Too much optimism damages the Dax

Containers in December in Qinzhou, China: exports are booming.
Image: dpa

The most likely scenario is for stock prices to rise. But on Monday it became clear what happens if things don’t go according to plan. What investors should do now after the steep fall of the Dax by around 3 percent.

D.he largest price movements on the stock exchange usually occur when many investors are caught off guard. At the moment, there is a lot to be said for stocks, at least in the medium term: The states are helping companies and consumers through the Corona crisis to an extent never seen before, the United States alone is taking a further $ 900 billion in hand for this. The central banks have cut interest rates even lower. And the global economy has already picked up, especially in Asia. At the same time, a lot of money that cannot be spent in restaurants or skiing goes to savings accounts and is available for consumption after the lockdowns. All of this speaks for a strong economic recovery, higher corporate profits and rising share prices.

Strong nerves, weak nerves

Accordingly, optimistic investors have pushed the Dax up by 20 percent in the past seven weeks, almost to a new all-time high. But setbacks in the fight against the pandemic and new restrictions, such as now in dealings with Great Britain, have not all investors anticipated. Those with weak nerves sell now. If you have good nerves, you wait for the weak phase and then buy.

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