Quarantine Your Mind
| Dear Ladies and Gentlemen
I continuously receive many, many emails from our readers with questions on various asset classes and sometimes even on what seems specific investment opportunities. For regulatory reasons, I cannot possibly get into such potential suggestions or recommendations as I am not allowed to give specific advice in the format of my weekly emails. Thank you for your understanding. However, when it comes to the greater picture, I am allowed to share my personal view, and this is what I am happy to do from time to time. As it happens, I did I receive a question on the quality of banks in Europe. Now, banks are no homogeneous group. There are indeed large differences between different banks. Yet, many banks in Europe have significantly improved their balance sheet quality since the financial crisis, and the supervision of banks in Europe is much stricter than before the financial crisis. I, therefore, consider the banking landscape to be reasonably OK, although there may be large differences between single banks and between the various jurisdictions as well and no matter by how much the balance sheets have improved, I would not consider investing in banks for our customers. One topic to keep an eye on in this regard is a possible impending wave of covid-19 induced bankruptcies that may harm bank balance sheets. Although I personally think governments and central banks would intervene, the risk of failure cannot be denied. It seems governments and central banks have abolished de facto, a large part of the free markets, and yet, the risk of failure of non-system relevant banks is existing. From an investor’s point of view, government and central bank intervention is not necessarily a bad thing at all. There is much hypocrisy out there and to be very blunt it is probably mostly thanks to governments’ and central banks’ flooding the markets with big heaps of money that asset classes like gold, equtîties, and crypto-assets gained in value over the last years. If you hold one or more of these asset classes, do not complain too much. You know, Ladies and Gentlemen, in 1986/87 I spent 12 months in Toronto as an intern in the securities department of UBS Toronto. Our office was located right in the center of Toronto’s banking district, directly above the stock exchange. I witnessed the legendary crash of 1987. At that time, there was a classy, somewhat nervous but bright-eyed stock exchange trader working for the bank who smoked out tons of cigarettes. While the most significant panic on the stock exchanges since the 1930s unfolded, he told me over and over again almost mantra-like: “do not worry, in 24 months, probably even before that, people will have forgotten” (I do not know the exact wording anymore, but +/- this is it). What can I say, he was right, and since then there have been over 20 stock market crashes, and the result is and remains the same. Those who hold a good selection of equities in a balanced portfolio are usually doing well in the long run. However, to be able to stick to your investment principles when everyone around you is panicking, you probably need to be able to quarantine your mind for as much as possible. 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 |
Let's meet!
Do you have questions about our product or do you want to arrange a personal meeting?
