February 22, 2018, 01:01 / Personal account

America will still give you a chance to earn money

What to do with investments after the stock market crash Lyudmila Koval Mikhail Overchenko

At first, the S&P 500 went up in January, but in early February there was a collapse / Charlie Riedel / AP

At the beginning of the year, analysts unanimously recommended foreign exchange investments in American stocks, for example, in the S&P 500 index through exchange-traded or mutual funds. Initially, the S&P 500 went up again in January, reaching a new all-time high of 2,872.87 points. But in early February there was a collapse: in a few days the index lost more than 10% and still remains below 2800.

As soon as the fall began, clients became nervous and asked whether it was time to withdraw money, said financial advisors and representatives of brokerage and management companies.

“Any correction, especially after such a long rise (the S&P 500 gained 42% in two years), is viewed with concern by investors. Everyone is getting ready to jump off and are afraid to miss the right moment,” shares Vladimir Savenok, general director of the Personal Capital group.

Their worries are understandable, but premature, market participants say. According to Oksana Kholodenko, an expert on international markets at BKS Broker, the situation is more like a healthy market correction after a long growth than a reversal. confident that this was just a correction . Savenok, managing director of Sberbank Asset Management Evgeniy Lynchik, portfolio manager of Alfa Capital Eduard Kharin, leading strategist of Aton Alexey Kaminsky and other experts are

As history shows, it will be possible to more accurately assess the situation only 2-3 months after the start of the fall, international financial advisor Isaac Becker points out. So far, he assessed the odds as 55:45 in favor of the start of a bear market. “By and large, the main driver of last year – Trump’s tax reform – has already been factored into stock prices. And the new infrastructure plan is designed for 10 years and is unlikely to have a significant impact on the stock market in 2018,” explains Becker.

Economic support

“From the point of view of technical analysis, to enter a bearish market, the S&P 500 must fall by more than 20% from its historical maximum, i.e., go below 2300 points. This requires either a sharp rise in government bond yields or a sharp weakening of the economy,” Kholodenko points out.

But now the situation in the American economy is the opposite. It is growing at such a pace (more than 2%. - Vedomosti) that the Fed is already having to proactively raise rates, company profits are at record levels, Kaminsky points out. “341 companies from the S&P 500 index have already reported for the fourth quarter, their net profit increased by an average of 14.7% compared to the same period in 2016, and sales by 9.3%,” adds Savenok. 80% of American companies reported better than analysts expected, Kharin adds.

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In 2018, according to estimates of US companies, net profit growth is expected to be 10-15% thanks to Trump's tax reform and the growth of the global economy, adds Lynch. The low dollar exchange rate will further boost the US economy, Savenok believes.

Bet on growth with caution

According to Kharin, the market will continue to grow steadily, but only after investors receive confirmation of the strength of the economy from macroeconomic data for the first and second quarters. Before this, analysts do not rule out another wave of decline in the American market. Lynch allows for correction, especially in the middle of the year. Kholodenko suggests that the index could drop to 2400–2500 points.

The stock market is still in a long-term bull trend that could last for many years, driven in part by economic-changing technological innovation, says Jon Treacy, co-editor of the investment newsletter Fuller Treacy Money. However, he said, “at the same time, we are in the late stages of the cyclical bull market that began in 2009,” and are seeing increasing evidence of euphoria.

Calm, Only calm!

Analysts note that the market is becoming very volatile. We are in for a difficult year, with ups and downs, Becker warns.

Under these conditions, experts do not yet advise making sudden movements and getting rid of American securities. Those who have shares in their portfolio are better off holding them now, and those who were just thinking about a medium- or long-term purchase. Local corrections can be used for this, Russian analysts are unanimous. Experienced players - clients of Finam - actively replenished their portfolios with American stocks during the February fall, said company president Vladislav Kochetkov.

For those who purchased American stocks in the area of historical highs, Kholodenko recommends being patient and continuing purchases during corrections, “averaging positions.” “During the recent fall, margin positions began to be closed, which may indicate the beginning of a period of market drawdown. It can create a great buying opportunity, so there has been no more important time in the last decade to track market trends,” says Treacy.

For those who cannot tolerate such strong fluctuations, it is better to leave the market, Savenok advises. And Becker recommends being careful and insuring yourself against a market decline by temporarily increasing your cash share to 30%.