This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
What a crazy week on the stock markets. First the markets decide to go haywire over exposure to multiple geopolitical issues, then they decide to rebound and go back to pushing new highs. How are investors supposed to make sense of it all? More importantly, how do traders make money on the stock markets when the UK 100 and major shares are all going up, down and sideways?
One crucial thing to understand is that all things need to be taken in perspective. The falls across most UK 100 sectors on Tuesday were a big deal to investors stuck in unfavourable trades, but in the end, it was just a 73-point drop from the open (7708) to the close (7635). Considering the size of the index, that was less than 1%. Painful, but not exactly the end of the world, right?
Not to mention that prudent investors probably had all measures in place to limit the damage. Guaranteed stop-losses, hedging their positions, investing in other, less risky financial products. There were many ways to keep safe and profitable out there. Not to mention that this was another ex-dividend week for UK Index stocks. Investors who purchased Marks & Spencer shares before the ex-dividend cut-off on Wednesday have already recovered most of the share price fall and come into profit by Friday afternoon (to about net 1.6p per share).
Just think about it. With all the supposed market craziness, there were still opportunities to make money, either on the market rebound, or on the dividend plays. And investors can continue making the same kind of short-term plays in the future, either by exploiting emotional market reactions to economic news (Spain next on the geopolitical horizon?) or by tapping into the potential to buy into stocks that go ex-dividend.
With more big-name companies going ex-dividend next week (Vodafone, Sainsbury’s, Evraz, just to name a few) investors shouldn’t be spooked by temporary turbulence and learn to navigate all this excitement to their own benefit.
We recently issued a new Dividend Plays report, so get in touch with me if you want to have a look at it. We are always happy to help investors get savvier and stay safe, so sign-up to access our research and trade ideas to take advantage of future market opportunities.
Amrit Panesar, Senior Trader at Accendo Markets, 1 June 2018
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
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