Market update: corona, crypto and inflation

Time flies… when you spend hours at a time in Zoom meetings, wait for news about border openings on a daily basis and try to update your clothing style to become socially acceptable again.

During these times you easily get the feeling that you don’t have control about anything anymore. But, you can actually use all of this time to let your money work for you whilst you start your hopefully last quarantine hobby (tried crocheting already?) .

Markets also grew again – despite many ups and downs, the crisis teaches us: it will be over at some point and markets recover.

What did influence markets in the first half of 2021 apart from the coronavirus crisis though?

Rapid ups and downs of crypto currencies

What the hell happened here? All of you who own crypto currencies, have friends who invest in crypto or simply follow popular social media channels have felt it.

Over the last few months, the value of Bitcoin grew incredibly, but within a short period of time it dropped to half its value – and even took some other crypto currencies down with it.

Reasons were stricter regulations from authorities and governments, discussions around negative environmental impacts due to the data processing centers of Bitcoin, and even “Tweets” from Elon Musk, Founder of Tesla and SpaceX.

These examples show what kind of high ups and downs (fluctuations) crypto currencies can have.

Crypto at Selma?

Selma clients often ask why Selma doesn’t offer investments in crypto currencies.

The reason is easy: Selma’s product selection does exclude products with extremely unpredictable and high ups and downs and changes in value. These products don’t really have a place in individual, balanced investment plans.

Especially the fact that one person (Elon Musk!) can create massive changes in value of one investments, does not really make us want to give a “Reliable investment product” stamp to crypto currencies. 😄

That’s at least the status quo of our expert team in July 2021. But who knows – maybe it does make sense to add crypto currencies into Selma’s plan in some way in the future. We are following the situation closely and you will hear about it the moment it’s possible to add crypto investments at Selma.

Are interests rising? Inflation?

Inflation is this wonderful topic that always comes up in combination with investing. At the moment, prices are on the rise in the US. Experts aren’t sure if it will stay a rather isolated phenomenon, or if prices will continue to rise.

That’s why the topic emerged a bit more vividly right now.

Selma and inflation

The distribution of investments into different investment categories (stocks, bonds, precious metals) in your Selma plan helps you in balancing risks and inflation.

Precious metals are especially interesting to mention because Selma only added these in 2020.

• At the moment, Selma invests a small share of your investments into gold and silver. Many investors use precious metals to “secure” money in times of potential inflation. The lion’s share of your investments still stay in growth-oriented investment categories.
• In March of 2021, many portfolios (mix of investments) at Selma got more money shifted into precious metals due to market measurements of over- and undervaluations. This is based on long-term data and changes according to movements on the markets.

Different economical developments

It’s also quite interesting to see how the development of economies in different countries and regions differs, because some are better in recovering from the crisis and some have a harder time to catch up.

• China grows strongly
• USA grows
• Europa grows with a bit of a delay (the vaccination campaign is taking longer)

What do we learn here? Investing into markets around the world makes sense, betting on one region might lead to losses.

Investing with Selma

Despite warnings from “market experts” and dystopian predictions, markets are going strong. Apart from the social crisis due to corona, the economic crisis proves to be “one of many crisis”. And crises do end at one point.

Therefore, always keep the three most important rules of investing on top of your mind.

• Invest for the long-term: at least 5-10 years
• Stick to your plan: invest regularly
• Don’t put all eggs into one basked: spread your investments

And back to crypto!

Crypto isn’t pure gambling anymore, of course. Crypto currencies have grown into an exciting and big part of investment options. That’s why it’s understandable if you’d like to “not miss out” on this trend and want to invest in e.g. Bitcoin.

Selma during the corona crisis

Even in March 2020, when the coronavirus took hold of the markets and they dropped by 30% in a short period of time, Selma held on to its approach. Selma does not start selling just because others are panicking.

Selma’s goal is to make sure that your long-term investments fit your profile. That means they fit your financial situation and your attitude towards risk.

Also, Selma doesn’t only look at how much risk you’d like to take, but also how much you should take. And that’s what Selma bases building your plan on.

This strategy helped many of Selma’s investors and their wealth to make it through 2020 unharmed, because many even bought more when prices were low and profited for the long-term.