Ignoring the Signals | Abundant Liquidity

The COVID-19 pandemic did not cause the economic disaster that is upon us. Rather, it was a trigger that accelerated its arrival and the crisis envisioned by experts. It has different nuances and interpretations that leave investors with few options amid abundant liquidity.

Several theories are circulating in the environment and we see how the market behaves erratically. In times of uncertainty, some prudence should be considered and try to be in sectors where high valuations are not obtained, but where acceptable dividends could be obtained, even exceeding the flow of an interest coupon offered by a short term debt.

A difficult task

This situation makes it difficult to mix a portfolio without an ingredient of risk. Practically, investment advisors are in that difficult task, which consists of going into a mine to pick the rock and find the vein of assets that allow to "juggle" the portfolio and reach a decent return without long maturities.

Stock indexes rise under pressure from a small group of stocks containing the burden of the advance. While other companies continue to perform in line with their financial results.

Market players overestimate the results and underestimate the sector. Today, companies are bigger, but there are no comparable benchmarks. It is evident that several economic precepts to which we were not accustomed have restarted and previous crises give us clues as to what could happen, but in reality nothing is happening.