Putin's Remark Spurs Stock Surge, Gold & Oil Plunge, Steady German Index Fund

At 19:23 Beijing time, the German DAX index slightly rose by 0.88%. However, from this moment on, the situation changed dramatically. The stock index suddenly surged straight up, and by 19:27 Beijing time, the increase reached 4.86%. At the same time, the stock markets of France, the United Kingdom, and even the entire European continent all experienced a sudden jump.

Almost at the same time, the gold quotation plunged. The crude oil price, which had previously risen by 3.5%, saw its increase reduced to only 1.7% within just a few minutes. In the following hour, it continued to decline.

Although the U.S. stock market had not yet opened, at the same moment, futures of the three major U.S. stock indices also exhibited a strange increase.

What exactly caused this?

01

It was simply because Putin made a statement.

Russian President Putin indicated that talks with Ukraine are making some positive progress.

Without any specific news, just a single statement led to an immediate significant reaction in the global financial markets.

Watching the ups and downs of the European and American stock markets, investors in the A-share market finally felt that this year we are not alone.

For instance, taking Germany as an example, the stock index reached its highest point of 16,285 on January 5th and then began to decline. The main factor affecting the decline throughout January was the Federal Reserve's interest rate hike expectations. By late January, when the Federal Reserve met, the stock index had already fallen to its lowest point of 14,950.Subsequently, there was a brief period of increase, but by mid-February, it began to decline again. This round of decline was due to the tension in the European situation, so the speed of the decline was faster, falling from above 15,000 points at the time to the lowest point of around 12,400 points.

In comparison, our A-shares are actually quite similar. In January, they fell due to the possibility of interest rate hikes by the Federal Reserve. Subsequently, after the Federal Reserve's January meeting, when European and American countries rebounded, we happened to encounter the Spring Festival holiday. After the Spring Festival holiday, A-shares had just slightly increased when they encountered the conflict in Europe. Since the beginning of March, the market has not only fallen significantly but has also reached a new low.

02

A friend started investing in an ETF linked to the German index last August and had a slight profit before December last year, but has now suffered a significant loss.

He said, looking at the rapid decline of the German DAX index, he suddenly felt that this was not the mature market of Europe and America at all, but almost similar to A-shares.

However, I would like to remind everyone that no matter whether you invest in American funds or European funds, the risk is not significant as long as you use the fixed investment method.

Taking the German index as an example, it was at its highest at 16,271 points at the beginning of January and fell to its lowest at 12,423 points a few days ago, a decline of 24% in just two months. Such a large decline is indeed not common, but it has been encountered before.

Not long ago, in March 2020, when the novel coronavirus had just begun to ravage the world. In just about half a month, the German index fell from its highest point of 13,796 points to its lowest point of 8,239 points, with a decline of up to 40%.

At that time, if an investor started at this highest point and invested weekly, by the end of June 2020, he had already achieved a very good return.

Because after the index fell to its lowest point at the end of March, it immediately launched a good rebound, and by the beginning of June, it had returned to 12,800 points. Although it has not yet returned to the high position at the beginning of March, this period has gone through a perfect fund fixed investment smile curve.Actually, looking back at the stock indices of several major European markets, they have historically performed similarly, always experiencing certain fluctuations. However, after these fluctuations, they continuously set new highs.

Let's review the changes in the German index over the past 30 years. After two increases in 1997 and 1998, there were several months of pullbacks, followed by another rise, a typical U-shaped trend.

Then, after 2000, following the burst of the American internet bubble, it traced the longest U-shaped curve. It wasn't until the second half of 2007, before the subprime crisis, that it finally returned to the high levels of 2000.

This longest period of regular investment required 7 years, but because these 7 years went from high to low and back to high, the returns from fund regular investment were actually very good.

Subsequently, the subprime crisis occurred, and the stock index began to decline from early 2008. This time it was a bit faster, and by 2013 it had already returned to the previous high levels, and since then it has been continuously setting new highs.

After the subprime crisis, up to now, although the German index has also experienced several declines greater than 10%, the recovery time has ranged from a few months to two years, and the waiting time for investors has not been too long.

The friend mentioned above let out a sigh of relief after hearing my data analysis.

In fact, whether it is regular investment in the German index or the American index, or regular investment in domestic actively managed funds that are not indexed, the principle is the same.When we engage in fixed investment, we should not stop, nor should we be afraid; the more the market falls, the more we should buy.

There is no need for the market to reach new highs; all we need is a slight rebound in the stock market, and we can break even. Moreover, we can quickly achieve a certain level of profit.