US Stocks, Russian Stocks, German stocks, Europe!

Dear Reader,

US stocks continue higher. They could well be overpriced, but the smartphone market is still growing, the global central banks like the Federal reserve, the European Central Bank and the Bank of Japan are still adding cumulatively liquidity to the global financial system. Additionally the global economy is growing, being at relatively slow pace and companies'  earnings are growing.

Actually, I think US stocks measured by the S&P 500 could fall by more than 30% if a selloff ensues. When the fall starts, risk management will be key. The risk can be managed through combination of long and short sales, derivatives like put options and futures or simply going into cash. Personally, I favor going into cash, when there are signs a selloff is coming. Possible signs could be large fall in the S&P 500, fall in GDP, abrupt stopping of liquidity provided by the global central banks.

Russian stocks are basically undervalued. The Russian stock market is reliant on energy prices, Energy stocks are value stocks at the moment. I think the price of oil measured by US WTI and Brent crude is going to start drifting toward 70 USD. Consequently, the rubble will strengthen and the Russian economy will start growing with more than 4% annually.

German stocks could still go higher, the European economy is growing at a healthy pace(2%). Germany is an economy leveraged on manufacturing, so if European growth accelerates German companies could still benefit handsomely. Other big stock markets in Europe like France, UK and Italy will also go higher if the region's economy goes on growing. Spain is another case, Catalonia could secede, which will be a great shock to the country, Actually, Catalonia is the main short-term risk before Europe's economy.


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Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!


Kind regards,
Petar Posledovich