Smart investors look at the fundamentals even though short-term geopolitics causes fluctuations
Redacción Mapfre
A successful investor is one who focuses on the fundamentals beyond any fluctuations that the market may experience. “It's about standing firm both when moving to one side and the other,” says Alberto Matellán, General Manager of La Financiere responsable, who has shared his insights on the current situation on Radio Intereconomía.
When will the market stop focusing on geopolitics and return to moving based on fundamentals? There are several factors beyond geopolitics, such as the speed at which liquidity flows into and out of the market, as well as the overwhelming noise that amplifies market movements. All this makes it difficult for the market to move based on fundamentals in the short term. Now, when we look further out in time, what we see is that the market moves like a pendulum, yet traces a trend that is ultimately driven by fundamentals.
Beyond the turbulence, in the long term the message is optimistic, and a bull market is on the horizon. For several reasons: “We are at a moment where global growth remains positive and a technological shift is leading to a very strong productivity gain. For all these reasons, the long-term picture points to an upward trend,” notes Matellán.
It remains to be seen whether the inflationary tensions will affect the long term. If we stay here, the impact will be limited in time. That is, in principle, positive, as it would not go further and would not have second-round effects. It would be a one-off, transitory effect. In exchange, if the conflict drags on over time, the inflationary damage could be longer. I like to think that it will be something relatively transitory, of no more than two or three months.
While awaiting clarity on how deep the damage will be, the ECB will continue to wait before making a decision on interest rates. “This issue puts them in a difficult position, because if inflation rises due to an external shock, it is risky to control prices through interest rates, as that inflation is coming from outside. It is not ideal from an economic standpoint. I believe the ECB will be very cautious and will monitor whether the damage is permanent or not,” says Matellán.
