Moneywise24 Personal Finance

Stock market sure have been on a roller coaster ride lately. First the terrible unfortunate events in Japan and the Middle East caused markets to rapidly decline, after which they recovered for the most part. At a later point, concerns over Greece took over, and stock market took a dive starting in April.

Earlier this week, the Greek parliament agreed on cost-cutting measurements, which was confirmed by a second agreement today. This decision frees the way for further financial support, such as today’s agreement between the German government and banks to support Greece with an additional 3.2 billion Euros.

One thing is certain: markets are emotionally loaded. Fear, relief, and euphoria seem to dominate the daily trends. As of yesterday, many markets are back on a rise due to relief regarding the situation in Greece.

But will this last? That is the question.

Although the economy has improved in many areas, many areas are still having a hard time, such as housing or unemployment. Markets have recovered greatly from the recession, many stocks having exceeded its pre-recession prices, but economic recovery is still in progress.

It is hard to really look at where the markets are going; they are extremely emotionally loaded at the moment, and they move according to what is “hot” and what is “not”. On the short term, markets may recover from the decline over the past weeks, and months. But will markets keep the positive trend and recover further?

Apart from a few smaller short-term speculative positions (options), I tend to remain neutral for the time being. I am keeping the hedge on my portfolio, covering for any losses as soon as the markets would sharply plummet.

What I am looking for is getting back to reality, getting back to a stronger focus on companies’ results, a stronger focus on economic indicators, and for the market to become less volatile. Additionally, Akzo Nobel and Philips, two leading Dutch companies, had submitted a warning for their results, after which their stocks plummeted by approximately 10%. Tomtom, a company for navigation equipment, fell 25% after is announced a warning on its results. None of these I had in my portfolio, but it could be indication that we might be facing some more surprises.

I am keeping a neutral opinion for the mid-term, and although stocks might rally a bit during July and August, I believe that stocks could still become cheaper towards the end of the summer, and towards the end of the year.

I am speculating on a little rally on the short term, I keep investing periodically in my long-term focused mutual funds while hedging my portfolio against short-term and sharp declines.

For the rest, my savings account is my best friend.