By any measure, 2022 was a difficult year for investors. However, at BBVA we like to see the glass as half full, which means that, regardless of market noise and tensions, simply focusing on the analysis of results, the optimization of resources and a long-term vision, you can find great opportunities tailored to your investor profile.
At New Gen, our mission is to bring you first-hand the latest developments in the markets, connecting this reality with our lives and preparing for the future.
Inflation and global economic growth headwinds do not suit the technology sector. Note that the valuation of these companies often focuses on the discounted future cash flow value at the present time. Therefore, their high dependence on the evolution of interest rates and the clear risk of a recession make them comparatively the worst-performing industry.
On the other side of the coin, yields on some assets have been rising substantially as central banks have been raising rates, bringing significant price declines and a slowdown in the economy around the corner. In the case of fixed-income or bonds from the best companies in the world, the situation is more favorable, because it allows you to invest with enormous predictability, knowing that we are buying a valuable asset that will be worth more as the years go by, as new issues will be offered with a cheaper premium.
There is no secret formula or magic wand to achieve the desired results, but models that have proven over time to be more effective than others or, simply, that are better suited to certain market conditions. Value investment seeks results consistent with positive returns, focused on a long-term horizon. This investment philosophy popularized by Warren Buffett, possibly one of the best investors in history, is based on the acquisition of quality securities at a price below their intrinsic or real value. For example, the energy sector's shares currently offer an attractive risk/reward opportunity.
Raw materials: Supply chain disruptions and the war in Ukraine has impacted us as investors but also as consumers, paying ever higher prices for immediate access to essential staples. For commodities futures, their price is directly related to changes in world supply and demand expectations, so their historical risk and return characteristics have historically shown few or no long-term relationships with other financial assets, such as equities.
Health: It is not only a fact we are living longer, but also that we want to continue doing so in the best possible conditions. While concerns about wellness have accompanied us for a lifetime, advances in molecular biology and genetic engineering are becoming increasingly appealing to the markets. Funds and investors are showing greater interest in gene therapies, biological developments and a whole series of advances that, together with traditional medicine, are shaping the new paradigm.
Metaverse : Our society is undergoing structural behavioral changes, and a large part of this is due to the digitalization of the world and the economy. It is estimated that by 2030 there will already be more than 25 billion connected devices (IoT) worldwide and, in relation to the metaverse, experts explain its development is in full swing and is expected to reach a size of 700 billion by 2030.
Nothing lost, but learned. Blockchain, or the central technology that supports platforms such as Ethereum, Bitcoin and DeFi works, and does so with a purpose: to offer a real alternative by placing technology at the service of society to generate more efficient systems with economies of scale, providing development for a world in constant change.
Of course, it is the responsibility of all players to make the whole system work and, in this sense, 2022 has been a decisive year in terms of trust generation and adoption by states, institutions and companies around the world. We are witnessing how Blockchain technology is gradually transforming the interaction between the main players in the financial industry. As a bank that operates in this environment, our mission at BBVA is to guarantee a solid and realistic transition, creating a fairer society in which everyone has access to the new digital economy that is being forged.
2023, here we come!
