It is no secret that this year 2019 is going to be very complicated for all financial markets, both those of equities and fixed income. This is indicated by the advice of the most important financial analysts who warn that this year may generate many negative surprises for small and medium investors. In this sense, the selective index of the Spanish stock market, the Ibex 35, starts from one of the lowest levels in recent years. Specifically, from the 8.500 points and after having depreciated in 2018 no less than 15%, in line with other international markets.
In this sense, the prospects for investing in the stock market are not at all promising. Not much less. Despite the fact that the Bankinter analysis department considers that "we continue to think that it makes no sense for the stock markets to close with losses when business results expand in double digits and the global economy slows but is not heading towards any recession." It is a point of optimism that is not shared by other financial agents who are of course more negative in the diagnosis they do for equity markets this year.
One of these opinions comes from independent financial analysts who warn that in the coming months the Ibex 35 could visit levels at 6.500 points. This in practice means that national equities would depreciate in double digits and that the losses would therefore be very large for investors who have open positions in these financial assets. A panorama in which the divergences are very very clear between the different financial intermediaries. Therefore, the main measure that small and medium investors can adopt is prudence and above other technical considerations.
Strategies in 2019: opportunities
Of course, there is no shortage of authoritative voices that emphasize that the economy is going to be reasonably well this year. Where valuations are very low, and profits seem to grow around 6% and 8%. As a consequence of this foreseeable trend in the equity markets, it seems reasonable that the stock market is performing well. Some financial analysts, such as those at Bankinter, point out that this new stock market exercise should be positive for investors' interests, with returns of more than 10%.
On the other hand, one thing seems very clear to all, and that is that this time investors must define their strategy to face the slowdown or even recession that analysts announce. It is more prudent to be cautious to avoid everything that happened in the previous economic crisis. Where a good part of the investors left many euros along the way. On this occasion, the opinion of market analysts is far from unanimous, so defining an investment route is not going to be easy this year. Factors as important as the trade war between the US and China, Brexit or electoral appointments such as the European one in May can have a significant impact on the development of the stock markets this year.
Go short
Given this scenario in general, the first of the investment strategies to carry out necessarily involves developing purchase and sale operations only in the very short term. It is the best measure to defend and preserve our money in the face of high volatility scenarios in international equity markets. In this sense, an excellent strategy in this operation is based on operating with securities that have a bullish momentum very interesting. Movements can be made within a few days seen. In order not to get stuck in the positions of the analyzed security.
In any year, this is not a year how to perform very durable operations. Unless they are to have them for most of our lives, just as our parents or grandparents did in other times. Where it was a financial asset that was part of the inheritances. Well, this is not the most appropriate time to stay in these movements because they can be very expensive. Especially if there are liquidity needs at some point or another.
Look for large-cap stocks
This is also not an appropriate time to experiment with very small cap stocks. Among other reasons of special relevance, because they are those that present a higher volatility in the conformation of their prices. Beyond other technical considerations of the securities themselves. It is therefore preferable to target the large values of equity indices. It is not that they will do better, but that they will offer greater security to small and medium investors.
On the other hand, with large caps it will always be easier for you to get the recovery in their prices. Something that costs much more in small and mid-cap companies since in some cases they do not even reach those levels any more. Over the last few years there are countless examples that highlight this very special trend. This is therefore another reason for choosing leading stocks on national or international stock exchanges. Not in vain, you will always be more protected and above all in the moments of greatest instability in the stock market.
Apply a restraining order
Putting in your purchase order a mandate called a stop loss will be little less than essential in a year as complicated as it is expected to be this 2019. In this sense, exercises protection to defend your interests as a small and medium investor. For a very simple reason to explain and that consists of you will only have the losses that you can only assume based on your particular needs. In this way, you will avoid having a strong indentation in your income statement.
To apply this order of limitation of losses it will only be necessary that you expose up to what price level you can hold on in the falls in equity markets. It is a very effective measure that will help you preserve your invested capital above other technical considerations. In addition, it can be used by any small and medium investor and without having any economic cost or in the form of commissions. It is open to all kinds of strategy in the stock investment sector.
Don't get carried away by rebounds
In this year, a figure as relevant as the rebounds in the stock market will be especially dangerous. Because you can fall into these traps offered by the financial markets and make purchases that you can regret after a few trading sessions. Because the difference between the quoted price and purchase price it can be very distant. This is one of the most obvious risks to which you will be exposed in this complex year to make profitable savings with this class of financial assets.
On the other hand, you cannot forget that the rebounds in the bearish processes they must be used for the opposite. That is, to lighten the portfolio little by little. Just because you can find yourself are very unwanted situations and that can lead to your capital falling very dangerously. This is something you should get used to in the coming months. Because there is no doubt that it will be one of the greatest temptations you have to enter positions in the equity markets.
Get away from the most conflicting values
In any case, and if for any reason you want to carry out operations on the stock market during this year, you should not opt for the most complex securities to operate. Not surprisingly, you are doomed to develop a series of operations that you can regret in a short time. To give you a more approximate idea of this aspect, nothing better than to put as an example what happened in the past year with Day. The share went from 4 euros to a level of 0,30 euros. You don't have to repeat this performance.
Well, this year it will not be very strange that this kind of actions in some stocks are repeated. And therefore, you should be much more attentive to signs of weakness in these companies that are listed on the financial markets. Beyond its technical considerations and maybe even from a fundamental point of view. Not surprisingly, this is going to be a year full of great surprises. And although there will be business opportunities, it is no less true that there will also be many crashes in the stock market, both nationally and outside our borders.
In any case, and as a summary, prudence should be the main common denominator of all your actions in the financial markets. Where there will undoubtedly come many difficult moments for small and medium investors. Where the key will be to make as few mistakes as possible and for this you must avoid certain operations in the equity markets. After all, this is what awaits you in the coming months.