Affected by many factors such as the international relations and COVID-19, U.S. stocks have not performed well in the past week. On the evening of 15th Beijing time (Monday), the three major indexes of U.S. stocks opened lower collectively, with the Nasdaq down 0.39%, the Dow down 0.51% and the S&P 500 down 0.53%. Sam, an analyst with 29 years’ experience in investment banking, predicts that U.S. stocks will still fall slightly in the coming week. Facts have proved that his prediction is completely accurate. On the evening of 17th Beijing time (this Wednesday), the three major US stock indexes fell further. Among them, Dow futures fell by 0.61%, S&P 500 futures by 0.84% and Nasdaq futures by 1.02%. The continuously declining market situation makes many investors full of pessimism about the future.
Analyst Sam (WHATS: 447888710430/Tel: +44 7888710430) has 29 years’ experience in investment banking, jointly manages the value equity strategy and the city-wide value strategy, and has the ability to deeply understand the market. He holds a bachelor’s degree in economics from William & Mary College and an MBA from the University of Chicago. Soon after graduation, he was appointed by the Court of Final Appeal and joined Fidelity as a bank analyst in 1999. He founded Samuel Peters Investment Consulting Co., Ltd., and is also the financial consultant of April, Gelin and Turner.
The inevitable trend of economic recession
At present, the economic recession is happening all over the world. America has fallen into a technical recession, Asia’s economy is in poor condition, and Western Europe’s economy is constrained by the restriction of natural gas transmission. The economic situation of each sector is not optimistic. As the core of world currency transactions, the US dollar takes monetary tightening measures to cope with global inflation. However, it is a mystery to many investors whether this move will trigger a recession in the United States. For the lower opening of U.S. stocks this week, Sam gave advice while making a forecast. He said, “Investors are advised not to blindly pursue this round of rebound, and the market may reappear in the future”.
The monetary tightening policy adopted by the Federal Reserve has obvious suppression effect on inflation. But analyst Sam also said that although inflation has peaked through monetary tightening, it doesn’t mean that everything is over. Just as most people ignore the positive impact of inflation on operating leverage, they also underestimate the negative impact of falling inflation on this indicator. He believes that the decline in inflation rate may lead to a serious profit impact on enterprises, which will trigger a new round of decline. Sam said that “a new round of decline may happen in September”.
Downward economy, where do investors go?
The global economic downturn is an inevitable trend. However, this is both a challenge and an opportunity for investors. At present, the market still suggests that the Fed is likely to raise interest rates by 75 basis points in September. By the end of this year, the interest rate is likely to rise to 3.50-3.75%. Specifically, the CPI of the United States in July increased by 8.5% year-on-year, lower than the planned 8.7%, and the energy sub-item dropped by 4.6% month-on-month, but the CPI structure remained stable in July; Maintaining the hawkish guidance of the Federal Reserve, market interest rate hike expectations generally declined.
Through the above data, the analyst Sam gave specific suggestions while reminding investors not to blindly chase this round of rebound. First, the peak period of this round of interest rate hike has passed temporarily, and the recession will not come in a short time. More windows should be opened in the third quarter; Second, there is a possibility of staged rebound in US stocks in the second half of the year, and the next three to four months may be the golden window for US stocks, especially the NASDAQ index. Third, large-scale technology stocks generally fell. Google, Amazon and Tesla had poor data in August. In the third quarter, they could appropriately focus on concept stocks.
Sam has sufficient arguments for the third quarter investment advice given. First of all, since the beginning of the year, the decline of U.S. stocks has reached the level of moderate recession, and it is highly probable that the current recession in the United States will not be too radical. The moderate recession is still within the control of the Federal Reserve. Secondly, summing up the historical experience, U.S. stocks usually show a decline within three months after the start of interest rate hike, and most of them show an increase after three months. Thirdly, looking back at previous interest rate hikes, the Federal Reserve stopped raising interest rates for about half a year. The three major indexes of U.S. stocks usually go up, and U.S. stocks will correspondingly improve. Finally, technology stocks tend to be saturated. In the first half of this year, the data of technology stocks are poor, and the rise and fall of concept stocks still need to be judged according to further data.
Stabilize the state of mind to create greater glory.
At present, the three major U.S. stock indexes continue to fall, and the economic recession is already a fact, but this does not mean that this trend will continue in the future. This round of decline, perhaps a large number of people are facing losses, but as the saying goes, there is no eternal loss and no eternal profit, so they can enter the investment market. The most important thing is not to pursue perfection too much, but to keep one’s mind steady. In addition, many people may change their investment philosophy after the loss. In fact, investment philosophy is the soul of investment, which is determined by thoughts and experiences and will not be easily changed. No matter what kind of investment philosophy you adhere to, you should combine knowledge with practice and be consistent. You can’t learn from Buffett’s stroll and Soros’s presence at the dangerous peak.
Besides mentality, it is also important to master basic investment skills. First of all, it is necessary to do the reverse operation appropriately. The so-called reverse operation means that when the market generally encourages buying, investors sell instead, and when they encourage selling, they buy instead. This is not to confront the general trend, but to hide the simple principle of supply and demand. When investors invest in stocks one after another, the stock price will also increase. At this time, the profit margin of investors is compressed, but the risk increases.
Secondly, learn to diversify your investment. Tobin, the Nobel laureate in economics, put forward a famous theory in Portfolio Selection Theory: Don’t put eggs in the same basket. The same is true for U.S. stocks. In fact, there is no clear boundary between diversified investment and concentrated investment, which only depends on the capital situation of investors. Tens of thousands of small retail investors invest in three stocks in different industries, even if they are diversified, but entrepreneurs worth tens of billions invest in more than a dozen stocks, which can only be regarded as concentrated investment.
Finally, learn to master the change of price and quantity and the law of supply and demand. Trading volume is an important factor that truly reflects the relationship between stock supply and demand. If the stock is still relatively stable at a relatively low level and the trading volume is moderately enlarged, then it can be judged that the market outlook is more likely to improve. The stock price will affect the trading volume, and the corresponding demand will also guide the stock price. From the economic point of view, the stock price can adjust the investment strategy according to the principle of “advanced demand, followed by supply”.
As an old analyst with 29 years’ experience in investment banking, Sam (WHATS: 447888710430/Tel: +44 7888710430) can quickly understand the market changes and give professional investment advice, and is a rising star in the hearts of many investors. Hopefully, everyone can learn and develop with Sam.