Nine consecutive months of quarterly growth for the S index&The P 500 ended with the closing of the highly hectic first quarter of 2018. However, things could have been much worse, S&P 500 and DJIA over the past 90 days, being in correction, still managed to turn the tide of events in their favor. Were there reasons for the active sale and volatility of the courses? The answer is short – yes.
Surely you have heard, seen and read in many sources such statements about market behavior: “We went too far and too fast!”, “Prices were too inflated!”, “Political unpredictability and instability all around!”, “A lot of money is spinning! “,” This is a Facebook bug! “.
In response to this, we have collected information that will help you prepare for upcoming events.
Expect more volatility.
Over the past two months, there have been 20 cases where the S index rate&The P 500 changed by 1% or more, and in the previous year there were only 10 such cases. Of course, in 2017 the market was mostly calm, the calmest in recent history. 2018 still looks like a two-year-old child who was pulled out of a toy store before he could play enough.
Investors, as a result, are worried about market volatility, but not personal finance or the economy. The macroeconomic picture is relatively stable. She shows moderate growth.
Political instability is not going anywhere.
However, there were many moments of political chaos that were supposed to hit the market last year, but continued to grow. Investors who recorded excellent returns in 2017 may not be as patient this year. The situation may be complicated by the upcoming midterm presidential elections in November.
The line between passive and active investment is becoming increasingly vague.
The astonishing growth of ETFs like SPDR S&The P 500 ETF Trust, SPDR Dow Jones Industrial Average ETF Trust, and PowerShares QQQ Trust can be misleading. It seems that these indices are intended for passive investors with a buy-and-hold strategy, and they would be happy to wrap their savings or brokerage accounts in them and to do other things abstractly. But this approach will not work. During the February correction, the traditionally stable SPY was sold out at 9% within a few days. According to Jim Ross, sponsor of State Street Global Advisors, this happened for the first time in 25 years..
Institutional investors use ETFs for a variety of purposes, including hedging and smoothing portfolios. According to Deutsche Bank, institutions accounted for 57% of ETFs. Expected growth of this indicator along with the growth of the market of exchange-traded investment funds.
Technologies are no longer masters.
Regardless of Facebook’s recent concerns regarding user privacy and alleged government interference, there has been a clear decline in the technology sector in recent weeks. Powershares QQQ ETF fell more than 6% as Facebook, Google, Amazon, Netflix and Apple, being its strongest components, suffered from a slight weakening.
Despite the great importance of technology for our lives, outside the Big Five there was an active sale of assets in this sector. Given the significance of these companies for S&P 500 and NASDAQ, the general weakening of the market will continue as long as investors are wary of buying these assets.
Rising bid approaching.
The new chairman of the Federal Committee for Open Market Operations, Jerome Powell, provided basic information about the upcoming promotions, so there is nothing to be surprised. Higher interest rates affect stock returns. Try to adapt to this.
What should an investor do?
Balance your portfolio if you have not already done so. Relieve yourself of unnecessary risk if you feel that you have strongly left for stocks, especially technological ones. Make sure you have a cash supply. If you don’t have savings, just in case and lasting for 3-6 months, make such a “safety cushion”.
Forget about 2017. Yes, it was incredibly cool for stock markets and some cryptocurrencies. It was fun and crazy, but it was all over. Winter has come to an end, even though the weather can not be said about it. Bears come out of hibernation very hungry, so take care and be careful.
Similar articles
- Best industries to invest in 2018 – Top 9
Finding a profitable industry to invest in can be a good strategy if you are looking for new opportunities. But throw money on new stocks (as if…
- In which shares to invest for a novice investor in 2018
The growth trend of the stock market has been going on for the eighth year in a row, which poses a difficult challenge for a beginner in choosing the right assets. After all, among…
- Secrets and rules of an investor – How to start investing wisely?
If you are thinking of investing some of your hard-earned money in the stock market, you might be a little nervous. Fortunately you don’t…
What key trends or market indicators should investors pay attention to in order to make informed decisions for the rest of the year?
What are the key highlights and trends in the first quarter of the year that investors should take note of?