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4 years ago
Was “let’s sell for now and wait for the dust to settle”, one of your mantras during the recent market shock? There are some common mistakes made during a crisis. Sometimes they come down to individual decisions. Often, they are as simple as financial advice gone wrong. Here are my top five common blunders that investors may encounter during a crisis. Mistake 1: “Let’s sell for now and wait for the dust to settle.” The equivalent for cash-rich investors would be “Let’s keep the cash and wait for the dust to settle”. The key S&P500 benchmark on Wall Street, widely considered an indicator of global market sentiment, has rebounded by more than 60 per cent since its low on March 23, 2020 and most investors that have not bought are still in waiting mode. An alternative view Instead of waiting, it is much better to build a solid exposure structured around well-defined investment themes, such as the US market and China. Potential winning infrastructure sectors might include IT & Communications, Healthcare, and Industrials. Other attractive opportunities may also be found within the Consumer Discretionary and Consumer Staples spaces. (Consumer Discretionary stocks represent companies producing non-essential goods and services. Consumers tend […]
4 years ago
Short-term traders rather than safe-haven seekers have pushed gold prides to record-highs in summer. It looks like prices have moved past their peak for now. The recent sell-off in the gold market brought back memories of the early days of the coronavirus crisis in March. Rapidly rising infection rates and fears of broad-based lockdowns triggered a risk-off move in financial markets, putting pressure on equities and spilling over into the gold market as the US dollar strengthened. While counterintuitive at first sight, such moves are not unusual for gold in times when the risk perception in financial markets changes and investors dump risky assets for US dollars. For many investors, the US dollar itself still is a safe haven. While a stronger US dollar and slightly higher – or rather slightly less negative – US real bond yields look like the triggers of the recent sell-off, neither the one nor the other is sufficient to explain it. Instead, the explanation is rather that trend followers and technical traders have again exited the market after piling into gold during the record run in July and early August. While gold is a safe haven which has proven its track record multiple times […]
4 years ago
In the below interview, Christian Gattiker, Head of Research at Swiss Wealth Manager, Bank Julius Baer talks about how the Covid-19 pandemic has impacted the way clients view investments and what are the key trends shaping the world of tomorrow. How would you describe the current investment scenario in a world that is still tackling the challenges presented by the pandemic? The current investment regime is a globally synchronised and mostly V-shaped recovery, helped by heavy monetary and fiscal stimuli. The world economy entered a synchronised shock-like recession in H1 2020 and is now recovering at different speeds. The main divergence in the speed of the recovery is the amount of fiscal and monetary stimulus available. The US, China and Japan have experienced a 10% downswing in economic output, while Continental Europe has experienced 15% and the UK 20%. Emerging markets have been hit hard but at varying degrees by the pandemic, with Latin America still in the doldrums. We expect most of the mature economies to compensate for about half of the shortfall during Q3, with a much slower pace thereafter. China is the exception, since the world’s second largest economy is back at pre-crisis levels as we speak […]
4 years ago
Patrik Lang, Head of Equity Research and Strategy, Bank Julius Baer In March, within a few weeks, the outbreak of the coronavirus led to an unprecedented sell-off on global equity markets, with the S&P 500 dropping 35%. From mid-March onwards, the S&P 500 started an equally spectacular rally, with the S&P 500 gaining almost 50% within less than three months. This came as a surprise to many analysts as fear of a second wave of infection are widespread. In addition to this, many economists only expect an anemic recovery. Equity markets – what to expect Against this backdrop, many investors are anticipating a second market crash. In our view, a major correction is rather unlikely because the economic recovery has already begun and a second wave of infection is unlikely to lead to a general lockdown because most countries will be better prepared for the second wave than they had been for the first one. Countries like Taiwan and South Korea have proven that testing and tracing is a much more efficient way to deal with the pandemic than locking down entire economies. It can be assumed that most countries will follow this example at least as long as no […]
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