Investors to top up portfolios following ECB announcement
The commitment made by the European Central Bank (ECB) to introduce additional stimulus measures will be used by rational investors to expand their portfolios.
The further measures announced by ECB president. Mario Draghi, aimed at boosting economic growth in the Eurozone, caused a chorus of criticism amongst many analysts.
However, it’s highly likely that the approach by shrewder investors will be somewhat different. They will use the ECB’s latest announcement of additional stimulus measures as a vehicle to expand their investment portfolios.
As I was quoted as saying in USA Today, Money Marketing and The Street, amongst other publications, investors will be eager to top up their portfolios now to take advantage of high quality equities available at bargain prices.
In certain sectors, stocks have reached 2009 levels, although the underlying economic environment has progressed, and also because the ECB is keen to take bold steps to incite sustainable growth in the Eurozone. This enhances investor confidence and makes buying opportunities more attractive.
Looking back to the beginning of the year, several investors have been increasing contributions to their portfolios as a result of the appealing prices, and the fact that they know stock markets perform well over long periods, therefore allowing investors to accumulate wealth.
As such, I am of the opinion that the new ECB stimulus will further advance this trend.
Indeed, a key advantage of this latest announcement by Mr Draghi is that it will encourage geographical diversification amongst international investors.
The more a portfolio is diversified due to a global spread, the greater the reduction of overall risk, and the higher the chance of the investor being best-placed to make the most of potential positives when they are presented.