2019 market highlights so far – 3 takeaways
Learn which world events have affected your investments – and how Selma's passive strategy works along.
How did reading “Finanz und Wirtschaft” every morning go for the last months? Was it very exciting? No? Surprising. 😉 No worries, Selma’s here to “squeeze the juice” for you:
How did the markets do in 2019 so far?
Why did they grow?
Why did they dump again in May?
What does Selma do during these times?
What might 2019 hold?
How did the markets do in 2019 so far?
Even without your daily dose of stock market news, you might have heard it: Pretty great … up until May.
To name a few things:
🌱 First, Emerging markets
… got quite a boost at the beginning of the year. People bought a lot of stuff in Western countries and because of a little peaceful phase in the trade war discussions, the economy in emerging countries was doing rather well. This means your Adidas running shoes were a good investment for multiple reasons.
🌱 Then, Emerging markets
… lost about 10% because Trump and China started their fight once again.
… didn’t break all our hopes so far. Postponing the decision let investors and markets breath.
… 737 Max airliner mess made passengers feel unsafe and American stocks drop a bit.
What does Selma do during times like these?
What is a passive investment strategy again?
Passive investing is the direct opposite to "active management" where fund managers try to be better than the market and calculate or guess the future.
Historically, passive management has done better than active management, relying on following the markets and resulting in way lower management fees. As the results have been similar or better, saving on management fees by relying on software instead of expensive (human) fund managers makes a big difference in how well your managed money can grow.
As a Selma client, you get your individual investment plan. You can find it on “Blueprint” -page.
A long-term plan is very important. It’s there to make sure you are not influenced by irrational emotional decisions sparked by crazy tweets and click-bait headlines.
That’s why Selma’s strategy is to stick to the plan, mostly. 😉
This means, Selma makes sure to monitor the markets and adjust your investments once something moves. In other words: Selma passively follows the market developments.
But wait, that’s of course not everything that fills Selma’s time! Additional to the passive investment strategy, Selma looks out for bubbles or crashes by using the Nobel-winning market valuation method called “Shiller CAPE ratio”.
A short summary of how Selma looks out for bubbles and crashes for you:
Selma measures over- and undervaluations of whole markets and companies
The measurements run over a long time span, comparing stock prices from stretches of 10 years with each other
This is done because bubbles and crashes build up over years and years as well
And according to these measurements, Selma buys more or less of the specific products.
How you can see the result of over- and undervaluations:
Already in 2018, Selma decided to put a bigger focus on Emerging Markets in lots of investment plans. This is mainly because she was looking for undervaluations of markets around the world.
One of those undervalued markets where the Emerging Markets. This year, they now finally caught up (by huge growth!) and became their “actual value’s worth”. This means they did really well – and so did your investments.
What might the rest of 2019 hold?
Some of the markets around the world are still heavily influenced by looming political decisions:
Trade negotiations have sparked a feud between the US and China again.
The decision has been dragged out but will come back again.
📉 EU markets
After the European parliament elections investors are a bit more relaxed at financial markets in Europe again. Skeptics against the EU grew, but the clear majority of Europe-friendly parties settled the panic.
What can I do myself?
It is a good time to start a monthly savings plan!
Investing monthly is the best strategy during these times, most likely getting you a better average price for the investments that are bought. It’s smart for the same reason as Selma’s step-wise investing of larger chunks. You can read more about monthly investing in our “Should I invest now” blog post about market timing.
Behind the scenes:
Help in shaping Selma’s future!
Would you like to contribute to building Selma’s future services?
At the moment we are looking for answers to some specific questions. What’s on your mind when it comes to pension planning, buying real-estate and monthly savings?
Take part in this survey and make sure Selma can help you understand and learn about your finances: