One of the factors that are penalizing the equity markets the most is the fact that the international economy may be immersed in recession. To the extent that many small and medium investors are undoing their positions due to the obvious fear that the stock markets of almost the whole world could be immersed in a important bearish process. Where significant losses could be generated in the securities portfolio. When at this time the doubts in the financial markets is one of the common denominators in the actions of the various financial agents.
Within this general context, there is no doubt that the global cycle is currently losing momentum, although the main indicators still suggest that it continues to be expansive. Even with the possibility that have hit bottom and in this way it is in a position to rebound with some intensity from current prices. Not surprisingly, there are several equity market analysts who estimate that no recession is taking place at the moment. Although what seems clear is that we are entering a more uncertain stabilization phase and in any case more unstable than expected from the beginning.
While on the other hand, there is no shortage of other highly authorized voices that are of the opinion that the symptoms of exhaustion are confirmed, which leads to fear that recession is very likely. That is, two completely different opinions from each other. But they mean that small and medium investors do not know what to do from now on. Whether to start or maintain your positions in the equity markets. Or if on the contrary, it would be much more advisable to undo all the positions or not to enter the financial markets before what may happen in the next few days. To provide total liquidity in the savings account above other more aggressive investment strategies.
Economic recession scenario
If this situation is confirmed in the next trading sessions there will be no other strategies to apply than to exit the equity markets in a hurry. Not surprisingly, it would indicate that there will be significant corrections in stock prices. Beyond other considerations of a technical nature and maybe even from the point of view of its fundamentals. Where there is no doubt that you will have time to buy them at more competitive prices than right now. It would not be surprising if stock indices could lose between 10% and 30% of your valuation. It is such an important percentage as to be more cautious in the possible contact with the stock market values.
While on the other hand, it should not be forgotten that you have nothing to gain in the financial markets and yes much to lose. Because indeed, the drops can be very violent and under great volatility in the conformation of their prices. Faced with this scenario, nothing better than to be cautious in the actions and opt for other alternatives in investment. The best of these would be to opt for fixed income derivatives. With a profitability between 1% and 2% and that safely maintains the savings of the entire visa. Without being exposed to the ups and downs of the financial markets.
What if it's just a scare?
If, on the contrary, and when faced with the question whether or not there is a recession in the international economy, the answer is negative, the solution would be to enter the equity markets. To the point that significant appreciations in stock prices could be achieved. Especially in operations aimed at the medium and long term where a juicy capital gains could be obtained if the decision is made that the stock market is the best answer in the investment at this precise moment. Beyond the fact that there may be specific corrections in the price of the securities. But that will serve to increase or enhance the positions from now on.
While on the other hand, there would be a series of values that would have a better performance than the rest. As for example, those of the banking segment or cyclical companies that would have a much higher growth potential than the others. In any case, it can be a business opportunity for which it will be necessary to be attentive to all the economic variables that appear in the coming weeks and that may give some clue about what may actually happen in the equity markets. international
Take advantage of cuts
In upward trends, a very common rule among the most experienced investors is to wait for cuts in the prices of companies to enter the market at more competitive prices, which can lead to a greater upward trend in the price. value and therefore greater chances of appreciation. These specific cuts occur when there is a certain "fatigue" in the buying positions and sales begin to float, that is, when the market is overbought and needs an adjustment in prices to continue its upward climb.
These "breaks" in its price quotation, in which sales begin to emerge, occur several times during a bullish process, even the stock market analysts describe it as "completely healthy market movements”That serve for indices, sectors or stocks to gain more strength in the next trading sessions. This is something that can be done if in the end there is no economic recession and everything is the result of a slight cooling in the economy on a global scale. Where, there will be no better solution to make the savings profitable than to opt for products linked to equities. Among them, mutual funds and of course the purchase and sale of shares on the stock market. But that will serve to increase or enhance the positions from now on.