Many financial experts had written off the stock market in 2018. Worldwide, the listed indices firmly in the red, nine-year-old stock market boom seemed to be the end of it.
But on Wednesday, the Dow Jones rose suddenly, in a single trading session of more than 1000 points – as much as never before in one day. After the trade was completed on Christmas eve, with a considerable decline of almost three per cent, showed the Dow-course panel at the end of the first Christmas day, a significant increase of around five percent.
this Is the relief rally for the end of the year, many investors had hoped for after a bad stock market year? Or it is only a short disturbance fire, before the stock market collapses in the new year?
it is Clear already now: The yesterday’s price of fireworks on Wall Street didn’t last long. At the start of trading on Thursday, the Dow Jones again recorded clearly in the Minus, also the German benchmark index, the Dax, lost again, almost two percent and fell back briefly to only 10.356 points – the lowest level in two years. The most important German stock market barometer will therefore close in 2018 as bad as in seven years. Since the beginning of the year, the Dax has lost almost 19 percent, similar to high losses it was in 2011, when the Euro crisis broke out. The German stock exchange is without a doubt in a bear market, as financial experts call a period of declining rates.
The traditionally highly Export-dependent German companies suffered from the ongoing trade dispute between the United States and China, and the disputes around the Brexit. Nothing to hate investors so much uncertainty, so many of the German stock they sold.
In the Young-Money-Blog we write about financial topics for beginners.
Subscribe to the Newsletter directly and for free here:
Yes, I wish non-binding offers from the MIRROR publisher and the manager of a magazine publishing company (magazines, books, subscriptions, Online products and events) by E-Mail. My consent, I can revoke at any time. All Newsletter
it comes in 2018 on the stock exchanges to violent fluctuations, expected Economists in the run-up. For the first time since the year 2008, the US Federal reserve Bank tightened its monetary policy, withdrew from the market billion of liquidity. Four times they raised interest rates, and you drove your bond back program purchase. Also, the European Central Bank (ECB) ended in December as expected, your billion-dollar bond-buying program.
All the years before that, the Central banks had driven the stock exchanges through its ultra-loose monetary policy and supported. The a lot of cheap money they pumped out in the years after the financial crisis in the market gave investors to buy shares – because the Alternatives were absent in the face of low interest rates. The engine in the courses from one record to the next.
Now this time is coming to an end and the two main reasons for this.
1.) In the US, the Fed is almost at the target: Inflation is where it needs to go, the economy is doing, unemployment is low as it has been since the sixties. In the new year, the Fed will raise the interest more. And also, the ECB might adopt in the next fall for the first Time in years, the zero interest rate.
for a Very long time, investors were able to trust in your decision, whether you should bet on shares, on the “Tina principle”: “There is no alternative”. As well as any financial expert knew To share there is no Alternative, because other asset classes have generated only a measly returns. However, this principle does not apply anymore for this year: Because the US Central Bank begins to raise interest rates, yields on government bonds in the United States. Investors sought to rebalance, therefore, their money in such bonds, also weighed on the share prices. “Investors have to share again an Alternative, many investors reduced holdings therefore their shares,” says Tilmann Galler, the capital market strategist of JP Morgan Asset Management.
2.) The environment for equities is also more difficult, because worldwide, the pace of growth in the nation slows down economies, including the profits of the company suffer. in 2018, increased the profits of the U.S. companies listed in the stock exchange S&P 500 index, by more than 22 percent, in the new year, is to halve this value. A number of economic research institutes corrected their growth forecasts for the year 2019-to-bottom. The Ifo Institute wrote about in his economic Outlook: “Many uncertainties will dampen the world economy, especially Brexit, the budget dispute in Italy and the US trade policy.”
Many market participants believe, therefore, that in 2019, the recession and the Crash in the stock market.
so bad it will not be according to the capital market strategist Gallen: “We expect for the year 2019, no Review. But the economic cycle is already well advanced, and therefore will slow down anywhere in the world growth”.
boom, not of old age
In Europe, the last recession was to die seven years, in the United States, there are even ten. Many observers feel that the downturn should come in time. But professionals like Carsten Brzeski, chief economist for Germany and Austria, the ING, say again and again: “There is no economic law that economic expansions die of old age.” Reminder: The Australian economy has been growing for 27 years without interruption.
optimists argue that a possible recession is priced in because of the negative prospects in the share prices. That would speak for at least a moderate rise in share prices in the new year.
Better than expected?
Because of all the negative sentiment leaves room for positive Surprises. It would, for example, between the United States and China, a relaxation in the trade of conflict or a solution to the Brexit issue, it would be reflected immediately positive effect on share prices. “The new trading year could be better than it is now expect a lot of naysayers,” says ING economist Brzeski.
For investors who are still invested in equities, thanks to the turbulent stock exchange times are also good entry-level opportunities. What is clear is that investors cut best if you get in at a time of low rates. “Because after all the years of records have been normalized valuations of shares,” says a capital market strategist, Galler.
However, new shareholders should bring a lot of time. Because the risk of a future downturn. Beginners should therefore bring a minimum of 15 years to be able to a serious crisis sit out. The stock market indices can, in fact, collapse in a recession for 30, 40 or even 50 percent.
Young-Money-Blog-MIRROR ONLINE Euro 10,000 at once to create: A guide in six steps