The appearance in the UK of a mutated strain of coronavirus has destroyed the euphoria that reigned in financial markets after news of the development and distribution of a vaccine. The demand for risky assets has risen again, and the shares of air carriers and oil workers who have perked up in the spirit are collapsing again.
What is the safest way to “sit out” such force majeure now? What assets can you make money on, and which ones are better to dump quickly? The Fortrader issue was commented on by Nikolai Dudchenko, an independent financial analyst.
– The “plums” that have passed on the markets confirm only one thing: it is too early to write off the coronavirus crisis. Therefore, it is not for nothing that we continue to consider COVID as a key risk factor for the markets from review to review. Recent events confirm that even with vaccinations, the world is far from protected, but is there any reason for panic? I think not yet. In this regard, I think that you can try again to seize the moment and “buy on hearsay.” Traditionally, you can pay attention to the following assets:
1. Gold and shares of gold miners
In our December 3 article, we discussed the outlook for the gold price and noted that a resumption of the movement towards $ 2,000 per ounce is more likely than a continuation of further decline. Indeed, the price has resumed its growth. From a technical point of view, the closest strong enough resistance level may become $ 1900, after which the path to $ 2000 will be opened.
Another important aspect to keep in mind with gold is that the US has approved a $ 900 billion stimulus package. Voting should take place on Monday (i.e. just at the time of this writing). The more money is poured into the economy now, the more interesting the “defenders” will naturally become. The following indirect factors also speak in favor of the possible continuation of growth:
- The gold market is in a state of contango, which makes it possible to arbitrage in the form of buying the underlying asset on a spot and selling futures on the derivatives market.
- The delta of one-month $ 1,870 strike options is about 0.6.
2. US dollar
Paradoxically, despite the strengthening of stimulus measures, the dollar continues to be in the focus of attention as a protective asset. Here, I would first of all consider speculative options for working against currencies such as, for example, the British pound and some currencies of developing countries (for example, the Mexican peso, the Russian ruble, etc.).
3. Shares of pharmaceutical companies
We can proceed from the assumption that, apparently, research in the field of vaccines will continue. This may have a positive effect on the capitalization of a number of companies. The negative factor is that most of them are already quite overrated. For example, the P / E ratio of the same Novartis or Pfizer is higher than 25.
I will make a reservation right away that I do not consider this asset as an investment instrument, however, speculatively cryptocurrency may be of certain interest. Increasingly, there are opinions that Bitcoin is now the new gold. Those. many may indeed see the “crypt” as a kind of “protector”. If so, then for a while it is worth thinking about joining the crowd that accelerates the price. The key words here are “for a while.” I remember one interesting saying in trading, which fits perfectly with Bitcoin: “you need to be able to betray the defeated in time and join the winners.”