Stock markets continue their upward trend as investors’ buying appetite shows no sign of dropping off. Alberto Matellán, Chief Economist at MAPFRE Inversión, explains that this changing trend is down to two factors: “We’re seeing a change in mentality and there is a lot of money.” In his opinion, “Black Friday has also arrived for stock markets and everyone’s looking for a bargain.” But this doesn’t come without its risks: “With Black Friday, not everything is a bargain. Nor does everything you buy turn out to be a good purchase.”
The change in investor perception has caused the DAX, the German benchmark index, to turn positive this year. “European markets were hit hard in October because it looked like it would be the region worst affected by this second wave of Covid,” he notes. As a result, investors have already started to think about the post-Covid world, “but this does not mean we are over the worst of the pandemic, either in terms of healthcare or the economy.”
Meanwhile, stock markets are also scaling new heights on the other side of the Atlantic. Wall Street has reached a new high thanks to the boost it is receiving from the technology sector, Matellán points out. “There’s a disconnect between stock market movements and the real economy. This, again, can be explained by the huge amount of money in the market. And in the case of Wall Street, it also benefits from listing the technology companies that everyone is turning to in a post-Covid world.”
Also in the United States, the knowledge that Janet Yellen, former chair of the Federal Reserve, may be appointed as treasury secretary was well received by the market. “This is a statement of intent. With Yellen’s appointment, the clear differences between the Federal Reserve and the Treasury may disappear,” the Economist argues.
In this more optimistic context, many companies have announced the return of dividends. Matellán points out that this decision, as with many other decisions, may turn out to be good or bad depending on why it is done; that is to say, depending on what motivations are behind the decision. “If the dividend is part of a coherent, long-term financial strategy aimed at securing stability, as is the case with MAPFRE, then it’s a good dividend. If this is not the case, in other words, if it’s used to move the share price in the short-term, then it’s not a good one.”
In conclusion, as he does every week, Matellán offers his recommendations to investors; specifically those in the retail sector. On this occasion, he believes that another fundamental pillar is discipline — not getting carried away by the current euphoria and continuing to make savings through long-term planning.