The past year has shaken up the stock markets. In view of the sharp fall in prices, many investors had to keep their nerves. And what are the chances in 2023?
12.9 million. Never before have more people in Germany invested in the stock exchange than in the past year. This is shown by figures from the Deutsches Aktieninstitut. This means that almost every fifth German citizen over the age of 14 owned shares, ETF or fund shares. And what about the rest of the population? Is this year a good time for them to get started?
“Exciting question,” says Markus Weis, Germany head of SPDR ETFs at asset manager State Street Global Advisors. After a very challenging year 2022, with significant price losses in stocks and bonds, one can say today: “Some of these major risks that led to the price losses have weakened.”
The market has priced in the ongoing war in Ukraine, says René Maushammer, portfolio manager at the Traunstein-based asset manager Top Vermögens. And the central banks, with their interest rate hikes, have pushed down the high inflation figures and calmed the capital markets, says Markus Weis.
At least the first two weeks of the new year have been clearly positive across all stock categories. According to Weis, the same applies to bonds. On the basis of this, however, it would be dubious to venture an outlook for the year as a whole. “Equity and bond markets are volatile,” says Weis. “We don’t know what surprises there will be.” It would be negligent to claim now that there would be no minus in 2023 because 2022 ended clearly in the negative range.
Instead, investors should be aware that there can always be short-term fluctuations on the capital markets. That’s why a long-term investment horizon is fundamentally important – ideally ten years and more, according to Weis. “Then I’m not interested in these short-term fluctuations.”
For investors with this staying power, an entry on the stock exchange is always worthwhile, says Nicolas Pilz, Managing Director of Societas Vermögensverwaltung. “Unfortunately, statistically speaking, no one can find the best time to invest,” he says. “Therefore, investors should be better invested in the long term than standing on the investment sidelines and waiting for the ideal time.”
However, newcomers to the stock market should note two things: First, they should diversify their investments as broadly as possible. Means: Do not rely on individual stocks, sectors or countries. Because: “The broader the investment, the less susceptible it is to fluctuations,” says Weis. The simplest options available for this are actively or passively managed funds. Both are available worldwide. Passively managed funds such as ETFs usually have a clear cost advantage.
Secondly, Nicolas Pilz advises that newcomers should not start immediately with all their available savings capital. According to Weis, it would also be better to use the capital gradually. For example, with the help of a defined savings plan. The different entry times offer the chance to benefit from falling prices at a later point in time.
“When choosing the right types of securities, you should be guided less by short-term profit opportunities and more by the desired long-term opportunity-risk profile,” says René Maushammer. Investors with an affinity for risk usually have a larger proportion of stocks and funds in their portfolio than more cautious investors.
For the latter, it makes sense this year, for example, to take a look at fixed-income securities. That could be European government bonds, for example, which are now offering yields of almost four percent again, says Markus Weis.
Of course, one stock market rule still applies: Don’t invest in assets you don’t understand, says Maushammer. “And stay away from “strategies” or securities that promise you high profits without risk.” Because nothing is free on the stock exchanges in 2023 either, says Nicolas Pilz. Unfortunately, there are still many scams to be observed, with which investors ultimately only have the guarantee of losing their entire investment.
Nicolas Pilz also recommends continuing to avoid cryptocurrencies. “The year 2022 has impressively shown that in many places it is still all about fraud and that a great deal of wealth has been embezzled and destroyed, so to speak.” The crypto market is completely opaque for most investors and therefore virtually uninvestable.
According to Pilz, there is no way around the well-considered, broadly diversified and long-term investment in securities in 2023 either. “The alternatives to investing in securities are simply not that great and savings accounts de facto cause a loss of purchasing power.” Because of the still high inflation, day and time deposit accounts could not deliver positive real returns even in the long term.n.