“It would be best for investors now to consider their strategy and not to resort to a new rapid entry into risk exposures but to rethink risk tolerance” said Dragomir Velikov - Chief Investment Officer of Compass Invest JSC in the show "In Development" hosted by Veronica Denizova

The chronology

“The optimism of the markets in the first half of 2019 was returned by the policy of the central banks” Dragomir Velikov mentioned. “As early as January, their tone and policy of raising interest rates changed. This optimism was combined with monitoring of the USA-China trade talks, followed by adjustments. This acted as a signal to central banks. Many of the companies who announced their results, gave negative forecasts. This was reinforced by weak data on unemployment in the United States. This required a reaction from a number of representatives of the Federal Reserve for readiness to change monetary policy and reduce interest rates in order to stimulate the economy” he added.

“The first six months of the year were definitely the strongest performance-wise of the indexes in the last 10 years after the big declines of the last quarter of 2018. All types of assets rose in a correlated way - from risk-free to high-risk with many double-digit growth."

Greek stocks have sold out in recent years, the guest said. This leads to a stronger rise in periods of growth. “Other factors for the growth of Greek indexes, on the one hand, are better data on the Greek economy, as well as expectations for winning a "New Democracy" and tax and administrative reforms” he added.

Dragomir Velikov revealed that the foundations of US companies show increasing activity. For the second and the third month, investments in new production capacity by businesses increased compared to the last quarter of 2018. The standards for lending in the United States are also beginning to loosen. Central banks are doing well, he said.

With a good policy that meets global economic data, we have reason to believe that a recession would remain ahead in time - 2020, 2021, says Velikov.

Is it time to take the made profits?

July and August are traditionally weaker months, said Dragomir Velikov. Then it is expected to increase in September. We need to be more careful in October. These levels are very good for investors who currently have more exposure to risky assets - to reduce them, in a sense, to reap profits. Those investors who are at more neutral levels or closer to risky asset levels should review the portfolio and rethink their positions. I think September is the right time to enter the market. For the second half of the year, the central banks will have the greatest influence, he added.