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Hunch instead of aluminum – columns

Monday,
December 28, 2020
14:45

of Lars Brandau, managing director of the DDV

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I don’t always agree, but I find one thing increasingly worrying: the mood in the markets is too good for my taste. And already we remember the old stock market wisdom that says: “A bull market arises from pessimism, grows with skepticism, matures through optimism and dies from euphoria.”

And just that euphoria of the quick comeback up to new highs should give food for thought. Now I am not a black painter or a prophet of doom and I still think that stock market events are better to be followed with your head than with your eyes. However, thinking about wealth can now and then cost not only the ability to think but also the real capital. Skepticism about rising prices should not lead to the wrong conclusion to withdraw from the capital market.

Yes, after the terrible Corona year 2020 there is light at the end of the tunnel and with the vaccinations courage and confidence come back. Still, the pandemic will cost hundreds of billions of euros. Many people have already been or will be in the foreseeable future unemployed, in the worst case also destitute. All of this will affect industries, companies, and their balance sheets.

And yet, in spite of all justified skepticism, private investors in particular must not ignore the fact that the low interest rate environment will be maintained over the long term. The principle that if you don’t do anything, you don’t do anything wrong, does not apply to investments. In this respect, it is to be hoped that small investors do not completely neglect the risk component in their investments. A reasonable degree of risk also means the opportunity for income.

Structured securities, whether classic investment certificates or leverage products, are a good introduction to the variety of capital market products. There is also the right certificate for every scenario, whether defensive, neutral or offensive. Even if the motives of the investors may be different, stamina and staying power when investing tend to pay off. This is important for investors in the course of their own financial old-age security. However you ultimately decide, it is important and correct to be prepared for as many market phases as possible and to equip the portfolio accordingly. Structured securities in their entirety can make a valuable contribution to this.

The DDV is the industry representative of the leading issuers of derivative securities in Germany. As a political interest group, the DDV – the largest of its kind in the world – is also active in Brussels. The members are among the most important issuers in Germany. They represent 90% of the total market. The DDV promotes the derivatives market and thus the acceptance of certificates, reverse convertibles and warrants. The goals of the DDV also include protecting investors and improving the understandability and transparency of the products. Further information at: www.derivateverband.de

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