BY EU STUDIO

Updated Monday, October 3, 2022-17:18

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The rise in energy prices, in addition to the rest of the raw materials, has caused a very significant increase in inflation at a global level, which is having a negative impact on the economy.

The central banks have made a 180 degree turn in their policies and have been forced to raise interest rates and withdraw the monetary stimulus that was in place until very recently.

This situation is affecting consumers, savers and companies.

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José Miguel Maté, CEO of Tressis, points out that 2022 is being a very bad year, both for bonds (fixed income) and for shares (variable income).

He also highlights that these first nine months of the year have been the worst in history for fixed income, with price drops between ten and fifteen percent in the different categories.

It is true that, during the summer, there was a significant recovery.

But, after this rise, the inflation data, the gas supply cuts by Russia, the announcements of new rate hikes by the central banks... are generating more tensions and a new fall in the markets.

José Miguel Maté, CEO of Tressis, and Daniel Lacalle, chief economist of the firm, discuss precisely this uncertainty in their talk "Long-term investment in the face of a difficult winter".

And it is that 2022 is, without a doubt, a year marked by drastic changes in the economy, by market volatility and by inflation.

Although the indicators point to a clear slowdown in the economy, "inflation has been able to peak and should tend to moderate in the coming months, although high underlying inflation continues to be a concern in the medium term."

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Despite this scenario, at Tressis they think that the sharp falls will provide opportunities to build long-term investment portfolios.

On the equity side, valuations have moderated to below historical averages while many fixed income assets are beginning to offer attractive returns for conservative investors, those most affected by the environment.

How can an investor fight inflation?

Both professionals believe that central banks will continue to raise interest rates and tighten the money supply - albeit timidly - to fight inflation.

"There is no quick or magical solution to inflation. It is easy to create and extremely difficult to moderate," says Daniel Lacalle, chief economist at Tressis.

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In a scenario as complex as the current one (high inflation and low growth), the best tool for savers and investors is to "be invested and be patient", but with a bias of prudence because, in addition to the fundamental factors, the war in Ukraine it is not over (far from it) and will continue to generate uncertainty and volatility.

For this reason, all Tressis portfolios maintain that conservative bias.

This private bank makes it clear that inflation is the great long-term enemy, "it is much more dangerous than a short-term recession," says Lacalle.

Thus, experts consider that it is a mistake to try to combat it in the short term.

"There is a risk of falling into the temptation of looking for magical solutions that do not exist," they say.

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Therefore, it is necessary to survive a "hangover" scenario after the accumulation of excesses by central banks.

A macroeconomic framework in which the best asset to fight inflation is "equities", but always bearing in mind that it is necessary to "diversify and be selective", especially in Europe.

Advice, key in the current environment

In this complex environment, financial planning and advice is especially important.

Each person has different goals that he wants to achieve with her savings.

That is why to decide what we invest in, it is essential to know what we want it for, in what period we are going to need it and the risk that we are willing to assume in each of our goals without losing sleep.

To achieve them, it is essential to have the support of an advisor who offers us a personalized proposal, helping us to be faithful to our risk profile, without changing it according to the fluctuations of the market, who explains the investment alternatives with transparency, always bearing in mind account our particular circumstances.

Since the year 2000, Tressis has been helping its clients to achieve their best version as investors and, for this, this private bank has three fundamental pillars: its experience of more than twenty-two years, its professionalism and knowledge of the markets and the most important , the necessary time dedicated to its clients to understand them and offer them the best investment solution that allows them to achieve their objectives.

Made by UE Studio

This text has been developed by UE Studio, a creative branded content and content marketing firm from Unidad Editorial, for TRESSIS.

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