Autor: Stefan Markus Kremeth

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

Good Morning Ladies and Gentlemen

On Tuesday, I looked at the 10-year performance of various asset classes. Today I want to share them with you. Again the numbers stem from Tuesday, but even if they should have changed slightly over the last few days, I do not think this will significantly change the performance over the entire 10-year period.

Silver

The 10-year performance of silver was negative and comes in with a big minus of  25.43%.

Gold

Gold did better. The 10-year performance comes in with a plus of 15.8%.

EuroSroxx 50

Let us look at some equities; the 10-year performance of the EuroSroxx 50 stands at plus 52.6%.

SMI

Next is the SMI, with a 10-year performance of plus 52.8%.

U.S. Stoxx 500

The U.S. Stoxx 500 10-year performance comes in with a plus of 62.9%.

DAX

The 10-year performance of the DAX stands at plus 94.46%.

Dow Jones

Furthermore, the Dow Jones Industrial, probably one of the best-known indices globally, 10-year performance stands at plus 143.7%.

Nasdaq Composite

Last but not least, the 10-year performance of the Nasdaq Composite comes in with a plus of 262.3%.

Style versus theme

What can we learn from this? A style-based or theme-based approach may make sense, depending on your investment goals. What else can we learn from this? Theme-based methods may yield extraordinary results at times. However, if you are invested in a theme during the wrong cycle, performance can be meagre and lead to frustration.

The example of silver

If you had acquired your silver investment ten years ago and did not change it, it lost roughly 25% in value. Over the same time, you had opportunity costs of over 50% versus an investor who had invested in a EuroSroxx 50 ETF.

…but who knows, after ten years of underperformance, silver may be ripe for serious outperformance?
Please feel free to share your ideas and thoughts 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 end of the world is the delusion of grandeur of the depressed“.
Matthias Horx

Since you asked

I received an intriguing question about the likelihood of a disappearance of the Euro or U.S. dollar, and I am happy to give you my take on it.

All about trust?

In the end, many things are based on trust, including the global monetary system. If people no longer have confidence in their currency or the currencies of other economies, then the corresponding currency disintegrates.

What do you expect from money?

Let us say goodbye to the idea that money is a store of value. There are investments for this purpose in companies, commodities, real estate, art, collector cars, precious metals, etc. In my opinion, and I did mention this many times before, money should primarily be understood as the lubricant of an economy. It ensures that the economy’s engine is not stalling even during difficult times. This is important insofar as the economy in which the money circulates also determines the intrinsic value of the corresponding money to a certain extent.

I am not afraid

I am not afraid, not even concerned about a possible collapse of the global monetary system. However, I know, and this is a little unfortunate, these thoughts have been around since the hyperinflation in Germany one hundred years ago. The topic and the fears arising from it are played repeatedly from different sides in never-ending catastrophe rhetoric. Last year, global concerns about the crisis were rife even in the reasonably sensible media. War, inflation, stock market collapses, recession, lockdowns in China, supply chain problems, etc., were too much for the beleaguered journalists and were seen as reasons for a total and all-doom mega polycrisis. However, for now, it seems such a crisis has been cancelled. At least, I do not recognise it.

Facts

The fact is, the companies we invest in have delivered reasonable numbers under the circumstances and over the whole year of 2022. Dividends on average across the portfolios are very likely to be higher than last year and the year before, and a recession in many G20 countries will not be as severe (if it happens at all) as analysts predicted. Patience, serenity and confidence have helped those who have not allowed themselves to be driven crazy.

Karl Popper

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. Why do I mention Karl Popper, firstly because I see him as a great thinker and secondly also because I have the feeling that many people would like to see a fully insured society in total equilibrium, which on top of everything, is tailored to the individual needs, fears, etc. of each individual? But, unfortunately, this, Ladies and Gentlemen, 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 always to have the adequate and tailor-made solution ready for any individual problem of each individual.

Complex systems

Societies are pretty complex systems, and complex systems are, unfortunately, only sometimes in balance. I think it is even the case that societies in their normal state tend to be in disequilibrium, and any equilibrium is the exception.

Gloomy pictures

In the 1970s, the members of the Club of Rome painted a very gloomy picture for the next 50 years. However, I believe that not a single one of the horror scenarios of that time has come true. So much for people’s ability to forecast.

Conclusion

Long story short, do not let yourself go crazy, enjoy life and do not be afraid. Patience, serenity and trust are essential companions in life, and I would venture to say that during our lifetimes, we will not have to experience the demise of the Euro, the U.S. dollar and, if you want, the Swiss franc.

Please feel free to share your ideas and thoughts 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

Last week I did send you a quote from Burkhard Varnholt. The quote was, «Stamina is the hidden secret of successful long-term investors».

18% of Germans wear bicycle helmets

Investment Principle

I speak to investors a lot, which is what I appreciate most about my job. Because investors often show me different perspectives, which teaches me to respect their views and not underestimate their emotions, and quite frankly, they are forcing me to question our investment styles and stay reasonably humble. However, because complex systems (financial markets are complex systems) behave non-linearly, counterintuitively and are difficult to control, some investors tend to throw their initial investment principles overboard in situations of stress. This amazes me because it is far from being rational.

Psychology

Our brain resolves an inner contradiction by somehow convincing ourselves out of the unpleasant situation. This is a protective measure because we do not like to see ourselves as idiots. Nevertheless, this is unfortunately not always the best solution. For this reason, many smart people use coaches, consultants and investment advisors (yesssss, Ladies and Gentlemen like us), i.e. people they trust, people offering comfort and help during challenging moments.

91% of Germans use a protective cover for their mobile phone

Heads versus mobile phones

If 18% of Germans wear helmets while riding a bicycle but 91% of Germans use protection for their mobile phones, one could argue that mobile phones are more important to the German population than their brains. I know this is bold, but it also shows that people do not always behave rationally. I like to think of my partners and myself belonging to both cohorts, the ones wearing a helmet on the bicycle and seeking protection for their mobile phones. I am convinced many of the non-helmet-wearing cyclists would change their behaviour if they knew about this comparison. (By the way, the behaviour is probably the norm also in other Central European societies. As it happens, I just had the statistical data for Germany at hand).

Strategy; a piece of advice or two

Now, when you follow a strategy, especially if it is someone else’s strategy, i.e. your coaches‘, consultants‘ and investment advisors‘, ensure you thoroughly understand it. If markets move in the right direction and the strategy works, start questioning it (ex-ante), imagining a potential turn in the market and how your strategy would work long-term. If you feel uncomfortable with it after that, you may want to change it. Most people start questioning their investment strategy once the market has already moved against them for some time (ex-post). If you think about changing the strategy, once the market has moved against you, you have probably already paid the price. At that moment, you would rather have to think about a potential rebound; you may, of course, still want to ask yourself if your strategy is the right one to take advantage of a rebound.

Critical success factors

So what are the critical success factors, you may ask? There are probably many; however, at Incrementum, we only offer one type of mandate for our private clients. We are entirely geared to cashflows. You know, Ladies and Gentlemen, if you ask successful entrepreneurs and private investors about their secrets of success, they will all mention at some point that they look very closely at net free cashflows, which is precisely the principle we follow with our private clients. Short-term volatility is much less critical and scary if the portfolio yields regular cashflows that can be reinvested, regardless of the performance of the underlying stocks. Warren Buffett loves value and cashflows. This may be boring but very effective in the long run. Why would anyone choose a different strategy since it has proven to be successful for such a long time? Anyway, besides finding the right companies to invest in, investors must stay invested. Because If one is not invested, one is, of course, not subject to short-term volatility, but this comes at the price of not receiving any cashflows and not taking advantage of any potential price appreciation.

Yes, Ladies and Gentlemen, investing needs a small quantity of stamina.

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

Year-end competition

Ben asked me about Incrementum’s partners‘ positions in the year-end competition. I finished second and had my numbers published last spring; there is complete transparency. However, my partners did not participate. The year before, my partner Hans participated, but in 2022 he was too busy making money for our investors and this he did! Now back to the competition. I usually finish more or less among the first three. This year as mentioned, I finished second. When I was in the first place, I sent the silver coin to the person in second place. This happened roughly four or five years ago when my friend from University, Andreas, received the coin.

Little secret

The question is, how do I finish within more or less the first three regularly? Ok, let me tell you a little secret. It is because I orient myself at the futures prices and keep away from speculation and daily noise at the start of the year-end competition.

Futures prices

All the buy- and sell-side participants‘ know-how of an entire market is reflected in those futures prices. So, for example, Brent crude oil was trading at 125 in March 2022, but the futures contract for December stood at 86, which meant that even producers, the largest oil companies on the planet, did not believe that oil would finish the year at 150. Otherwise, they would not sell their products at a much lower price in a forward market. Alternatively, while I am writing this, the price for one ounce of gold in December 2023 is trading at 1’977. So what is the rationale for coming up with a price estimate of, let us say, 2’463.29? It does not make sense when currently, even the largest gold miners are happy to sell their production forward in December 2023 for 1’977. Of course, futures prices fluctuate heavily, a little less at the long-, yet more at the short end. Still, they are always worth looking at as one indication of several.

Psychology

Humans have a bias toward overweighting short-term events. When investing, this is not always very helpful. Moreover, we are awful at admitting mistakes. We absolutely hate being caught wrong. Even after years of underperformance, we keep holding on to our views because our ego wants us to be right more than anything else, even more than make money. Lastly, we love being told what we want to hear. This is why we prefer to read what confirms our view rather than reading stuff challenging it. You know what? That makes me happy because it offers opportunities. I am always trying to challenge my views, which is hard, and I admit I am not very good at it. Nevertheless, it sometimes works, and I hope to improve with age.

Interview

The following link leads to an interview I gave to «Executive Global» I thought you might like it:

The Swiss Banker – Incrementum

Enjoy the read, Ladies and Gentlemen!

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
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

Finally, and once again, the sleepless nights are over; time to declare our year-end competition winner.

Like every year, the data stems from Finanz und Wirtschaft (fuw.ch).

Gold

According to the above source, Gold closed the year at USD 1’824.56, in negative territory for the second consecutive year, despite spiking inflation. A few of my readers were hoovering around USD 1’850; however, most were far too optimistic. Dario’s estimate came in at USD 1’834 and therefore was the closest. Well done, Dario and many thanks for participating!

Brent Crude Oil    

According to the above source, Brent Crude Oil closed the year at USD 83.09. However, the participants were too bullish on Brent Crude Oil, with estimates going up to USD 160. The closest call in Brent Crude Oil came from Mark with USD 84. Well done, Mark and many thanks for participating!

S&P 500:         

According to the above source, the S&P 500 closed the year at 3’849.28. Almost every year, my readers are far too negative for equity markets; I wonder why this is the case because, statistically, there is no better way to invest than in equities. Anyway, the lowest bid for the 2022 year-end competition for the S&P 500 came in at 1’881. The closest call in the S&P 500 came from Marius with 3’812 points. Well done, Marius and many thanks for participating!

The Winner 

The winner of the Incrementum 2022 year-end competition and thus of the one-ounce Silver coin is John. John is a long-term reader of Stefan’s weekly, writing back to me regularly and sharing interesting views and knowledge! Congrats, dear John, well done!

Most probably, there will be another competition in 2023.

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!

Ladies and Gentlemen, I wish you an excellent start to the year, a wonderful weekend, and above all, good health!

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