Equities breathe with some caution. The fall of semiconductor companies and other collapses such as Telefónica after disappointing, continue to cast doubts on the future, demonstrating a high market sensitivity to earnings reports.
The strengthening of the dollar, added to the fall of the euro and the pound, indicates that capitals seek to protect themselves. The falls in riskier assets such as technology stocks and cryptocurrencies confirm that the general market mood is caution.
Individual investors are the ones who have made the market rise, adding massively to the winning stocks on the stock markets (technology, banking and energy). If in Spain there are 15% of individual investors, in the US that percentage is higher, since US households own 38% of the shares on the US stock market.
These new investors, who have only been in the stock market for a couple of years, have experienced the sweetest moments of the last 25 years, and as soon as the markets have fallen, their «legs have shaken.»
Time to rotate portfolios? Or do we wait?
As indicated by the veteran manager of T. Rowe Price: «Investors should ignore market volatility so that it does not scare them, since everyone is focused on the charts, the macro data and not the fundamentals of the companies.. That’s what we should look at.
If we look at the strength and trend sectors of Investment Strategieswe see that for example in Spain there are the majority of strong sectors…
The companies have presented excellent results, at least most of them so there may be corrections, but not other things…
Remember, therefore, whether the companies in which you are invested have achieved results or not. If a company has risen a lot in the stock market and does not deliver results, let’s run away, because the correction will be strong. Otherwise…Let’s continue on the trend that the year-end rally is coming, next year there are mid-term elections in the US, the central banks do not seem to be going to lower interest rates further, in Germany there is an infrastructure plan, increased defense spending in Europe and not to mention the large number of data centers that need to be built in general to support AI and all the improvements that are coming….They are catalysts that will make companies continue winning money, whether AI, Banking or Energy to name a few sectors. And if not, look at how the sectors are in terms of strength and trend.
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