bag came back investors’ target. New generations have made risky investments common in their lives. Investments in cryptocurrencies or derivatives based on technology shares have in recent years become an example and paradigm of success for young people with small savings who aspire to the millionaire dream of the greats of high-tech startups. After failures and successes are everywhere, bubbles and crashes, investments in cryptocurrencies are returning with renewed hope, as is the purchase of precious metals such as gold (currently at its highest) and even shared real estate investment in the shadow of the real estate boom or global crisis . profitability of renting (vacation or living). In this maelstrom of high-profile investment dreams, the stock market is under the spotlight once again after a year of significant revaluation (more than 20%) and analysts promising double-digit gains (more than 10%) by 2024. Anticipation of lower interest rates. Here are some elements to consider.
Measure the risk
However, promises of revaluation of any investment are associated with levels of risk. Banks specialize in selling products for which they create risk profiles based on the customer’s age or the risk they are willing to take on. The youngest are cannon fodder in this high-risk market, promising success in the form of income supplementing their salaries. The stock market is inherently risky and it is necessary to seek information and advice.
Variable income/fixed income ratio
The stellar advice of the past for savers who aim for profitability above all else returns in the final period of the year. Stock market experts always talk about the 60/40 portfolio as the philosopher’s stone in the fundamental principle of the infallible investor, but it has caused many stomach aches in recent years. It is now strongly animated and may be an adequate guide for the novice investor with a penchant for emotions.
The idea is that a 60/40 portfolio includes 60% stocks and 40% fixed income. Sometimes 20% raw materials are included to minimize further risk at the expense of inventories or public debt. The typical investment axiom is that this diversification allows for “correlation benefits” or, in Roman Paladino’s case, that it doesn’t all go to waste at once due to an unexpected cyclical element. We are far from bubbles where the investment criterion was to bet on the lowest price because everything went up. Or imitating leaders to follow the smartest (for example, where CaixaBank invests). Now, at the announced milestone, it’s time to play a little bit of everything and hope that big increases in something make up for the stagnation of the rest.
Historical data does not imply future returns
November delivered a historic increase in profitability. 60% of the portfolios were invested in the stock market and 40% in debt, producing a return of 9.6%, the best month in the US since December 1991, according to Bank of America data, and complete bliss as the old portfolio was dispersed was done. Soviet Union.
key to 60/40
In its 2024 report, the manager of Allianz Global Investors calculates a message of calm in the prospects for a traditional portfolio combining the stock market and debt. “We understand the rush for cash as a result of uncertainty and rising interest rates. But we believe fixed income in 2024 and, over the longer term, equities and other assets offer much greater potential for overall profitability.”
Inflation
According to Rothschild, “Inflation in Europe was lower than expected. Inflation is falling across the continent and in general (food, energy, goods and services), so there will be less pressure on European monetary policy in 2024.” It is logical that the stock market will tend to rise if interest rates fall, so having a stock weight of around 60% in the portfolio will benefit the investor.
Experts doubt that the abnormal situation of recent years and the poor performance of 60/40 portfolios will be repeated. The rapid increase in interest rates reduced the price of debt and increased the required profitability. Now the outlook may change, but gradually public debt may become attractive in the short term.
fixed rent
“The outlook for global fixed income in 2024 is generally positive. There is still a lot of uncertainty in the economy and markets, but the combination of attractive total returns and the risks of seeing some sort of global economic slowdown next year will help these assets,” underlined manager Payden & Rygel in its latest report. drawing.
In fact, the BBVA executive recently classified fixed income as the star asset of 2024, with rates set to act as a buffer at 60/40, with the expectation that it could “offer 3% to 5% with limited risk”. wallets. Companies’ dividends are an important factor when choosing a particular stock against an index. Dividend yield is very important to stabilize investments.
dynamic portfolio
But the key in the stock market is to be ready to buy and sell according to the pace of trends and, above all, to avoid fighting against general movements. And this obligation to be dynamic, to be careful, is a big brake for the inactive investor to jump into the stock market. It is necessary to be careful, sell when the threshold is reached and incur a loss. Buy when the uptrend becomes clear with rising lows and clear volumes. And between the commission and the sales commission, have enough resources to entrust the income tax return at the end of the year to a professional.
Interest rate cuts expected for 2024 are presented as an incentive for the stock market to continue its rise. Even if the economy will go worse than expected, contrary to the most pessimistic forecast.
2024 outlook for Banco Sabadell and CaixaBank
Catalan delegation Spanish Institute of Analysts held this Monday barcelona A day of analysis on the economic challenges of 2024. The results of the meeting made clear the lights and shadows surrounding the investor in the year ahead. Head of the institute’s Catalan delegation, Margarida GabarroHe defended the role of analysts as useful professionals in this era when artificial intelligence and algorithms threaten autonomous decision-making.
Sofia Rodríguezchief economist Sabadell BankAnd Enric Fernandezchief economist CaixaBankHe was responsible for charting this upcoming panorama, influenced by a complex economic environment, increasingly important financial factors, and the headache that inflation represents.
Sofia Rodríguez “Although the decline in inflation has progressed significantly, upward pressures on prices, which may be structural due to geopolitical conditions, weather conditions and wage trends, continue.” Rodríguez added that “the global economic environment remains fragile and exposed to a complex geopolitical context” and that “we will continue to see the effects of restrictive monetary policy in the coming months.” However, he reminded that there is a remarkable divergence between what the market expects from monetary policy from now on and the statements of central banks.
Regarding the expectations of the Spanish economy for 2024, Enric Fernandez He noted that the current economic weakness is expected to “persist until early 2024” but that “a recovery in external demand and investment, as well as a further withdrawal of European funds” will encourage recovery throughout the year. But according to CaixaBank’s chief economist, “Spain will need to gradually reduce its fiscal deficit and gain room to maneuver in case new shocks occur.”