Category: Stefan’s Weekly

Help – Preferences and Incentives of Impact Investors and Managers across the United States and Europe

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen

I need your help. Please apologize for my being so blunt, but our former assistant, Cristian Ababii, is currently writing his master-theses to receive an MSc in Finance and needs your support.

He created a questionnaire but did not reach answers leading to the necessary sample size to show the statistical significance needed to satisfy his professors. He asked me if I could maybe help him with my network, and I would be delighted to be of help!

Now, Ladies and Gentlemen, this is where you come into play. Please take a little time and help this young man fulfill his task. He wrote a short introduction to the topic, and I am happy to share it with you:

“There is evidence showing a significant difference between assets under management directed to impact investing (investments in companies, organisations and funds with the specific intention of achieving measurable, positive effects on the environment or society in addition to a positive financial return) between the US and EU. The US investors’ share in the impact investment market counts for 66% and the EU investors’ share for 28%. For my thesis, I am intrigued to discover the overall investment preferences of US- versus EU investors. The assumption is that US investors are more focused on making an impact, rather than on financial return, contrary to EU investors. If this assumption proves to be wrong, the next assumption is that the governments from either the US or the EU provide investors with different investment-incentives. Accordingly, the US government provides investors with more incentives nudging them to allocate assets towards impact investments.
For my master thesis, I have created a specific questionnaire. I would be very grateful for your participation in the survey. It will take approximately 10 to 12 minutes, and it covers 21 closed questions. The survey responses are strictly confidential and anonymous.”

Please take a moment now, click on the following link and reply to the questions:

https://www.questionpro.com/t/AOzQzZg52z

Thank you very much, indeed!

And now, 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
Wealth Management
Incrementum AG

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

Bull Markets are so much more fun than Bear Markets!

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen

Many thanks for participating in my year-end competition, I had still received some more bets from here and there. Thanks for this!

Now, today I have a real treat for you! Today you will not have to read, you may only click on the link below to listen and watch, this is all you’ll have to do, and you will see my friend and partner Ronni Stöferle. Ronni is most probably one of the best known, if not the best-known gold analyst on this planet. Not only is he very knowledgeable and the editor of the most read gold report globally, i.e. Incrementum’s “In Gold we Trust” but furthermore he is charming and fun to listen to. I personally think that many analysts in the space are rather boring and depressing, Ronni is not. Please enjoy his latest video under the following link:

https://www.youtube.com/watch?v=xNRAcw2XSI4

…and please let me know if you liked it and as always feel free to share your ideas and investment experiences and thoughts with me, but please don’t forget (instead of hitting the reply button) to send your messages to:

smk@incrementum.li

Many thanks, indeed!

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

Year-End Competition Part II

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen

Thank you very much for the fantastic feedback I received for my friend Anton’s text on the importance of USD liquidity.

Today I would like to come back to the year-end competition and my very own predictions. I have received quite some feedback, as I had purposefully taken an extreme stance. I am delighted to give you my very private and personal opinion; however, please keep in mind that I do not have a crystal ball and can’t foresee the future. Now, why was I going for a new all-time high in the S&P 500, when companies will feel the impact of Covit-19 in their P&Ls and be subject to earnings revisions? The reason is that I think the market will disconnect (even more) from what seemed “fairly” valued in the past. And why would that happen, you may ask? I think it may happen because all the money that is being created right now by governments and central banks will trickle down and find its way right into financial markets. Furthermore, investors are aware of the difficulties corporates may face, and earnings revisions will, therefore, not come as a surprise to them.

Ladies and Gentlemen, I would not be surprised to see an asset price inflation in art, collector cars, rare real estate, scarce luxury goods, equities, etc. Furthermore, interest rates will stay low for a long time, leaving no alternative to pension schemes and other long-term investors as to invest in so-called risk assets.

If a scenario unfolds that seems more or less congruent with my views, it may be that gold moves up as well, you may claim. You are right, as the “cost of carry” is neglectable at current interest rates, and gold represents a valid hedge against inflation. However, if equity markets move up, greed or, in other words, catch as catch may come into play. Gold could suffer as greed for higher returns may lead to a competition of “potential excessive returns,” where investments that are presumably delivering lower profits be sold for “investments” proposing higher ones.

I could easily imagine exaggerations like we had seen during the Nasdaq tech bubble twenty years ago. In this respect, I would like to draw your attention to the fact that the Nasdaq 100 has already crossed its 50-day moving average. Netflix and Amazon climbed to new all-time highs, and Tesla rose significantly. The charts of these stocks show an intact tech bull market.

Ladies and Gentlemen, all of this is pure speculation, and again none of us will be able to foresee the future, and your guess is as good as mine. Above everything, my year-end competition should be fun for those participating and myself, and if everyone is close to consensus, fun is smaller than if we have a broad set of bets leading to a lively discussion.

And now, Ladies and Gentlemen, I wish you a good start into the day, a wonderful weekend and above all good health!

Please feel free to share your ideas and investment experiences and thoughts to Anton’s article with me, but please don’t 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
Wealth Management
Incrementum AG

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

Year-End Competition

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen

Interesting times demand for an interesting competition!

Let us have another year-end competition. I know it is still early in the process, but I think you will like the challenge. I hope for a few bold predictions.

Those who follow my weekly mails for some time will know, that I don’t like making predictions. Why? Because predictions are impossible to make. We will take assumptions based on our best of knowledge, only that this best of knowledge will never be enough to get it right.

However, from time to time I am happy to tell you what I think may happen and since these are exceptional times and since I like you to let me know what you are thinking, it is time for a year-end competition. The deal is easy, I tell you when you tell me.

Like I did in the past, I would like to invite you to compete with all other readers and myself and out of tradition, the winner will receive one ounce of sliver in the form of a silver coin. This certainly will make my friends Robert and Chris wanting to participate.

Last year’s competition was won by my friend and mate Andreas, and I know I mentioned before, Andreas was the best producer of study notes during university-times.

Now, I suppose and as we did last year, we are trying to guess the year-end price for one ounce of gold in USD, for the S&P 500 and for one ounce of silver in USD. All cash, no futures. The closest one wins the silver coin. The year-end prices will be taken from this page:

https://marktdaten.fuw.ch/.

Now my predictions are the following: S&P 500 – 4’450, Gold – USD 1’280, Silver – USD 14.95.

As last week let us again quickly see what has happened to financial markets so far this year? Here are some numbers for 2020: Gold: +6.36%, Silver: -19.35%, Dow Jones: -20.98%, EuroStoxx 50: – 23.96%, DAX: – 24.52%, SMI: – 13.31%, Crude Oil (Brent) – 58.2%.

Next week my young friend Anton will share his ideas on USD liquidity and its importance to global trade and financial markets. I am very much looking forward to getting to know more.

And now, Ladies and Gentlemen, I wish you a good start into the day and above all good health!

Please feel free to share your ideas and investment experiences with me, but please don’t forget (instead of hitting the reply button) to send your messages to:

smk@incrementum.li

Many thanks, indeed!

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

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

First positive signs?

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen

Many thanks for your kind messages to my last weekly mail “Full Stop or the Road to Zero”.

I think there are some first positive news out there, but they are not yet strong enough to stand up against the bad news.

Still, Apple announced the successful reopening of all of its 42 stores in China. Italy seems to have finally been able to stop growth of new Covit-19 infection cases. A stagnation is already a success and probably proves right the concept of social distancing. China is getting back into production mode and restaurants and bars in Hong Kong are open for business and full of people again.

The U.S. government and the Federal Reserve have taken measures to help the economy and to avoid anything like a liquidity crisis and the European Central Bank has just announced on Wednesday evening the injection of some EUR 750’000’000’000.00 into the system and if necessary, even more.

These are absurd numbers. However, absurd or not this money will eventually find its way into financial markets and guess what I think that will lead to?

Please let me know what you think!

And now as last week – let us again quickly see what has happened to financial markets so far this year? Here are some figures for 2020: Dow Jones: – 29.61%, EuroStoxx 50: – 34.47%, DAX: – 35.01%, SMI: – 17.3%, Crude Oil (Brent) – 56.94%.

Dear Ladies and Gentlemen I wish you a good start into the day and above all good health!

Please feel free to share your ideas and investment experiences with me, but please don’t 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
Wealth Management
Incrementum AG

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

Full Stop or the Road to Zero

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen

Today’s weekly “Full Stop or the Road to Zero” covers some of the thoughts I was sharing with our investors during the course of the week. I was writing two mails to our private clients this week. I tried to explain what had happened in financial markets and what my thoughts were.

Losses, even if only book losses, always hurt. I am convinced a cool head can help to some extent, especially in difficult times. Since the Second World War there have been around 25 – 26 stock market crashes. Each one of these stock market crashes was most likely associated with an extremely unpleasant experience for investors at the time, but despite all these stock market crashes we have been able to experience new highs in many indices over the past decades.

What conclusions can be drawn from this fact? In my opinion, the conclusion can be drawn that periods of great fear are followed by periods of confidence and with time investments in well-managed companies may again be considered attractive and rated accordingly by market participants.

But let us quickly see what has happened to financial markets so far this year? Here are some figures for 2020: Dow Jones: – 25.71%, EuroStoxx 50: – 32.04%, DAX: – 30.85%, SMI: – 22.1%, Crude Oil (Brent) – 46.33%.

The fear of a global recession is undrstandable and has risen sharply almost overnight, leading to major disruptions in stock markets around the globe. The entry ban imposed by President Trump on travellers from Europe, Switzerland, etc. has not helped the situation. This measure is evidence that the fear of the pandemic has now reached the US government. To me it seems the U.S. government has long been rather reluctant in accepting the importance of the virus.

In addition, a large proportion of the money under management today is invested in so-called passive instruments such as ETFs (Exchange Traded Funds) and other index-based instruments. In the event of a crisis, such instruments are thrown onto the market and find no buyers, which puts massive pressure on the prices of the individual shares they contain. This is the flip side of indexed products and it is also but not only for this reason that we do not use them in our portfolios. Nevertheless, our portfolios have also suffered greatly, albeit not to the extent of the indices or index products.

However, Covit-19 is a temporary and not a structural issue. Covit-19 reveals many weaknesses in the system, and I am convinced that governments and government-related organizations, global companies, local authorities and market participants will learn from it and that we as a global community can emerge from the crisis stronger than before. In China, there are already the first slight all-clear signals and in certain regions, everyday life (which is still reduced in most cases) is returning. Covit-19 should not be underestimated and be treated with respect. Nevertheless, every crisis is followed by a recovery and recovery often leads to a surge in consumption, people will be relieved and want to treat themselves.

A full stop generally comes before a restart and sooner or later all of us will be restarting again. I see absurd price movements in the markets and can’t imagine this full stop leading us into a closed end road to zero. If financial markets continue to fall like yesterday for the next 10 days, indices will go down to zero and if this happens, I promise, at zero I will “buy” every stock I can for all my clients and for myself as well.

Dear Ladies and Gentlemen I wish you a good start into the day and above all good health!

Please feel free to share your ideas and investment experiences with me, but please don’t 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
Wealth Management
Incrementum AG

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

What do you expect?

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen

Many thanks for the plentiful and positive feedbacks I had received to my last “weekly”. I was amazed to see that so many of you were thinking along the same lines.

Now once again I would like you to have a look at the following link by the Centre for Systems Science and Engineering (CSSE) and the department of Civil and Systems Engineering (CaSE) at Johns Hopkins University (JHU):

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

Some of you may know the link already, as I had sent it out to you in a “special edition” of my weekly mail last weekend.

Ladies and Gentlemen, COVID-10 is a serious threat and yet beginning Monday the 2nd of March 2020, for the first time, the cohort of recovered people was larger than 50% of all known and registered cases. This is particularly good news because the increase of the number of recovered patients is developing faster than the total number of all known and registered cases. This of course does not mean that everything is fine now but at least I think we see a silver lining on the horizon.

The weeks and months to come risk to be very volatile and painful. How inconvenient this may seem, it is unfortunately part of investing. Investing is no one way street and maybe we will see much lower prices for financial assets. This is why I personally like to receive cash returns on my investments. While the price of our financial assets go up and down and up and down, the cashflows from such investments are usually rather stable.

COVID-10 will have an impact in the quarterly results of many companies. Those with a healthy balance sheet will recover and maybe even get out of it as winners, while those with weak balance sheets will disappear in a worst-case scenario and be taken over if all works well.

Financial markets are being pulled by greed and fear. Last week fear pulled the markets down, in the beginning of this week greed pulled them up and yesterday fear pulled them down again. One can’t possibly know what next week will happen. However, looking back at central bank and government behaviour over the last years, I see a tendency of uncompromising will to keep global economies from anything like a serious recession. This doesn’t mean there will not be a recession, but it means that the efforts by the major global political powers and their respective central banks will be directed at avoiding calamities as much as possible. Of course there is no guarantee that calamities will not happen still.

Last week I wrote: “From what we have seen, experienced ever since the GFC (Great Financial Crisis), I think we can expect the central banks to be on the side of the markets in the event of a crisis. I believe they will not hesitate to respond to possible losses of momentum in the global economy by cutting interest rates and flooding the markets with cheap money over and over again. Furthermore, President Trump aims for a re-election. If the U.S. economy is in a desperate state of a looming recession and financial markets are down, his re-election hopes will most probably evaporate at the ballot.”

Now, Ladies and Gentlemen, this week the U.S. Federal Reserve System announced an unexpected interest rate cut of 0.5%. This was big and even if it was not giving the expected stability to financial markets, it shows how far central banks are willing to go and eventually those ultra-low interest rates will lead to an ever increasing “hunt for return” und thus one day to yet another stock market rally. Whether this will happen in two weeks or in two decades, I can’t possibly know. I also believe China will do everything to show their economic strength in the second half of 2020 and I would not be surprised to see solid economic growth rates from them in two or three quarters from now.

Last week I also wrote: “I am cautious too but if I see an opportunity to buy into a well-managed net free cashflow producing company at lower prices, I will do it. I am fully aware that I will not buy at the lowest prices possible and yet, I will still do it. I buy in small amounts and over many days, if not weeks and I am looking forward to harvesting dividends, interests and the like.” To me this is still valid. “I buy in small amounts and over many days, if not weeks and I am looking forward to harvesting dividends.” If you follow that route, it is important not to put all eggs in one basket and to buy in multiple small amounts and over time.

What is your opinion, Ladies and Gentlemen, please let me know about your ideas, your investment experiences, but please don’t 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
Wealth Management
Incrementum AG

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

Coronavirus COVID-19 Global Cases by Johns Hopkins CSSE

Posted on by Stefan Markus Kremeth

Ladies and Gentlemen

The following link was sent to me by one of my clients who is a medical doctor. Please look at it for your convenience:

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

The interpretation of the numbers is up to you. For myself I can only say that I am somewhat surprised that the mainstream media is not mentioning recovered cases as much as cases of new infections.

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

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

Perception

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen

COVID-10 has received coverage in the media for approximately two months by now. However, the effect it developed over the last two weeks was rather unpleasant for financial markets’ participants. While in the beginning people were looking at the news and thinking the poor people in China had a problem, suddenly the same people seem to realise that viruses do not necessarily respect a country’s borders. The virus came to Europe. I guess this was not the initial idea of the official European “welcome culture”.

Ladies and Gentlemen, we are in a phase where perception is not necessarily matching facts. People do not know what is going on and how coronavirus will develop and this uncertainty is very bad for financial markets and it may go on for some time. Financial markets do not like uncertainty!

Nevertheless, these may also be the moments when one can buy into great opportunities. It may still be too early but then again, if the general public is afraid of investing, the ones who dare may buy at attractive prices.

From what we have seen, experienced ever since the GFC (Great Financial Crisis), I think we can expect the central banks to be on the side of the markets in the event of a crisis. I believe they will not hesitate to respond to possible losses of momentum in the global economy by cutting interest rates and flooding the markets with cheap money over and over again. Furthermore, President Trump aims for a re-election. If the U.S. economy is in a desperate state of a looming recession and financial markets are down, his re-election hopes will most probably evaporate at the ballot.

Ladies and Gentlemen, I am cautious too but if I see an opportunity to buy into a well-managed net free cashflow producing company at low prices, I will do it. I am fully aware that most probably I will not buy at the lowest prices possible and yet, I will still do it. I buy in small steps and over many days, if not weeks and I am looking forward to harvesting dividends, interests and the like in the months and years to come. Investing is long-term by definition, investing is what we are doing. I always ask myself during turbulent markets if I still would shed an investment applying a five to ten years investment horizon and if I can’t answer with a clear yes, I will not sell.

What is your opinion, Ladies and Gentlemen, please let me know about your ideas,  fears, your investment experiences, but please don’t 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
Wealth Management
Incrementum AG

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

What the Incrementum partners think

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen

Today I would like to share a transcript with you. It is a rather long transcript, and this is why I will keep it short here. It is a transcript of a meeting the partners of Incrementum conducted some two weeks ago. We were discussing about financial markets and some of the risks we see. It somewhat was the purpose of the exercise to gear it towards risk and less towards opportunities of financial markets. However, and as you can imagine, ahead of the start of a new physical and digital gold fund, it will come as no surprise to you that we see opportunities in those two asset classes, otherwise we would not come up with such a product in the first place. Therefore, please excuse our bias.

Please feel free to come back with your comments, ideas and questions, but first enjoy the read:

https://www.incrementum.li/en/journal/incrementum-inflation-diversifier-advisory-board-call-q1-january-2020/

Thank you for letting me know about your views and please don’t forget, if you are sharing your viewpoints, (instead of hitting the reply button) to send your messages to:

smk@incrementum.li

Many thanks, indeed!

Ladies and Gentlemen, I wish you a great day and weekend

Kind regards.

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

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