ZAt the end of each investment year, there are usually a few surprises waiting for investors. Quiet and quiet, some stock indices or other investments have sometimes become big winners that you would never have expected – and vice versa, of course. On the other hand, some things are obvious because the development had been evident for a while.
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The 2019 stock market year definitely goes down in history as one in which the courage to take risks has paid off for investors – despite the uncertain market environment. The never-ending trade disputes between the United States and China or the whole brawl surrounding Brexit – Britain’s impending exit from the country European Union – always caused turbulence. On the other hand, it had a positive effect, for example, that many economic worries ultimately turned out to be unjustified and that companies were also doing better than initially expected.
In contrast to most of the previous years, it was not even necessary to go far and focus on particularly exotic markets and thus even higher risks. In 2018, for example, stocks from Jamaica were ahead with a plus of around a third, but also stocks from Mauritius or stock exchanges in the Middle East such as Qatar, Abu Dhabi and Saudi Arabia. However, such winners are to be enjoyed with some caution and are more likely to be of a theoretical nature. Because markets of this kind are often considered illiquid, non-transparent and difficult to access for foreign investors.
Why look into the distance?
But this year it’s less about distant beaches, sun and sea than more moderate temperatures, green forests and rivers. Because even the domestic one Dax has grown so significantly in the past twelve months that 100,000 euros would have theoretically become 125,500 euros at the beginning of the year. A profit – before taxes and fees – of more than a quarter. In the previous year, the Dax had put investors to the test – with a minus of 18 percent, or to stay in our calculation example, a good 18,300 euros. This alone shows what it can mean to invest in high-risk investments such as stocks – in good and bad days.
The small caps, like the shares of the M-Dax, did even better than the big German standard stocks. If investors had bought exchange-traded index funds (ETF) or certificates on shares of German companies with a medium-sized market capitalization, they would have theoretically made it 131,200 euros – 31,200 euros or around a third more than at the beginning of the year. It is not unusual for positive stocks to be better in positive stock market phases. But the last few years of losses have also been somewhat better for investors who invested in the smaller stocks. In the M-Dax they lost 17,600 euros last year – around 700 euros less. In 2011, a minus of 14,700 euros in the Dax was offset by an index loss of 12,100 euros for medium-sized stocks.
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