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What a difference a year makes. In fact, investors could not be wrong in 2017: whatever the products in which they put their money, the return was at the end of the year more or less high. On the contrary, in the current year, virtually all asset classes are expected to be negative.
At least a quarter of a century ago, we have to go back to find such a constellation: currently, stock and bond markets around the world are facing price declines. In addition, investments in oil and other commodities, or in emerging market currencies, must also be depressed. Even the prices of Bitcoins are breaking
one, after soaring in the last year.
And the so-called refuges? They also offer little protection against losses:
US and gold government bonds were in high demand during market turbulence, as in October, but their balance sheet for 2018 remains broadly negative. a
very rare exceptions – with a positive return of currently around
1.5% – are German government securities.
Diversification does not take
stock and the links usually move in opposite directions. The first win in times of economic recovery and rising corporate profits
while the latter suffer from price declines due to the rise in interest rates. Conversely, bonds tend to gain in price in a declining economic environment, while stocks are falling.
This balancing mechanism is based on diversification strategies
many investors whose portfolios therefore contain both stocks and bonds.
But in a year like this, this safeguard will lead to nothing. how
Deutsche Bank calculated that no less than 90 per cent of
so far, 70 asset classes have recorded a negative total return so far this year; In addition to price changes, this also includes dividends and interest income. The worst record so far is 1920, when
84% of the 37 asset classes that were successful ended up in the 2017 loss zone was that
best year of investment so far: Only 1% of asset classes were closed in the red zone (all calculations were made in dollars).
At current price levels, accumulated losses on global equities and the bond market have risen to more than $ 5 trillion since the beginning of the year.
This is the biggest setback since the financial crisis. In 2008, the stock markets alone had lost over $ 18 trillion, according to the Financial Times calculations. Although the links closed at that time, they could never close this huge "hole".
Fundamental change of the tide
Many observers see this year as a turning point in the post – financial crisis era. From 2008 to 2017, the major central banks poured money into the markets. In an increasingly desperate quest for returns, the demand for high-risk assets has increased in emerging countries.
or in high-yield, small-cap corporate bonds. The current is now over: the Federal Reserve has recently rationalized its monetary reins more than expected by many experts. In addition, the European Central Bank and its counterpart in Japan are closing.
Tidal change has fundamentally changed the dynamics of the market: investments in short-term dollars now report interest rates of up to 3%, then
almost nothing has been thrown away. The associated attraction effect of the dollar
has withdrawn a large portion of its capital from emerging markets and has seriously weakened its currencies. At the same time, investors are increasingly differentiated by risk, leading to higher risk premiums and returns for bad creditors. The rise in bond yields is accompanied by a drop in bond prices.
Higher and more frequent price fluctuations
Higher bond yields also make equities less attractive than fixed income investments. This is happening at a time when it seems that global economic activity is slowing and corporate earnings growth is slowing. Both fuel investors' skepticism: are stocks still not overvalued, even after recent price corrections, given dark and uncertain prospects?
Increasing uncertainty among market players is reflected in particular in the growing wave of waves on the market trades, By mid-November, it was already possible to count 52 days when the largest stock index in the world, the S & P 500 in the United States, experienced price fluctuations of more / minus 1% in one day stock market. Thus, the US stock market has returned to its long-term average – this was recorded during superinvestment 2017, just eight days, with price fluctuations above 1%. The fact that these times will not happen again so quickly is probably one of the few reliable predictions for the coming year. (Editors Tamedia)
Created: 28.11.2018, 15:44 hours
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