As always happens with the arrival of a new year like 2018, there are several scenarios that can determine the evolution of this year. To the point that they will be very important so that you are in a better condition to form a stable investment portfolio and certainly balanced. With no other objective than to optimize your relations with the equity markets. In a year like this one, which is certainly not going to be easy at all for small and medium investors.
There are many scenarios that analysts of equity markets are considering. But not in all cases they will be fulfilled from now on. It will serve you not only to enter the stock markets, but to exit if the scenarios are not the most favorable for monetize savings with a wide safety in operations. At the end of the day it will be one of your challenges for these next few months. Although of course it will not be an easy task, but rather the opposite, as you will see from now on.
Of course, investing in equities is one of those chosen for these scenarios. But not the only one since it covers all kinds of investments, even from more alternative approaches. In any case, we are going to present you with a series of perfectly feasible scenarios that can be fulfilled in the coming months. And that will surely be of great help to you carry different investment strategies. Both in regard to taking positions and to leave the financial markets when the time is right. Are you willing to take on this challenge to make your personal assets profitable?
First scenario: rate hike
Everything seems to indicate what it will finally be this year when the long-awaited rate hike by the European Central Bank (ECB). This important monetary measure will have broad effects on a large part of the financial markets where you operate. Especially on those of variable income and that initially could have a downward reaction to the withdrawal of stimuli by the Community monetary bodies. With a foreseeable drop in the price of shares. Although with a limitation in the space of time where these cuts will take place. You must be very aware of Mario Draghi's pronouncements in this regard to operate with agility and take advantage of all these movements.
This measure will not only affect the stock market, but also fixed income. Where bonds could be devalued under more aggressive margins. As a consequence of the impact of the drop in interest rates on the competitiveness of the economy of some EU countries. To avoid these situations so unwanted for small and medium investors, nothing better than to go to the safe haven bonds. Where its behavior will be significantly better than in other fixed income products. In any case, you should update your investment portfolio taking into account this scenario that will surely appear in the new year.
Rise in the price of crude oil
Another of the scenarios being considered for this exercise is the increase in black gold rates. Due to the tensions that are lived in Saudi Arabia and that could infect other areas of this important geostrategic area of the planet. To the point of trading above $ 70 a barrel. And where the oil companies will be the ones that best pick up the new trend of this important financial asset. Because if so, you will have no choice but to be exposed in their positions if you want to make profitable these movements in the oil sector with greater guarantees of success.
You cannot forget that at this time the price of crude is trading between $ 50 and $ 55 a barrel. With which its revaluation power could be very high from now on. And of course, higher than that generated in other financial assets, with equities included. Because the tensions in the area may drive the price of this energy to skyrocket in the coming months. Although the class will reside in verifying up to what levels it will reach in this rebound that may arise in 2018.
Tensions between EU partners
There is no doubt that the difficulties for full integration into the EU will be another serious obstacle for equity markets to move forward from now on. Not only for the Britain's departure from community institutions. If not also because of the problems that some countries are creating. And that coincides with a weakening of the Union's locomotive, Germany, as a consequence of the formation of a very unstable three-party government headed by Angela Merkel. Its effect will be a possible and forceful drop in the stock markets of the entire old continent.
It would be one of the strongest effects the bag could have. Because companies in this geographic area would be affected with a significant cut in their stock market valuation. To the point that you will have no choice but to leave these financial markets and go to safer ones. Because not in vain, you would be much more exposed to losing money in the operations carried out. Perhaps under levels that you cannot bear and depending on the profile you present as a small and medium investor. It may be the definitive moment for vary your investment strategies. You are playing a lot from these precise moments.
Weakness in economic growth
Of course, it is one of the most feared scenarios by small and medium investors. Especially because it is not the best of allies to get benefits of your money in the investment. You cannot forget that if these scenarios are met, they are certainly the equities will fall sharply. But also fixed income, even in some of the most virulent cases. In this sense, you should be very attentive to everything that happens with the macroeconomic data. In order to when faced with any weakness, opt for an aggressive exit of financial markets. Do not doubt that a change in trend will start in the stock market to go from bullish to bearish. With all kinds of connotations you already know as a result of the experience accumulated over so many years.
With regard to equities, there will be no other solution than greater monitoring of listed companies. In particular, of the business results that are given quarter by quarter and that can give you more than one clue about what you have to do in these situations. It necessarily translates into a decrease in both variable and fixed income. With few alternatives so that you can make the new scenario profitable. Among these few would be the precious metals market and very especially that of gold. Acting as a refuge value so that you can improve your positions in your checking account balance this year.
Continuation of the attacks
Also during 2018, Islamic terrorist attacks are expected to continue. However, its reflection in the stock market will be much more limited. Its effects will be very punctual and affecting a series of sectors that are very vulnerable to this kind of action. Among those that stand out the tourist above others. Where airlines, reservation agencies, hotels and companies related to the leisure segment would be the most exposed to depreciate before the appearance of these terrorist attacks. But only for a few days or weeks to soon return to a situation of apparent normality. In addition, it is something that you will have to live with, as some of the most relevant financial experts allude to.
In any case, this will not be a new scenario, but it is already present in the stock markets of the old continent in recent months. Although it will vary greatly depending on its intensity and the repercussions that it finally has in the western world. In this sense, should not be a reason for you to change your strategy in investment during this new year. Of course, unless its effects are much more serious than those generated up to now.
Change of trend in stock markets
And finally, a radical variation in the trend of equity markets in most of the world cannot be ruled out. To go bassist this year. This would be the most negative factor for your interests as an investor. You must make a determination and this is none other than abandon positions that you have open in the bag. Although they are formalized with losses since the handicaps could deepen over time.
You cannot forget that as it is a change in trend, this new period can last for many months or even years. Your best defense strategy is to stay out of the financial markets. Especially your movements They are intended for the short and medium term. Not surprisingly, it is a very complicated scenario where you can drop a lot of euros along the way.