Month: July 2023

Good Morning Ladies and Gentlemen

“A certain lack of solutions characterises many current political leaders.”
 From a discussion I had with one of our clients.

Latin in German

For the ten years of Incrementum, we received many truly unique presents. One of our clients came up with a remarkable book on the influence of Latin on the German language by Karl Wilhelm Weeber. Totally unnoticed, we use words and expressions with Latin roots in everyday language. That book I casually read through during our summer vacation made me think last week of one or two of the Greek or Roman historians I read over thirty years ago.

Ancient historians

Why on earth would I think last week about ancient historians? Ladies and Gentlemen, I received feedback on my last “Stefan’s Weekly” on “A Whole Bouquet of Fears”. In there, I mentioned that people (rather ruthless ones, if I may say) are happy to make money with other people’s fears. And now, what is interesting about reading ancient historians at least once in a while is that they show that humans have known the need to consult oracles ever since the time of the Greek and Roman historians and most probably even well before that. People have felt comfort in listening to some higher power for thousands of years. Interesting, no? Needless to say, the signs those oracles saw served primarily them personally, i.e. those who knew how to interpret them or at least pretended to know how to interpret them. Until today, especially in the financial industry, “oracles” still create hope without promise, without having to take responsibility; what a clever business concept.

U.S. inflation

Back to the real world, the U.S. inflation rate stood at +4.0% in May (with a high in June 2022 at 9.1%). I would not be surprised to see the U.S. inflation rate decline below 4% within the next two or three months. An inflation range between 2% and 4 %, with real growth of 2%, implies a pretty strong nominal growth of between 4% and 6%, which could be described as a so-called goldilocks situation. Financial markets would certainly appreciate this. Perhaps the current favourable market performance can be partially explained by anticipating such a goldilocks environment. However, the Federal Reserve raised the key interest rate by 25 basis points yesterday, and for the moment, financial markets are no longer pricing in any further rate hikes in the U.S.; the next Fed meeting will take place on September 20, 2023.

Never boring

What I like about my industry is that it is never dull. The decisions we have to make daily are based on research, experience and always on several unknowns. To me, not being able to foresee the future remains a feature. Think about it.
Ladies and Gentlemen, 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 and a wonderful weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of 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

“As much as people refuse to believe it, the company you keep does have an impact and influence on your choices.”
By: unknown person

Your messages

I keep receiving messages from readers who write about their worries and fears in connection with their investments. Many are hoping for advice from me or a recommendation that I cannot give for regulatory reasons. In general, I have the feeling that there is a lot of negative news circulating and that many of our contemporaries see the glass half empty instead of half full. Therefore, I take the liberty of dedicating today’s “Stefan’s Weekly” to anxieties.

Apology

Ladies and Gentlemen, I apologise for being maybe slightly cynical in today’s “Stefan’s Weekly” edition. I do not want to offend anyone. I only hope to provoke one or the other thought. Thanks for your understanding.

Fear; a definition

Fear is a natural, powerful, and primitive human emotion. It involves a universal biochemical response and a high individual emotional response. Fear alerts us to the presence of danger or the threat of harm, whether that danger is physical or psychological (one of many definitions by psychology research).

Wallow in fear

Fear of the so-called greatest dangers seems to change in people’s perception. Either it was the effects of Covid 19 or the effects of the vaccination against Covid 19. There are fears about the strengthening of China, but also of an economic downturn in China, and fear of a banking crisis in Europe, China, the U.S., Switzerland and the entire World. About the crash of the U.S. dollar, the fear of a real estate crisis, the fear of high energy prices, the fear of climate change, the fear of people demonstrating against climate change, the fear of nuclear power plants, the fear of microplastics, of inflation, stagflation, reptiloids, Russia’s war against Ukraine, Putin and the Wagner soldiers, religious fanatics and alienation, etc.

Pick your fear

Go ahead, Ladies and Gentlemen, pick your fear or even fears. There are so many fears around. I am sure you will find the appropriate fear for yourself as there is something for pretty much everyone. But never forget, it is your choice to live in fear or to see opportunities.

The ultimate fear for market participants

To me, it seems, but then I am undoubtedly biased; the ultimate fear for anyone in the financial industry is the fear of the next stock market crash. Nevertheless, eople in the financial industry should be used to this as the fear of a stock market crash always hovers over our heads.

The next crash

Some people within the financial industry are even making lots of money with the fears of other market participants by predicting the next crash. They can only do that because an audience is willing to pay attention (and sometimes even money) to them, and you know what? Eventually, there will be financial crashes; because crashes are merely a feature of any financial market, they help to reduce exaggerations. Boom and bust cycles are nothing more than a regular part of the game. Predicting a financial crash is a bit like predicting the nightfall. There is no magic, Ladies and Gentlemen; it is part of any market’s behaviour. Markets go up and down and up again; no big deal.

Wrap-up

It is your choice to live in fear or not. If you read the quote at the beginning of today’s “Stefan’s Weekly”, it may inspire you to choose well the sources of your information. Because your environment, your newspapers, radio and tv-channels, TikTok, WhatsApp, Telegram and whatever sources have an imprinting effect on your psyche, please be aware of that and choose well by whom or by what you want to be influenced or inspired.
Ladies and Gentlemen, 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 and a wonderful weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of 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

“Be fearful when others are greedy and be greedy when others are fearful.”
Warren Buffett

Difficult Market Environment

Liquidating stock positions when prices fall is generally terrible advice because it pays to remain patiently invested even in a challenging stock market environment.

History I

A look back shows that sharp price corrections and bear markets are a recurring feature in the financial markets. This was the case on Black Monday during the 1987 stock market crash, in 2001 after the bursting of the dot-com bubble, in 2008 with the great financial crisis, in 2020 with the stock market crash when the Corona epidemic broke out and also when Russia started its war on Ukraine last year. What all these events have in common is that prices went up again.

History II

All it takes is time, well, almost (it helps to implement a sensible strategy and invest in solid companies). Anyway, anyone who invested in the S&P 500 Index over 20 years always made a profit. During the 1987 stock market crash, it took 3.5 years for the S&P 500 Index to recover its losses. At the low during the financial crisis, it took five years until 2013 before the index rushed to a new record high. The fastest recovery was during the Corona pandemic when the S&P recovered a 25 per cent loss within five months. The losses from last year’s crash have yet to recover, but we are getting closer.

Dividends

While the markets go up and down, dividends are usually much more resilient. In our private mandates, we have raked in the highest cashflows ever for the year 2022, and it looks like 2023 will be no less successful in terms of the dividends expected from the companies we invest in for our clients.

Sitting out the bear market

Sitting out the bear market more than pays. Warren Buffett’s philosophy: buy shares in a well-performing company when the market is dumping them in panic and take profits when the whole world only believes in an eternally rising stock market statistically makes enormous sense. However, quite a few investors do the opposite of what Buffett recommends. They fall into panic mode when prices plummet or the mood on the stock market is terrible and sell everything when prices have practically hit rock bottom. Looking back, it is not only the realised losses that hurt. Far more severe is that one usually misses the right time to get back in. The consequence is to be underinvested at the beginning of the upswing.

Stats – 25 vital days

A study by Blackrock, the world’s largest asset manager, shows how much profit potential investors are giving away. Those who missed the 25 best days on the stock market in the last 30 years gave away a great deal of return potential. This is almost impossible to recover.

Holding period

In the long run, shares bring the most significant return if held in the portfolio over several decades. The successful investors Peter Lynch, Benjamin Graham, Jesse Livermore and Warren Buffett have done well to invest in solid companies in uncertain times or during crises, or as Warren Buffett put it, “our preferred holding period is forever”.

Ladies and Gentlemen, 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 and a wonderful weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of 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