With the exception of the Russian indices (which at the moment are separate history), the is officially the worst stock index for performance since the beginning of the year (YTD -30.5% approximately).
As we can see from the image above, in fact, we returned to the lows of mid-June (retested and to understand if they will be broken soon) from the highs of the end of 2021 from which we then witnessed an inexorable decline.
Since several investors, especially the younger ones, practically only had tech portfolios or Growth stocks, as always happens, it was a bloodbath on the results side, with individual stocks losing from 50 to 90% of their value in a few months.
Yet, as always, if we want to look closely at the situation today on the investor side, we can read the situation as tragic, or try to remain lucid and understand that opportunities arise precisely from moments like these, so let’s find out an interesting statistic …
What you see above is the percentage (vertical axis) of stocks trading ABOVE the 200-day moving average. As you can see from the last update, over 90% of the stocks on the trade are trading BELOW this level, clearly following the strong bear market we are experiencing.
Now, if this might seem like an element of panic, let’s deepen the data connected to this interesting situation, with the second image below …
Now, I don’t want to bore you with statistics and technical terms, but explaining it simple, if you look at the darker distribution of yields (that kind of tallest mountain) you will notice (look at the horizontal axis) that when it happened (1996 to present, therefore even with the dotcom bubble) this particular situation seen above (ie over 90% of the securities trade below the MA200) in the following 12 months has always had a positive performance.
Therefore, it would mean that within 1 year, we could have a positive tech performance, with all that goes with it (individual stocks could have a major rebound).
Now, as always, since no one predicts the future, even if the statistics say it has happened 100% of the time, we must always approach the data with the right caution (a similar year had never even happened for mixed portfolios and stocks. bond, as they collapsed together).
Therefore, a possible approach, putting everything together, could be to start repositioning (gradually) on tech stocks, perhaps “hoping” for further drops in 2-3 months (breaking the famous lows) so that the probabilities then are even more in our favor. And this could be done by taking direct exposure on the index, or, in the case of individual stocks, on top quality techs at discounted valuations.
As always, no one foresees the future, but at least investing based on data is worth much more than investing at random.
Until next time!
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“This article has been written for informational purposes only; it does not constitute solicitation, offer, advice, consultancy or investment recommendation as such does not want to incentivize the purchase of assets in any way. Remember that any type of assets is valued from several points of view and is highly risky and therefore, every investment decision and the related risk remain with the responsibility “