After the announcement of Russia of the start of a special military operation in Donbas, Ukraine, a geopolitical crisis has intensified, which would have negative impacts on the global economy. As has already happened, United States has imposed economic sanctions on Russia cutting off access to trade and financing. This is disrupting supply chains and making essential resources scarcer globally.
This historic event would have direct effects on the Peruvian economy, such as the rise in oil and wheat prices; Russia being one of the main exporters in the world. In addition, the supply chain would be affected, because countries will have to avoid crossing the conflict zone, which would cause possible delays in exports and shipments. Let us remember that the economy is globalized, what happens in Europe and the US could have repercussions in Peru, despite the distance.
What should every investor know and do when markets falter?
First you have to understand that the international stock market is very changeable and that is not always negative for those who invest in the stock market. Those with experience investing in the stock market know that this scenario could present unique investment strategies. The greater the volatility in the market, the greater opportunities to make capital profitable.
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“A simple way to visualize the stock market at times like this is like walking into your favorite store and finding everything with unbeatable discounts. Right now the US stock market is going through a correction (a 10% drop from its peak), something that historically occurs every two years. When the stock market is going through times like this, one should not be alarmed, but should start trading”, says Renzo Centeno, Sales Director of Golden Capital FX.
One of the alternatives that arise is trading in the stock market. In these times where the stock market is fragile, short-term investors could benefit from sharp movements in the market. The most attractive investments are found in the most volatile stocks, which during these periods are the ones that suffer the most from over-reaction. That is, they are oversold and overbought. These are the actions that every investor with a short-term vision can take a position.
In times of uncertainty about the global economic future, investors always seek refuge in what are considered safe haven assets. Gold is considered the main safe haven asset and serves as a strategy to protect against fear about the future of the markets, as we have seen in the price of the precious metal in recent days and during the pandemic. For example, since the beginning of the pandemic it was trading close to US$1,500 and, at the peak of the health crisis, it reached USD 2,050. As we know, gold is a limited resource, difficult to extract and highly valued at a social level.
While the opportunities can be unique, the risks can also be high. In this scenario, Golden Capital FX recommends only investing surpluses or savings that do not compromise your payment commitments. Likewise, the investor must always be accompanied by personalized advice and a financial broker that connects him and keeps him informed about the events of the International Stock Exchange. Finally, it is essential that the trader is clear about his investment objective, his available capital, his risk profile. Events such as pandemics, wars and atypical crises should not alarm us and are often good opportunities to invest in the Stock Market.
