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news-container"> Systematic risk has manifested itself
Fastest crash in DAX history
Good opportunity for beginners –
The current sell-off in the stock market should have caught most investors on the wrong foot. Many younger investors are now realizing for the first time that the stock exchange is not a one-way street and that equity investments are subject to various risks, which from time to time result in considerable fluctuations.
The systematic risk has struck
A global pandemic can be classified as systematic or market risk and accordingly affects all companies equally. Accordingly, regardless of the industry and the operational business, the share prices of almost all companies are falling. However, this fact offers long-term investors and newcomers to the exchange an excellent opportunity to expand existing positions or to position themselves on the stock market for the first time.
Fastest crash in history
The current crash on the stock market has no historical role models and only very few matches with past crises on the stock exchange. “The development this year is a blatant exceptional situation. The built-in production is a reflection of a massive exogenous shock, for which there have been no comparative models in recent economic history,” said Prof. Dr. Stefan Kooths, head of the forecasting center at the Kiel Institute for Economic Research, in his company’s economic report.
The enormous speed of sales on the stock market is currently particularly remarkable. Regardless of whether in 1987, 2000, 2008 or 2011, the German flax index DAX has never gone down as quickly as in the current corona crisis. The German flagship index practiced around 40 percent of its value in just 28 days. “This pandemic has triggered the fastest reevaluation of equity market risk in 30 years,” JPMorgan analyst Bram Kaplan said recently in an interview with CNN about the extraordinary pace of sales.
Clearance now offers opportunities
Given the origin of the current exceptional situation on the stock exchange, however, there is hope that the crisis will not last too long and that the descent will soon be over. The scientists at IfW Kiel believe that the chances are better compared to the 2008 financial crisis when it comes to a quick reversal of the trend. According to the experts, the current stress situation should only continue until the end of April and gradually relax in May. Accordingly, the German economy could have recovered in 2021, which would of course also result in rising share prices.
The positive assessments of the Kiel Institute for the World Economy should provide investors with gradual bright spots. The Vice President of the European Central Bank, Luis de Guindos, is firmly convinced that growth rates for Europe can increase again in the second half of 2020. “I believe that the first half of the year will be very bad. This will pull the entire European economy into negative growth rates this year, but I think we will see positive growth rates for Europe in the second part of the year,” said the vice president of the ECB in an interview with the Spanish television station La Sexta.
Late to sell and early to buy?
Investors who are now asking themselves whether they should increase their stock positions or better repel them must first consider their financial goals. People who now need to get their money quickly have no choice but to sell quickly, but those who have a long investment horizon should never get out and therefore not realize their losses. Because in the past it was only a matter of time before price losses turned into price gains again.
For courageous investors it can even be worthwhile to buy the existing positions in the portfolio and thus to make the personal acquisition prices cheaper.
ETF savings plan – if not now, when?
The current market environment also offers extraordinary opportunities for newcomers to the exchange. Beginners in particular, for whom the risk of individual shares seems too high, can now rely on funds and ETFs. Because in the current market phase there are real special offers on the stock exchange. So ETF investors now get significantly more ETF or fund shares for the same money than a few weeks ago.
However, in order not to fall into the “falling knife”, it is worth dividing your own investment amount into several tranches and investing at fixed intervals. Individual ETF savings plans are primarily worthwhile for this. These offer two major advantages. On the one hand, investors benefit from the so-called cost average effect through savings plans, and on the other hand, an ETF savings plan enables shares to be started with, for example, very low savings rates of just 25 per month. From this savings rate, interested parties can invest with an ETF savings plan from OSKAR.
The crash is there
There is no question that retail investors need very strong nerves in the current situation in order not to panic. Because the fastest crash in the history of the Federal Republic of course does not leave even the toughest Brians cold. It is not the corona virus that is to blame for the crisis, but rather the innumerable protective measures that are currently slowing global economic growth.
but the recovery is sure to come!
However, as soon as these drastic protective measures can be relaxed and the coronavirus gradually disappears from the news, the global economy should flourish again. Sooner or later you will be able to look forward to this “black swan” again if you have remained true to your individual stocks and ETFs or even bought them cheaply. Even experienced veteran speculator Andr Kostolany knew: “If you don’t have the shares when they fall, you don’t have them when they go up”.
On my own behalf
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Who avoids the risk of individual stocks …
Investors who do not want to take stock selection in their own hands, but still want to use the greatly reduced price level to buy shares, can of course also opt for funds or index funds (ETFs) or set up a fund or ETF savings plan. Our editorial team explains how to do this, e.g. in the entertaining YouTube video ETF selection: 5 golden tips for ETF searching and the ETF portfolio. There beginners can find a. also the practice video Buy stocks in 3 steps.
If you want to use the significantly reduced price levels to build up long-term assets, but don’t want to worry about choosing the best securities, you can do that with OSKAR, a professional wealth management service that is also used by the Finanz.net founders Start was brought. Feel free to drop by here too!
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This text is for information purposes only and does not constitute an investment recommendation. Finanzen.net GmbH excludes any recourse claims.
Image sources: Ismagilov / Shutterstock.com, Andy Dean Photography / Shutterstock.com
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