There is currently a sense of calm post Friday & Monday's shock sell-off. It's too early to be sure this is behind us and with uncertainty on the near-term market outlook, rising geopolitical tensions and US elections heating up, volatility may be here for a while. We think there are 3 ways you can ensure you navigate this volatility well:

  1. Do Not Panic: Remain invested. The old adage of time in the market beats timing the market.

  2. Be Diversified: Historic equity market concentration will mean single stock exposure can be very extreme. Diversifying with ETFs, Mutual Funds or Bonds in your portfolio can help.

  3. Be Opportunistic: Our clients today sit on a lot of cash and these sell-offs often present great entry points to good value companies. Be sure to be on the look out for the right opportunities. Our Themes section under the research tab can help you find interesting themes to pick up. 

What Saxo's clients are doing:

  • Over the last week clients have generally added to positions
  • We have 3% more Nvidia holders than a week ago
  • Of clients exposed to Nasdaq 100, 57% are "long"
  • Our client equity (stocks) trading so far today is 72% BUY
  • Novo Nordisk (most valuable co. in Europe; weak Q2 earnings) 89% BUY
  • Some evidence of risk aversion, such as our most traded future today is Gold; 66% BUY
  • In summary, from Saxo's perspective there is no real panic, and somewhat a buy the dips mentality being demonstrated

Guidance from our strategy team

Equities:

A classic market crash driven by, as Peter Garnry puts it, "The Perfect Storm". This includes recession fears in US post weakening employment data, a rush to take profit in all things AI after a huge bull market and a surprise BoJ hike. This BoJ move nuked one of the favourite trades held by currency investors, the "Carry Trade", unwinding of one of the key trading strategies for options traders and most importantly for investors, massive concentration in equity markets. Concentration is the highest it has been since the 1930s with a few stocks dominating performance.

The message here as always is Do Not Panic. Be diversified, allocate spare cash opportunistically and remain invested--> time in the market beats timing the market. 

Read more: The perfect storm hits market and what comes next

Bonds

Reestablishing their inverse relationship with equities. This resets the classic value or holding a mix of bonds & equities within your portfolio to weather turbulent markets. Althea highlights why bonds are better hedges today than they have been in recent years. You can screen for bonds on our platform by going through "Trading --> Screener --> Filter"

Read more: Why Bonds Are Regaining Their Hedging Power in Today’s Market

Commodities

Commodities not unaffected by this crisis. Deleveraging across the industry means people are reducing their exposure. Gold typically is seen as a source of safety in heightened market turmoil & geopolitical risks.