Markets under pressure: where, when and how to invest?

Will markets stagnate at low levels under pressure? How should an investor behave in such a context? “We see that the markets are overreacting. The economic situation does not justify such a decline. This is not a long-term situation. Markets are not always rational. We can say that those who buy on the stock market today are not mistaken. In time, he will not regret it. ” , says Etienne de Callataya, co-founder of Orcadia Asset Management. If we analyze the situation in the United States, we will see that the market seems to be the most expensive. But in the S&P 500 we have a few big limitations. However, in the US SME segment, price-to-earnings ratios are lower than in the last 20 years. So there are still centers of attractiveness in the markets.

Note that stocks are indexed to inflation. An investor with a well-diversified portfolio in different sectors and regions must be well protected from the effects of inflation. “Investors have outperformed certain pockets, such as technology stocks or growth stocks. Many of these companies have become too expensive. When interest rates rise, these companies will be fined. But there are quality stocks that have fallen. It’s an opportunity to buy.” adds Frank Vranken, chief investment officer of Edmond de Rothschild.

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Prioritize dividends?

Probably, today it is advisable to focus on stocks that offer good dividends. Companies that have the ability to pass on rising costs to their selling prices may also be considered favorable for investment. “Today we are in a gray area. There is no visibility in the markets. We can marvel at the credibility and compatibility of the profits announced by companies with the expected economic growth. ” , says Lionel Henrion, senior financial manager at Banque Nagelmackers. Several catalysts that can have a significant impact on investment should also be considered. Of course, there is the evolution of the Russian-Ukrainian war. On the sidelines of this conflict, it will be necessary to monitor the evolution of inflation, as well as to look closely at what is happening in China. Investor sentiment is bad today. This can be seen as a buy signal. To increase confidence, you need a positive catalyst that would cause a rebound in the markets. Such a catalyst could be, for example, the improvement of the Russian-Ukrainian conflict.

But today, what investments can we make? “We can focus on the defense sectors and companies that have the power to set their selling prices. We find insurance, healthcare or long-term consumption in this segment. Even if they are cheap, we need to be careful with technology stocks. The same goes for discretion. We also need to be more restrained about the eurozone, which is more vulnerable to the war in Ukraine. ” advises Cedric Gayen, Senior Relations Manager, NNIP Belgium.

There is one point on which four speakers are unanimous: cryptocurrencies. These assets do not create anything, cannot be equated with currency and often finance illegal actions. Compared to casinos, these operations also create terribly harmful effects on the environment through the way they are created. The recent decline in these assets is clearly demonstrated by Warren Buffett’s statement: “When the tide comes in, you see those bathing naked.” Experts in the four sectors also question the inertia and carelessness of central banks in the face of these cryptocurrencies.

-> Our file: Sicav rating, June 2022 – Overcoming the financial storm