Buy shares now?: “The DAX is valued with plenty of room”

Buy shares now?
“The DAX is valued with plenty of room”

Things are going up sharply on the stock market. The DAX reaches a record high. Two stock market experts explain in an interview what investors should pay attention to now.

ntv.de: At the end of the year, the stock markets are making a final push. And all of this just because interest rate cuts by the US Federal Reserve and the ECB have become more likely?

Daniel Saurenz: Fed Chairman Jerome Powell presented the Christmas presents early when he indicated three interest rate cuts for next year. Falling interest rates, stable company earnings and a stable labor market in the USA – that is the feel-good scenario on the stock market at the moment and the scenario priced in for 2024.

Things look more unpleasant in Germany. The Bundesbank and economic research institutes are expecting a recession. The DAX still climbs to its highest level in its history. Will this be hidden on the stock market?

DAX
DAX 16,751.44

Benjamin Feingold: Expectations are traded on the stock market. And investors expect interest rates to fall next year – not just in the US, but also in Europe. This will help the German economy.

Saurenz: What is also important for the market is why interest rates are being reduced. If the central banks do this from a position of strength because they have got inflation under control, that’s good. If interest rates are lowered because a cooling economy needs to be stimulated, that is bad for the stock market.

In the USA, key interest rates are at their highest level in more than 20 years. Even after interest rates are cut, they will remain high. And yet the stock market is having a party?

Feingold: Many people expected this year that the US economy would have problems due to the rapidly rising interest rates. But at the moment it looks like inflation is falling without causing a recession. The job market is stable. There is a good mood on the stock market at the moment. But the mood on the stock market can change quickly.

How much hope is there in the prices of DAX companies?

Saurenz: Overall, the DAX is rated with plenty of room. SAP alone contributed 500 points to the record this year. Rheinmetall and Adidas also did very well. The classic cyclical stocks are still in the basement, for example BASF or Lanxess. These stocks clearly show the concerns there are for the German economy, for example in view of energy prices. For other stocks, however, a rosy scenario is already priced in.

Feingold: Companies have to deliver. The same applies to the DAX as, for example, to US technology stocks. As things stand, the valuation is ok, but there can be no disappointment with the expected profits.

Given the rally that has been going on since the fall, is it still worth getting involved?

Feingold: You can’t say that across the board. An example is the Nasdaq 100. There the “Magnificent Seven” are rated quite sportily, i.e. Apple, Nvidia, Alphabet, Meta, Amazon, Tesla and Microsoft. They make up 40 percent of the Nasdaq 100 valuation. There are 93 other companies in the index. It is possible that there will be a change of favorites next year and other stocks will perform much better than the Magnificent Seven.

Saurenz: The example of the subway or tram, which you shouldn’t chase because the next one is coming soon, is trite, but it still applies to the stock market. In October the mood on the stock market was very bad and prices were low. Now the mood is very good and the prices have risen very sharply. There will also be times in the future when hardly anyone wants shares and prices will go down. These are good buying opportunities. This Christmas, however, the buying opportunities are not particularly exciting from a risk-reward perspective.

Benjamin Feingold and Daniel Saurenz run it “Feingold Research” stock exchange portal. Jan Gänger spoke to them.

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