Autor: Stefan Markus Kremeth

Good Morning Ladies and Gentlemen

«Gentlemen, no one can stop me from getting smarter every day.»
Konrad Adenauer

Konrad Adenauer

Conrad Hermann Joseph Adenauer, Konrad Adenauer, was the first Chancellor of the Federal Republic of Germany from 1949 to 1963 and the first Federal Minister of Foreign Affairs from 1951 to 1955. During a meeting in December 1949 with members of his party, the CDU (Christian Democratic Union), he was called to have radically changed his position on joint European forces. He responded to those charges: «Gentlemen, no one can stop me from getting smarter every day.»

Germany’s recent economic history

Many hard-working and well-educated workers, professional pride, excellent and modern infrastructure (which was built after WW2 and was state of the art for decades), a liberal economic policy and cheap energy, among many other factors, have ensured that Germany could rise from a war-ravaged country to the fourth largest global economy. (Ladies and Gentlemen, I am deliberately simplifying a complex issue here. This is due to „Stefan’s weekly“ format, which should remain concise).

Germany’s economic present

I am utterly puzzled, and again I am simplifying, but why would German politicians take three functioning nuclear power plants off the grid and, on the other hand, pour thousands of tons of concrete in beautiful landscapes to be able to erect wind turbines on them and at the same time run coal-fired power plants to partially compensate for the electricity no longer produced by the shutdown nuclear power plants? Furthermore, why would German politicians hurt their small and medium-sized businesses as well as their large industrial conglomerates with exploding energy prices and risk a shrinking economic environment, recession and declining prosperity for broad sections of the population? Is this a sign of ideological blindness or, at best political opportunism?

Why Would I come up with this?

I understand if you ask yourself why Kremeth comes up with such a highly political and emotional topic in his «Stefan’s weekly». The reason is that I receive many calls, emails and questions during discussions with clients regarding investments in German companies. The consensus often is that due to the political and macroeconomic environment, there is no money to be made. Is that true? What do you reckon?

My view

Many, if not most, listed companies in Germany have an international client base and own production facilities around the globe. While it must be painful for numerous of them to see and experience what is happening in their home country, their global presence in a lot of circumstances offers solid diversification. Therefore, and this is what I am usually saying to our private clients, I see opportunities to invest in German companies at reasonable multiples and attractive dividend yields, despite the incomprehensible political developments and the expected economic consequences.

Konrad Adenauer once more

Ladies and Gentlemen, we need politicians to become smarter again, and we need them to have the courage to question their own decisions and views and, if necessary, to change their actions. Of course, we all make mistakes, but we should try to learn from them and introduce corrective actions where ever appropriate.

Disclaimer

As always, these are, of course, my very personal views. Thanks for your understanding.

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

««I do not know what the future holds for us, but I am confident that things will pick up again after every crisis, and dividends will continue to flow.»

Quarterly Report

Every quarter I report to our private clients. Let me share a part of the report on Q1 2023. It may be attractive to one or the other because it provides insight into the differentiated and multi-layered perspective in Incrementum AG’s portfolio management and shows how multi-faceted the approach to solving the problem of maintaining purchasing power can be.

June 13 2023 – 10 years Incrementum AG

On June 13, 2023, Incrementum AG will celebrate its ten anniversary. For this, we invited our private clients to a round of golf for those who enjoy playing golf, and all of them (golfers and non-golfers) for drinks, a barbecue dinner and a fabulous and relaxing evening at a beautiful golf club. So if you want to be part of it, feel free to become a private client of Incrementum AG.

Sustainability 1

I explained Incrementum’s view on sustainability to our private clients in a previous quarterly report (beginning of April 2022). The following part comes directly from the current quarterly report. «However, it is now the case that a new regulation stipulates that you, as customers, should give some thought to your personal sustainability preference. We have therefore developed a form that every customer must fill out and sign. We are obliged to request this form from you in the coming months. The paper is not necessarily self-explanatory for all persons, for which I apologise. As it must comply with strict regulatory requirements, the scope for wording on our side was somewhat limited. I will happily explain and discuss the form with you in the coming weeks and months. So far, unfortunately, the document only exists in German, but it will be translated within the following weeks.»

Sustainability 2

You know, Ladies and Gentlemen, as Incrementum AG, we want to opt-out as long as possible, not because we do not care but because of the many different standards used in the industry and because we feel that solving the problem of maintaining purchasing power is currently not even part of the sustainability equation, which to us seems a colossal omission.

Questions about the market environment

Now, our private clients often ask me whether I am not worried about the world situation and whether I do not see any risks.

Answer

My answer to this question in the report was the following. «Of course, I see risks and worry from time to time. This has accompanied me for decades and is an inherent part of my profession. How often have I warned you about Credit Suisse, for example? On the other hand, I also see opportunities time and again. At the moment, I have the feeling that very many people see mainly risks and the bad and almost forget to look at opportunities. All our portfolios have developed positively without exception over the last few years and also in 2023, and all the companies within our „dividend share strategy“ have announced that they will pay dividends and, in some cases, even increase them; the energy crisis notwithstanding, the war in Ukraine notwithstanding, sanctions notwithstanding and banking crisis notwithstanding. At the risk of repeating myself over and over again, I am pleased to be able to tell you that during all the troubles of the past years, dividends have risen on average, even if some shares have shown significant volatility and, in some cases are still trading below their purchase price, they have nevertheless delivered the expected cash flows. We can reinvest these cash flows and expect even more of them in the years to come and can thus benefit from the effect of compounding.»

And again…

The quarterly report ended with: «I do not know what the future holds for us, but I am confident that things will pick up again after every crisis, and dividends will continue to flow.»

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, and hope you will join us on June 13, 2023, as our new private client!

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

«The culpability of corporate directors in often putting their interests ahead of shareholders and customers seems a reoccurring, unaddressed course of business. When times are good, they deserve high compensation and stock options; when their decisions cause loss and hardships, it is time for risk to be shared.»

By Tom, one of my readers

Thank you!

Ladies and Gentlemen, This week, I initially wanted to write about an analogy with Aristotele’s unmoved mover. However, I felt like coming back on my last weekly. Thank you for the many emails I received to my last week’s Stefan’s weekly. I became slightly emotional when I wrote it; thanks for your understanding.

Accountability

I wanted to ensure that the message, not only obviously incapable management and shareholders but also clients who enabled the frivolous behaviour of Credit Suisse’s management ever since the Great Financial Crisis, maybe even before, should be held accountable. I know this is wishful thinking, and I know that most customers are simple, kind people who do not ask questions. Not many think about the fact that the big bonuses, the limousines with drivers, the buildings at the most expensive addresses, and the silver teaspoons to go with the expensive china have to be paid for, and thus no one questions where the money comes from and whether, in addition to too high fees, too high risks are also taken. However, I genuinely believe that mature bank customers should consider such matters, and if they do not, they should, as a consequence, bear part of the risk. As Tom put it, it cannot be that we «privatise profit and socialise risk.», i.e. that the broader population pays for it.

Cryptos

Let us move to another topic. Many cryptocurrencies, above all, Bitcoin, were initially launched as a decentralised, fast and cheap global means of payment. This was the idea behind the protocol. It was not primarily designed to be a store of value or a product of speculation. Nevertheless, this is precisely what it has become. As a result, most transactions in cryptocurrencies are speculative.

Advantages of FIAT currencies over cryptos

I am also a moderate critic of the FIAT system. It indeed has its weaknesses. However, where is the advantage of a system, like in cryptocurrencies, without a hint of a chance of recovering lost or stolen money? Ladies and Gentlemen, the ultimate lender who steps in if the worst happens does not exist in the crypto environment. The last lender, like in the case of Credit Suisse, remains central to any crisis case.
Moreover, who else should represent it but a state institution, which certainly does not enjoy organising bailouts? It is probably no fun for them, but it is their job, and they are doing it, and I am pleased they are. While I believe that large parts of a population can not assess the consequences of what would happen if state institutions did not interfere in a crisis, most of the population is probably, even if unknowingly, happy they do so. While I can not think much of privatising profits and socialising risks, I am still happy to know there are institutions stepping in when the worse comes to worst.
Now, Ladies and Gentlemen, this „guarantee“ of the ultimate lender does not exist in the world of cryptocurrencies. Funny enough, the notion of many crypto „investors“ is the opposite, i.e. they think that cryptos are more secure. They obviously are not, or not yet. 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, a wonderful weekend, and above all, joy!

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

«The difficulty lies not in the new ideas but in escaping from the old ones.»

By John Maynard Keynes

Credit Suisse

What happened to Credit Suisse, you may ask? I have been pointing out for years that Credit Suisse, on the one hand, was selling its real estate, writing losses, and, on the other hand, paying out billions in bonuses. This outrageous greed of obviously highly incompetent managers starkly contrasted with the bank’s performance. As a Swiss citizen and former banker, I am amazed and saddened by the fall of this traditional bank.

Taking responsibility

The indignation is suddenly very great, and guilty parties are being sought everywhere. Of course, the top management of the past 20 years bears a great responsibility and, if you like, guilt. However, the fact is that every client is responsible and should, by default, question how excessive spending on salaries, bonuses, offices, and client events can be financed. I think clients have a responsibility to question the behaviour of their bankers. Therefore, this story also depresses me because seemingly naïve customers feel flattered when bank employees greet them in meeting rooms with thicker carpets than the customers‘ wallets. It feels like in sixth-grade history class when we learned how the Spanish explorers sailed to Latin America and sold the natives glass beads for their gold reserves.

The media

Interestingly, in November 2022, the former Chairman of Credit Suisse’s Board of Directors was granted a multi-page interview in a Swiss weekend magazine. This magazine is clearly positioned left of the centre; nevertheless, no critical question was asked to the ex-Chairman of a large Swiss bank, under whom the stock lost 90% of its value. So I am asking myself what is the value of such an interview?

Enough

Excuse me, Ladies and Gentlemen; I had to get rid of these thoughts. Thanks for your understanding.

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, a wonderful weekend, and above all, joy!

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

For this article, we were asked to elaborate on our view on the impact of rising interest rates on real estate investments. After a general introduction to current topics, we will outline what we consider critical factors of this popular asset class in the now-changed interest rate environment.

One year ago, when the Russian war of aggression on Ukraine broke loose, energy prices soared, and financial markets crumbled. Interest rates went up and are still increasing. Stagflation was one of the keywords used excessively by the media and even by economists. Stagflation is a business cycle characterised by slow growth, high unemployment, and inflation. For economic policymakers, this combination is challenging to manage, as any attempt to correct one of the factors may aggravate another. However, one year later, stagflation is still nowhere to be seen, and as often, things develop differently than predicted by the masses; the term „stagflation“ was sent back to sleep, at least for the time being and seems to have disappeared from the media altogether. Instead, today’s buzzword is „soft landing“.

We will see in what direction economies went in twelve or twenty-four months. However, we can learn from the old „Austrians“ that societies and economies with constantly unbalanced budgets and accompanying market interventions inevitably lead to a consistent misallocation of resources. Over time, the loss of purchasing power due to a lack of budgetary discipline is significant, and during the last twelve months, global economies suffered heavily from this effect. At times inflationary pressure can be pushed back on the timeline, but eventually, an outbreak is unavoidable. Therefore an investment strategy tailored to one’s needs and which helps to diversify inflation makes enormous sense.

Balanced and cash-flow-producing strategies have proven resistant and shown impressive inflation diversification potential. Furthermore, those who can afford to invest in real estate and physical precious metals and want to add them to their portfolio can expect an additional diversification effect, maybe leading to lower volatility but not necessarily any better long-term performance.

Volatility always seems to be an issue, and as inconvenient as it may seem for investors, volatility nevertheless represents an intrinsic part of investing, and any investor should know that. We usually tell our private clients that volatility is a price to pay for any consistent long-term performance. Now, many people would like to see a fully insured society, with its economy in total equilibrium, which on top of everything, is tailored to the individual needs, fears, etc., of each individual. But, unfortunately, this is not realistic. Just as we cannot always expect perfect solutions from science, we cannot expect our society, the state, monetary policy, individual politicians, fellow human beings, doctors, teachers, gurus, family members, friends, and acquaintances to always have the adequate and tailor-made solution ready for an individual problem of each individual. How should that be possible? Economic cycles come and go, economic crises come and go, political cycles come and go, and political crises come and go. This may seem unreasonable, out of date, exhausting and at times unfair, but it is nevertheless constantly the case that all sorts of crises affect our daily interactions. Societies and their financial markets are pretty complex systems, and complex systems are unfortunately not always fair or in balance.

Even the best political system, economic theory, and investment approach have their limits and cannot answer all the questions, identify all the unknowns (hence the name) and take into account the complexities and interdependencies of politics, the macroeconomic environment, central bank policies and scientific innovation, to name but a few. Against this backdrop, and for purely common sense reasons, it seems arbitrary to us to focus on one asset class or, even worse, one single asset.

Karl Popper pointed out more than 80 years ago that science can never produce absolute truths but rather approaches the truth in constant processes (also thanks to trials and errors), i.e. every theory is only considered good until it can be replaced by a new and better and tested one. Now, we all know that theories often leave out certain aspects; the developers of such theories deliberately limit themselves to core topics and usually do not claim to be all-encompassing. So when investing, we should keep that in mind and not expect the impossible from any investment or other theory.

After this introduction, let us focus on the main topic of this article, real estate and the impact of higher interest rates, opportunities and threats on this asset class.

Over the last decades, real estate investments have enjoyed immense popularity against low or negative interest rates and steady economic growth. Prices knew only one direction – up. However, the changed interest rate landscape also leaves its mark on the real estate market. The days of continuously rising valuations are over, at least for now. Moderation is the order of the day.

Our thoughts relate to the market for investment properties. For owner-occupied residential real estate, some arguments are less relevant because not only economic factors play a role in the respective purchase decisions.
Rising interest rates influence the performance of investment properties in three ways. First, rising financing costs and the declining relative attractiveness due to higher yields on alternative investments (bonds) harm the price level.

In addition, the discount rate is the most critical factor influencing the valuation of an existing real estate portfolio. Real estate companies and pension funds use the discount rate to determine the present value of their portfolios. This rate is usually derived using models and is conceptually based on a risk-free interest rate (yield on long-term government bonds). In addition, the general real estate risk and property-specific surcharges are considered when determining the discount rate. Steadily falling discount rates have been the main driver of rising valuations in recent years. Accordingly, real estate portfolios have appreciated significantly. For example, the largest Swiss real estate company, „SPS“, has recognised more than CHF 1 billion as income from revaluations since 2017. Therefore, the need for adjustment due to the changed interest rate landscape will likely not be insignificant. However, due to the inertia and long-term nature of the real estate market, the impact of these adjustments will probably only become apparent over the coming years. From an investor’s perspective, therefore, there is no reason to rush into investing in existing real estate portfolios.

For real estate to become more attractive again from an investor’s perspective, property yields must rise (significantly). This means that property prices must fall and/or rents must rise. Rents for space in commercial properties are determined by supply and demand. Here, both the economic environment and structural factors impact pricing. Because of current trends in the labour market (home office) and retail trade (online shopping vs stationary retail), high-quality offers in central locations will likely remain in demand. On the other hand, properties in geographically peripheral regions and properties of inferior quality will become significantly less attractive. As a result, the market will become increasingly differentiated again in the future.

Regarding investment strategy, the time for „buy and hold“ is also over in the real estate market. An active strategy that focuses on quality and valuations seems more promising. It is essential to monitor current trends on the demand side. Structural changes are occurring due to demographics (immigration and urbanisation), the labour market (home office) and shopping habits (online vs stationary retail). This structural change is likely to accelerate further.

Nevertheless, selected real estate investments are to remain interesting. This is because they may offer a diversification contribution and deliver significant cash flows based on a reasonable valuation. This opens up exciting investment opportunities in the medium and long term for disciplined investors with experience who can handle investments in non-liquid asset classes.

Your Copy
If you feel like reading through the online version of the current Global Executive issue, please feel free to click on the following link.

Executive Global Magazine – Staying Ahead in a Fast-Paced Environment – Incrementum

Enjoy the read, Ladies and Gentlemen!      

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, a wonderful weekend, and above all, joy!

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

Many thanks for all your messages and participating in the Incrementum year-end competition. We all know it is seemingly impossible to forecast the future and that we are doing this for fun.

S&P

So far, the highest bet on the S&P stands at 4’634 and the lowest at 3200.

Gold

So far, the highest bet on gold stands at 2’600 and the lowest at 1’910.

Silver

So far, the highest bet on silver stands at 38 and the lowest at 21.13.

My bets

As every year, I like to be transparent. So my bets are as follows: gold 2’090, silver 21.425 and the S&P 4’116. I keep my fingers crossed for all of you and look forward to sending this one-ounce silver coin to the winner at the end of the year.

Interesting aspect

Some weeks ago, I read a piece of research. The producers were speculating about a technology shift corresponding to a workforce demography shift favoured by retiring baby boomers worldwide. The idea of the article was that while baby boomers from the combustion sector retire, younger workers increasingly develop into the renewable energy sector; this aspect, according to the writers of the research, is receiving too little positive attention. Interesting, no?

Next week

Next week I will share an article on the impact of rising interest rates on the real estate sector my partner Dr Christian Schärer and I produced with you.

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, a wonderful weekend, and above all, joy!

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

All about fun!

For those who have joined our readers recently, every year, I organise a year-end competition in guess, for example, the price of gold, silver, crude oil, the SMI, a cryptocurrency or the S&P 500 Index.

Predictions

Regularly, I receive emails from readers asking me where I think the price of gold would be at the end of the year, the SMI or interest rates, or the price of silver. Those who follow my weekly emails frequently will know that I would not say I like making predictions.

Invitation

However, from time to time, I am happy to tell you what I think may happen just for fun, and since we are in March already, it is time for our traditional year-end competition. As I did in the past, I invite you to compete with all the other readers, my partners Christian, Mark, Hans and myself, and as always, the winner will receive one ounce of silver in the form of a silver coin. Suppose the winner stems from within Incrementum or my family, I am happy to also send a one-ounce silver coin to the second in place. As your bets will be coming in, I will publish ours. To start with, I give you the ranges of the Incrementum partners. For gold, the range is USD 2’090 to 2’350; for silver, the range is 21.425 to 27.5; and for the S&P, the range is 3’500 to 4’421.

Former Winners

The list of former winners includes an old friend from university, two clients, a former fund manager and value specialist from London and regular readers. So far, none of my family members or partners was close enough to be called a winner. It is impossible to guess the future, yet I look forward to receiving your bets! It is all about fun!

Gold, Silver, S&P 500

Now, Ladies and Gentlemen, I suppose we try to guess the year-end price for one ounce of Gold in USD, the S&P 500 and 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/.

Ladies and Gentlemen, what do you think? What is your best guess for the year-end prices of gold, the S&P 500 and silver? 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!

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

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

«We all should want to stay ahead in a fast-paced environment yet always incorruptible and sensitive.»

Michael from California won our quick competition. He sent the correct answer, i.e. Fourth Turning by Neil Howe, and William Strauss, 27 minutes after Stefan’s weekly was sent out. He certainly was quick! I posted the one-ounce Incrementum silver coin yesterday. Congrats, dear Michael, and please let me know once you have received the coin.

What we do with our investments

Since some of you asked me what I was doing with our client’s investments, I am happy to let you know. I believe that in times like these, patience is needed. Now all our companies are starting to pay dividends, and many are even increasing them. This means that for us, and for this current „interim period“ we are in, we do nothing because there is nothing clever to do. In my opinion, this patient opportunism is also part of investing. Avoiding mistakes, not trying to be too clever, waiting, cashing in dividends, and trying to avoid the daily noise. The cash flows from the dividends we are going to harvest over the coming weeks and months; will be able to be reinvested in due course. This will provide new opportunities and probably future additional cash flows.

Year-end competition

Ladies and Gentlemen, you sent me many emails with requests, and as I mentioned last week, the winners are silver, gold, and the S&P. Mark suggested a fourth one, and I do understand and feel tempted; however, for me, it would mean additional work, and I do want to keep the work limited. Thanks for your understanding!

Be prepared

My next Stefan’s weekly will be all about the year-end competition, so be prepared. I will try to convince my partners to let us know their estimates.

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!

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

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

I have a quick competition for you. The first one to answer wins a one-ounce silver coin. Below you will find a sentence fragment from the beginning of the first chapter of a brilliant book, which still has a certain topicality even after having been published initially 25 years ago.

«Though we live in an era of relative peace and comfort, we have settled into a mood of pessimism about the long-term future…»

Competition

If you are the first to name the book’s title, the one-ounce silver coin is yours, and your first name will be published in my next Stefan’s weekly.

Your thoughts

I picked two of your emails and allowed myself to publish the writer’s thoughts and my replies in slightly condensed versions.

David’s thoughts

«Good point, Stefan! We increasingly worship at the altar of celebrity. How is a punk entertainer with a mob following qualified to offer advice on investment products or pharmaceuticals? Or climate change? It is apparently very effective.»

Adrian’s thoughts 

«However, what is impressive and unfortunately often not done, every investor should ask himself the following questions:

1. What do I know others do not know?</ol>
</li></ol>2. Is the investment in my area of expertise?

If you can answer both with yes, you are already on the right side but not yet ready. After that, you have to ask yourself, what if I am wrong with my assumptions?»

My response

One of the problems I see lies in the growing gap between people who actively accumulate knowledge because they like doing so and people who do not because it bores them. Many of the population cannot find the concentration to read books or an article exceeding the length of headlines. Their attention span is too short, and their knowledge is mainly built from watching T.V. and social media and discussing issues with peers from the same socio-cultural cohorts.
If we now consider that different perspectives on most social issues are pretty permissible, but we see how vehemently, intransigently and sometimes primitively our seemingly sensible and somewhat educated political elites defend their positions, we should not be surprised if the average citizen proves incapable of abstracting. If their superstars, idols from sports, fashion, film, and music, keep telling them what to do, they will.
Maybe the trained adoption of different perspectives at school, high school, and university, as well as a school development that is as permeable as possible, can bring about an improvement under certain circumstances. But, on the other hand, we must not harbour any illusions; the probability is very high that we will have to live with the status quo.

Asset classes

From the feedback I received, the asset classes you wanted to include in this year’s year-end competition are crude oil, gold, silver, Bitcoin, Dow Jones, S&P, Tesla, and others. Now, Tesla is, of course, an individual stock, and Bitcoin is a particular cryptocurrency, and therefore I would like to choose gold because we are the gold experts, silver because we very much like silver and the S&P because the by far most prominent part of assets managed by Incrementum is of course invested in equities.

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!

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

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

One of the issues I see when speaking to investors, something I do a lot and genuinely like doing, is what I would call their «assisted thinking».

«You must not run after money; you must go towards it.»
Aristoteles Onassis

Influence

Our surroundings, family, friends, the media, social contacts, gurus, religion, books, tv, radio, politicians, bankers, a former Swiss tennis superstar, an actor playing a former FBI agent and analysts, you name it, do influence us all. But, of course, this is nothing new; I have written about it many times.

Assisted thinking

What do I mean by assisted thinking? I mean that too many investors are adopting the ideas and arguments of people (who are perhaps even long dead) without questioning how these people arrived at their ideas (economic and political environment, time period, level of education, personal beliefs, religious background, spirituality, etc.). For example, a former Swiss tennis superstar was promoting Credit Suisse as an Asset Manager for years. I suppose the main reason was that Credit Suisse offered him a frivolous amount of money for doing it, not because he was known to be a skilled selector of asset managers and chose Credit Suisse because of their excellency. What do you think the people feel that invested due to that ads campaign in all the Credit Suisse products that went bust over the last years? Alternatively, an actor that crosses my mind, a very cool actor indeed, promoted cryptos just before the previous crypto crash. I imagine he did this promotion (which was very well done, by the way) because he was paid well and not because of his expertise in blockchain and digital assets.

Fair enough

If corporates are happy to pay big heaps of money to well-known people to help them promote their products, this is all fine and if the famous people cash in handsomely, fair enough. But why on earth would investors conclude that a tennis player or an actor, a priest, guru, neighbour, taxi driver, hairdresser or a long-dead economist, if you want, i.e. people with limited academic records or limited knowledge of today’s rather complex financial environment, would be suitable in giving them any advice on choosing a bank or an investment?

Context

Ladies and Gentlemen, this beats me! I do not understand, yet I am confronted with it regularly. Please always try understanding the context of statements, advice, news, information, and research. Always ask yourself why they said, concluded, wrote, or recommended what they did. Because even the greatest of all times have their very personal views, thoughts, ideas and agendas. It would be a coincidence if they matched perfectly with yours. Come to your own conclusions, limiting assisted thinking to the max.

Next week

We are getting close to the beginning of March. Time to start another year-end competition. Let me know what you would like to include. I am aiming at three different asset classes.

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!

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

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