This year, bonds and bonds are performing poorly as well, and many have been hammered by another recession. With regard to the cyclical nature of the economy, however, we are still in the recovery phase, so it can take up to 1-2 years until the economic slowdown. However, at the current stage, extreme moves and even smaller or larger losses can be expected, so investors should not look at the moment of individual assets but at the long-term profit of the whole portfolio.
This year, neither the bond market nor stocks are performing well, and even negative returns are happening, so many people are worried about the crisis because of a new crisis – reported by K & H Fund Management.
Due to the cyclical nature of the economy, it often happens that the performance of the two asset classes is different or both are performing poorly, so the picture needs to be taken in the long run and in place of the current economic cycle: correction in conditions of. To achieve this, the performance of the world economy, central bank actions and market processes must be taken into account.
– Mátyás Kovács, senior portfolio manager at K & H Fund Management, said.
Although the world economy is expected to grow by 3.7% next year and the US economy's growth of 2.5%, the euro zone which is currently performing weaker also expects a 1.9% increase, a clear increase. Meanwhile, the growing shortage of labor is also a warning sign for the cycle, but inflation is just beginning, which in turn clearly indicates a mature phase of recovery rather than a recession.
Although the central bank, which has a role for the US central bank, continues to raise interest rates, the European Central Bank will close its bond purchase program by the end of this year. This caution suggests that economic growth is already stable in the feet without the stimulating measures of central banks.
Similarly, stock market downturns have been occurring in recent years, so in fact this is a correction, while in the long run there is still a growing trend. European bond yields are still in the bond market, but US yields are already rising, which is a peculiarity of the recovery phase.
Overall, we see that the economy has always been cyclical and continues to be what we are now in the recovery phase. However, this can last from 1 to 2 years, so instead of panicking, two things need to be matched: on the one hand, strong fluctuations in the exchange rate remain with us and, on the other hand, one or more investments in that environment volatile market may show less or at least a profit less than one or two. years ago. What is the most striking solution in this case, if we are not looking at a single investment asset, but wanting to make a profit across the portfolio of our long-term investment portfolio?
– the investment specialist recommends.
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