| Dear Ladies and Gentlemen
I somewhat do have the impression, we live in a time of aggressive nervousness, and I can not think much of it. I am fully aware that bad news sell and yet, we all deserve a break. This is why I decided to write only about positive things in today’s weekly. First of all, the sentiment of U.S. house building companies is skyrocketing. In October, the mood among home builders reached a new all-time high, rising from 83 to 85 points compared to September. The NAHB home construction index has never been higher at any time since the start of the survey in 1986. Housebuilding sentiment is good when interest rates are falling or when interest rates are staying on low levels for a long time. It can be seen as an indicator and usually runs ahead of a stock market trend. At least this was the case at the end of 1998 and in summer of 2005. The S&P 500 marked its high points one and a half and two and a half years later (September 2000 and October 2007). Following the corona-related economic slump in the second quarter, the U.S. economy grew strongly again in the third quarter. The gross domestic product grew by 33.1 per cent between July and September on an annualised basis, thus exceeding market expectations. Then we have seen last week’s Weekly Economic Index (WEI) rise to -3.8 per cent from -4% in the previous week. The recovery of the U.S. economy continues. As the WEI is scaled to the growth rate of the past four quarters, it is increasingly approaching the expected growth rate for the calendar year. Considering all Covid-19 implications, this is rather good. Looking at the largest economy in Europe, we see the German truck toll performance index remaining at a high-level. The decrease compared to February is now only marginal at 1.7%. The toll performance index is published with a delay of about one week and acts as an indicator for the development of industrial production. Germany’s industrial production developed positively in October. The reason for this is substantial demand from Asia. Last but not least, we have seen Bitcoin performing positively over the last few weeks, and this usually is a clear sign of risk-on mood among investors and speculators. Therefore, if Bitcoin continues to rise, it could well be a positive signal for stock markets. Ladies and Gentlemen, by the end of next week one uncertainty is most probably going to be gone. I hope we will receive the results from the U.S. presidential election next week and this again would be good news, no matter who would be elected, as there would be one short-term uncertainty out of the way. By the way and just for fun, I like looking at the quotes on: Now, next week I have a real treat for all of you. My old friend Claudio was able to interview a former head of state on and during the Covid-19 pandemic ‘s first wave and he allowed me to publish the interview in my next weekly. Please feel free to share your ideas and thoughts with me, but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li And now, Ladies and Gentlemen I wish you a great day and weekend. Yours truly, Stefan M. Kremeth Tel.: +423 237 26 60 |
Month: October 2020
How will Gold perform in 2021?
How will Gold perform in 2021?
Ronald Stöferle and Mike Maloney talk about golds future in 2021. Will it go up even more and how long will the current bull market continue.
Does Patience bring Roses?
| Dear Ladies and Gentlemen
On October 3, one month before the elections in the USA, the editorial of the “Magazin” (No 40) read the following: “What does it make to be an adult?” (I did mention this quote some three weeks ago in my weekly mail). “Faced with difficulties, they look for solutions. They do not despair at the first hurdle. They know that many problems that seem big and important at the moment are not in the long run and will eventually resolve themselves. However, above all, being an adult also means always being friendly and showing compassion for others”. Alain de Botton Now, back to the question in the headline of this mail. Is the old wisdom that patience should bring roses justified and above all, does it also apply to my profession, the investment of assets for private clients. Let me say straight away; I think this is the case. When I look back over the last decades, long-term investors have always been able to earn money with stable equity investments, even if they had to accept negative performances in the short term. As you know, our private clients’ mandates are geared to cash flows. That is why our portfolios always include shares from insurance- and telecom-, pharmaceutical- and energy-, real estate- and food industry sectors. Now, this year, it is precisely such stocks that are suffering. All of these companies usually produce positive cash flows for years and sometimes decades. From time to time, for a quarter or two, those cash flows may stop. However, and due to their strong balance sheets, these companies are still able to pay dividends. Even though Royal Dutch, for example, has cut its dividend payments for the first time in 45 years, they still pay out 3%, Swiss Re has always paid out 5% or more in recent years, and Zurich Insurance has shown a constant dividend yield of over 6% in recent years. For us, these shares belong in every portfolio that is geared towards cash flow. If I now take the share of Zurich Insurance as an example, the dividend of 20 Swiss francs over 15 years can amortise the investment of 300 Swiss francs. In our opinion, this is very attractive. All the more so as we find ourselves in an environment of negative interest rates. We are well aware that our approach requires patience, especially in this exceptional year, but we are convinced that after many good years, some of them even very good, we will just get through this year as well. You know, Ladies and Gentlemen, Molière is credited with saying that “trees that grow slowly bear the best fruit”. So if patience brings roses and the slow-growing trees produce the best fruit, and if, as Alain de Botton suggested, many of the problems that currently seem to be significant and vital are not in a longer-term perspective and will eventually resolve themselves, then I am rather confident that our cash flow strategy will continue to generate gratifying returns over the coming decades despite Covid-19. Please feel free to share your ideas and thoughts with me, but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li Many thanks, indeed! And now, Ladies and Gentlemen I wish you a great day and weekend. Yours truly, Stefan M. Kremeth Tel.: +423 237 26 60 |
The year in which capitalism died
The year in which capitalism died
Are we facing the end of capitalism? Ronald Stöferle in conversation with Max Wiethe of Real Vision about this and many other topcis.
IASF – Seasonal Reflections – 2020 / 08
The fund manager’s reflections on important political and macro topics and how they affect his management of the fund
O’zapft is! – The Gold/Wiesnbier ratio 2020
O’zapft is! – The Gold/Wiesnbier ratio 2020
We are pleased to present this year’s Gold/Wiesnbier-Ratio 2020. Even though it is out this year, O’zapft is!
Year-End Competition Update II
| Dear Ladies and Gentlemen
Time for another update on our year-end competition. The estimates are still wide-spread; this is great and as I had mentioned before, makes it more fun than if everybody is around the same numbers. We had some new readers joining in, but there were no new “highest” or “lowest” estimates. However, the prices for Gold, Silver, and the S&P moved up considerably since the last update. So, let us have a look where we are standing. Gold: Silver: S&P 500: Currently (at the time when I was finishing this message) gold stands at USD 1’908.59, Silver at USD 24.24, and the S&P at 3’483.34. If there are still readers out there who would like to participate, please feel free to send me a quick email, and I will be happy to take you on the list of participants. Do not forget; you may win a one-ounce Silver coin. Its price just went up by roughly 35% since my last (June-) update. Please feel free to share your ideas and thoughts with me, but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li Many thanks, indeed! Ladies and Gentlemen, I wish you a good start into the day, a wonderful weekend, and above all, good health! Yours truly, Stefan M. Kremeth Tel.: +423 237 26 60 |
Efficient Market Hypothesis
| Dear Ladies and Gentlemen
Much as expected, I received many messages concerning my last weekly mail called “a quantum of decency”. Also, much as expected, my personal perspective was not necessarily congruent with the perspectives of all of my readers. Nevertheless, thankfully, and again much as expected, most of the messages not agreeing with my point of view came along politely and thoughtfully, and I had many interesting conversations with readers explaining (agreeing or not) their perspectives, and this is what my weekly emails are all about, at least for me. Thank you very much to Barbara, Bob, AJ, Tom, Thomas, Mark, Steve, John, Mike, David and all the others for sharing your points of view! Now, before writing about the market efficiency hypothesis and because it fits last week’s topic so well, I would like to share a quote by the Swiss/British writer and philosopher Alain de Botton. When asked what adulthood meant to him, he said: “When faced with difficulties, they (adults) look for solutions. They do not despair at the first hurdle. They know that many problems that seem big and important at the moment are not at all in a long-term perspective and will eventually resolve themselves. Above all, being an adult also means always being friendly and showing compassion for others.” Today’s topic is about EMH, the efficient market hypothesis (EMH), which is a mathematical-statistical theory of finance. The EMH states that asset prices reflect all available information. Therefore, assuming this is true, no amount of analysis can give an investor an edge over other investors in a given market. EMH does not require that investors be rational; it says that individual investors will act randomly, but as a whole, the market is always right. In simple terms, “efficient” implies “normal”. For example, an unusual reaction to unusual information would therefore be expected. If for example, a crowd suddenly starts running in one direction, it would be normal for anyone to run in that direction as well, even if there is not a rational reason for doing so. A direct consequence to believers of that theory is that no market participant can beat the market in the long run. Many market participants and even financial markets scientists object to it. Warren Buffet, Daniel Kahneman, Amos Twersky and Richard Thaler have been criticizing EMH on various occasions. Please feel free to share your ideas and thoughts with me, but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li And now, Ladies and Gentlemen I wish you a great day and weekend. Yours truly, Stefan M. Kremeth Tel.: +423 237 26 60 |
Ronald Stöferle as guest of The Market Huddle
Ronald Stöferle as guest of The Market Huddle
Ronald Stöferle has an entertaining conversation with Patrick Ceresna and Kevin Muir from The Market Huddle.
Incrementum Inflation Diversifier – Advisory Board Call – Q4 2020
This quarter’s advisory board call we talk about the possible long-term effects of the Covid-19 crisis, negative interest rates and much more. This time our special guest was Lyn Alden.