Month: November 2022

Good Morning Ladies and Gentlemen

In his iconic book «The Sun Also Rises» or «Fiesta», Ernest Hemingway’s character Michael Campbell (Mike) is asked how he went bankrupt, and this is his answer:

«Two ways. Gradually, then suddenly.»

Brexit

In 2018 I was asked to share my view on BREXIT, which led to an article in the summer edition of the magazine « Global Executive ». One of the key messages was the following:

«In my view, one of the biggest risks is that the Bank of England will flood the market with money to offset the effects of an opaque business investment climate that will certainly reign until the negotiations between the U.K. and the E.U. bring clarity and that this flood of money will not only weaken the British currency but will lead to inflation and eventually backfire at British consumers.»

Foreseeing the future

Obviously, I cannot foresee the future; it was just common sense. The sterling lost about 40% of its value, the Bank of England flooded the market, and inflation is staggering; average British consumers are suffering. Nevertheless, I can imagine that there is potential in the U.K. Some great companies have been hammered down, and I would not be surprised to see at least a market rebound.

Link

If you feel like reading the full text, please feel free to click on the link below:

https://www.incrementum.li/wp-content/uploads/2016/08/Life-after-Brexit-Executive-Global.pdf

Next week

Next week, Ladies and Gentlemen, I will come back on Mike Campbell’s quote «two ways. Gradually, then suddenly».

Ladies and Gentlemen

As always, please share your opinion with me, but please remember (instead of hitting the reply button) to send your messages to: smk@incrementum.li.
Many thanks, indeed!

I wish you an excellent start to the day, a great weekend, and peace above all!

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

«After a time, you may find that having is not as pleasing as wanting. It is not logical but is often true».

Spock, Star Trek, Season 2, Episode 1 – Amok Time, 1968

Dinner with friends

I had this interesting discussion with friends over dinner. Four couples, tasty food, great wine – maybe slightly too much, same age range, comfortable lifestyle. You understand the setting. Do you know what the bottom line was after this dinner? Well, the bottom line of our evening was that today we do not always want more of everything but rather the best of the essentials. Now, Ladies and Gentlemen, I did not sleep well that night. The bottom line of our discussion over dinner made me think!

Bull market – some history

When the Spaniard Hernán Cortés and his 550 companions reached the east coast of Mexico in 1519, he brought disease, death and destruction to the Aztecs and the bad habit of bullfighting. Over the decades, cultural appropriation has taken place in most Spanish-speaking countries. However, the custom developed slightly differently in each country. The Mexicans replaced the bullfighter with a bear. In Texas, which belonged to Mexico until 1845, they chose bulls with long horns (longhorns) and pitted them against chained grizzly bears in an arena. These bloody fights were particularly popular with the gold miners in California during the gold rush (1848-1854).

From below or from above – a question of technique

Bull and bear had different fighting techniques. While the bull attacked with his head down and tried to spear his opponent from the bottom up, the bear fought back, delivering a powerful paw strike to the attacker from the top down.

More history

The Spanish author Don Joseph de la Vega (Joseph de la Vega – Wikipedia), with his standard work on the Amsterdam stock exchange published in 1688, brought the bull and the bear onto the trading floor. In his moralising polemic “Confusion of Confusions”, the bull stands for rising prices, and the bear for falling prices, both because of their fighting technique and the designation “bullish” for optimists and “bearish” for pessimists has persisted to this day.

Why did it make me think?

So, Why did I not sleep well after this wonderful dinner with our friends, and why did it make me think? Because I think it is pure luxury to state «not always more of everything but rather the best of the essentials». Most of us live a privileged life, and we should keep that in mind.

Ladies and Gentlemen

As always, please share your opinion with me, but please remember (instead of hitting the reply button) to send your messages to: smk@incrementum.li.
Many thanks, indeed!

I wish you an excellent start to the day, a great weekend, and peace above all!

Yours truly,

Stefan M. Kremeth

Stefan M. Kremeth
Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

Admin

Today I have to start on a personal note. As you know, in every «Stefan’s Weekly» I am writing the following at the end:

« As always, please share your opinion with me, but please do not forget (instead of hitting the reply button) to send your messages to: smk@incrementum.li
Many thanks, indeed!»

However, there are still readers hitting the reply button for one reason or the other. This is very uncool because the messages do not come to me but go to «mailchimp», the program we use to distribute our newsletters. Our mailchimp administrator is my partner Ronni, who spends a fair amount of time on the road, speaking at conferences worldwide, doing marketing and seeing investors. When he sees the messages, he gladly forwards them to me, but they often go under in the houndreds of emails he receives regularly. So please, Ladies and Gentlemen, share your opinion with me, but please send them to: smk@incrementum.li. Thank you very much for your understanding!

Recapitulation

As you all know, the book is closed, and no more participants are accepted. The final highest S&P bid stands at 4’482, and the final lowest is at 1’881. The final highest bid for gold stands at 2’350, and the final lowest was at 1’715. For Brent crude oil, the final price estimates range from 160 to 33.63. As always, all prices are USD.

Today’s prices     

While I am writing this edition of «Stefan’s weekly», the S&P is trading at 3’885.12, gold at 1’712.10 and Brent crude oil at 92.86. Therefore, the S&P and gold prices went up; crude oil has stayed more or less flat since my last update.

Will we see a year-end rally     

Usually, and according to the stats we are looking at, November is the second-best trading month of the year, right after April. Usually, again, the strong performance season is roughly lasting from October/November until April. Once more, usually, presidential midterms are followed by a strong performance in equities. Then, of course, there are the usual standard deviations and no certainties, all but indications, Ladies and Gentlemen, all but indications. So now, will we see a year-end rally? I do not know, but looking at the markets over the last few weeks, I almost have the impression that we are in the midst of one.

Ladies and Gentlemen

As always, please share your opinion with me, but please remember (instead of hitting the reply button) to send your messages to: smk@incrementum.li.
Many thanks, indeed!

I wish you an excellent start to the day, a great weekend, and peace above all!

Yours truly,

Stefan M. Kremeth

Stefan M. Kremeth
Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

«Happiness is contagious; spread it!» (from a fortune cookie)

Once in a while, I receive emails with questions about cryptocurrencies. For example, one reader argued that cryptocurrencies backed by precious metals would be tangible. Another reader asked me if governments/central banks could issue cryptocurrencies out of thin air. Of course, I am happy to share my take on it.

Gentlemen’s agreement

However, first, for an interview in the Executive Global Magazine, I was asked to describe what defines Incrementum AG; this is what I said:
«Besides the fact that we love what we are doing and are very passionate about what we do, we are patient and generous with our staff, customers, outsourcing partners, and ourselves. (I know, this is a bit taky and what everyone would say, the next part is key, though). However, one of the critical factors for success in our organisation is the gentlemen’s agreement among partners to take any strategic decision only with 100% consent by all five partners. To reach a consensus, it is necessary to approach others, take their needs and wishes seriously, and put one’s wishes and needs on the back burner to some extent; this has fostered not only trust among us partners but also promoted responsible action.»

Tangibility

If an investor considers the fact that an asset is physically tangible to be necessary, cryptocurrencies will not be able to play a role in his investment universe. Under no circumstances are cryptocurrencies tangible; this was probably quite deliberately never part of the design equation of cryptocurrencies and should, therefore, not be an expected feature. The good thing about physical precious metals is their tangibility. No cryptocurrency will ever have that feature; we should never forget that.

What about precious metals-backed cryptocurrencies?

The same is true here; cryptocurrencies are not tangible, even backed by precious metals. In this context, we can also use futures on precious metals as an example. Although precious metals themselves are tangible, futures on them are not. Again, this is because they are not “tangible”; they only exist in «paper» or digital form.

Investment purpose

However, depending on an investor’s investment purpose, precious metals-backed cryptocurrencies, which is today’s topic, may represent a valuable investment tool. So it comes down to one of asset management’s most important questions: “what is your investment purpose»? If a solid and regulated issuer issues a token backed by physical precious metals and if those precious metals are regularly audited and stored in a known or better in many different and known locations, and if the storage, the management of the process, the insurance, the auditing etc. is not costing an arm and a leg in yearly fees, there may be a market for precious metals backed crypto assets.

Cost

Nevertheless, investors should remember that precious metals do not produce cashflows. However, managing, storing, insuring, and auditing the physical precious metal of any such precious metals-backed crypto asset creates cost. The critical question to look out for is how the issuer of such tokens caters to the cost.

What about cryptocurrencies issued by governments?

Cryptocurrencies issued by governments would presumably be regulated by the issuing government and backed by its national economy. They could be issued like today’s conventional currencies within the given central bank’s mandate (and yes, if you want to some extent “out of thin air”). As pure book currencies, they would not be tangible either. Cryptocurrencies issued by governments would most probably lose the design feature “crypto” because I assume governments would probably build in features offering them full transparency about who uses the currency where and for what. In this respect, it would be a “digital fully transparent currency” rather than a cryptocurrency.

Ladies and Gentlemen

As always, please share your opinion with me, but please remember (instead of hitting the reply button) to send your messages to: smk@incrementum.li.
Many thanks, indeed!

I wish you an excellent start to the day, a great weekend, and peace above all!

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li