August 14, 2022

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Oslo Bors is approaching a "crossing of death" - investor Peter Hermannrod predicts a continuation of the recession and a possible collapse in the stock market

Oslo Bors is approaching a “crossing of death” – investor Peter Hermannrod predicts a continuation of the recession and a possible collapse in the stock market

After the big run at the Oslo Bors last year, things have been much more difficult this year. The stock market is in the red so far in 2022, and many investors fear the worst is yet to come.

“I think there will be a recession, and then a stock market crash will often follow soon after, but gods know,” says investor Peter Hermannrod.

The thing that supports this fear is the development of the moving average on the Oslo Stock Exchange. The indicator shows the average price development of a financial instrument during a given period.

When the 50-day moving average drops below the 200-day moving average, a strong sell signal appears. Often referred to as the “crossroads of death” in technical analysis, it is an exercise that involves forecasting market movements based on similarities between current trends and historical patterns.

Beginning of the End?

The cross has proven to be an early indicator of some of the worst financial crises in history. Hermannrod, for his part, is not focused heavily on this tool, but rather is interested in what happens to companies at the micro level.

Personally, I don’t think this sign has much to say. Technical signals can tell us something about psychology, but the prices on the Oslo Stock Exchange are determined by what is happening in the world market. Maybe the big markets are the ones to look at technically. Oslo Bowers will just be a tailwind. I’m more interested in the basics, like stock pricing and its multiples.

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Hermannrod told DN earlier this year that he believed a 30-50 per cent drop in stock markets was imminent. It is not excluded that what we have witnessed in the current six months is the beginning of the end.

A bad first half of the year in a severely deteriorating global economy was often a precursor to bigger explosions in the fall, he says.

Meanwhile, Hermanrud offers a few tips for small stock market savers. He thinks it is still wise to sit quietly in the boat.

Most small savers should stay in the stock market, it is easy to lose weight and never get it back. At the same time, we are in a period when one must be careful. Despite the fact that a number of Norwegian stocks have fallen, not all of them are cheap because of it.

Hermannrod believes that one must also distinguish between different types of markets. There are, for example, clear discrepancies between the main index in Stockholm, which is down 18.4 percent this year, and the Oslo Poor’s index.

– In Sweden, I think there was a good buying opportunity. In Oslo the bors haven’t fallen as much, and here the risk and reward are very weak, he says, referring to the ratio between risk and potential reward.

bet on salmon

After serving as Chief Strategy Officer for more than 23 years at a number of brokerage firms, most recently at Sparebank 1 Markets, Hermanrud decided to start working as a private investor last year. Since then, Hermannrod has been involved in a number of stocks, investing, among other things, in oil services and salmon farming.

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Fear of a recession also failed to dampen Hermannrod’s short-term optimism for the farming company Lerøy.

– I bought some shares in Lerøy Seafood. Everyone knows salmon prices drop this time of year, but I’m not as pessimistic as analysts are. If I’m right and the price stays around NOK 75-80, the estimates will go up. In addition, feed costs fell somewhat in the end.

With the higher price estimates, at the same time that the cost estimates are no longer gradually rising, I clearly see higher earnings expectations. He concludes that this is a fairly short-term trade.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using the links that lead directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.