Autor: Stefan Markus Kremeth

Good Morning Ladies and Gentlemen,

Last Monday, I returned from a short trip to Singapore. It was my first visit to the Far East in more than three years, and the experience was an interesting one. I used to travel to the Far East a lot and have been to Singapore many times. Life in the Far East is in many ways different from life in Central Europe. For today’s Stefan’s weekly, I would like to briefly elaborate on some differences in current issues. I do not intend to judge and want merely to describe what struck me most.

Covid-19     

Covid-19 still is an essential topic in Singapore, but since the beginning of April, vaccinated people can enter the country without any problems. However, masks are still mandatory indoors, and when entering a building, one has to prove the vaccination status, the most efficient way of doing that is via an app provided by the local Ministry of Health.

Three Things

Vaccination rates in Singapore are very high. Over 91% of Singapore’s entire population have at least been vaccinated twice, and over 72% have received a booster shot already. I noticed three striking differences compared to life in Liechtenstein or Switzerland.

First Striking Difference

Taking a vaccination seems no big deal; people just do it. They want to go out, eat and drink, go shopping and enjoy themselves. If this requires a vaccination, they take one. In this respect, the people of Singapore seem to show a rather pragmatic approach, certainly also «motivated» by their government.

Second Striking Difference

The in the Western European media omnipresent attack by Russia on Ukraine is covered more subtly in the Singapore media. The local media certainly covers the war; however, never to the extent, I am used to by the German-speaking media in Central Europe.

Third Striking Difference

Shopping is massive. Every day, you will see people waiting in lines in front of shops like Hermes, Louis Vuitton, Channel, Dior, Rolex, Omega, and other luxury brands. I spoke to a salesperson selling watches at the airport. She told me that they were almost sold out. They could sell more watches but do not receive all they have ordered.

What did I take home from my trip for our business of managing assets?

It helps change the perspective from time to time. So, for example, while Covid-19 was and still is a horrible virus, while the war on Ukraine by Russia caused and still causes the lives of thousands of people, while inflation may hit the average family harder than expected, in other parts of the world, the focus may be on different topics or if on the same, maybe not quite as pronounced or on the contrary more pronounced (as for Covid-19 in China) as over here, in the centre of Europe. When managing assets, we have to make sure not to get carried away by always the same information overflow the media is feeding us on a daily basis. Strategy, structure, discipline and patience should reign, not daily media noise.

Next Week

Now, Ladies and Gentlemen, holding cash on an account for an extended period is a value-destroying exercise. Cash is absolutely no good store of value! I would like to discuss exactly this topic with my partner Hans-Günter Schiefen and see if he is willing to share his recipe to perform in highly volatile markets and an unstable environment.

Ladies and Gentlemen

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 Easter weekend, and above all, peace!

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,

The other day I read an intriguing article, and one of the key sentences to me was the following: «those who expect guidance or inspiration from the government have only themselves to blame; true liberals are those who think and steer without an instruction manual within what is legally possible and socially decent, and justifiable.»

French Presidential Elections

Purchasing Power was an essential topic in Marine Le Pen’s election campaign, and it helped. Many Frenchmen are concerned about rising energy and other prices, and Marine Le Pen promised to ease the pain of rising prices if elected by lowering taxes on fossil combustibles, and it seems she was successful as she continuously gained ground on President Macron throughout the campaign.

Some Reader’s Feedback to my Weekly on Purchasing Power

«At least some of the men in the street have already woken up. For example, a company in the UK supplies anyone, but primarily the government and the likes of the Antarctic Survey, with freeze-dried 25-year lifespan foods. Their six months for person freeze-dried food pack has gone up in price from £800 to £1100 in four months. Another company that sells sealable Mylar bags with de-oxygenating tablets for storing small amounts of food for long periods, which used to only supply trekkers and campers, has been out of supplies and shut now for over two weeks. I remember seeing Jim Rogers interviewed once, and he said, „You do not need to be clever; you just need to go around with your eyes open and questioning.» Feedback by Bob.

«Yes, I see the loss of purchasing power as a massive problem in the coming years. In my experience, prices go up and not down. So I am protecting my purchasing power by putting away some silver (poor man’s gold).» Feedback by Geo.

«Yes, Stefan, purchasing power is bound to become an issue in the short to medium term and fits with currency devaluation from the deluge of fiat currency creation and inflation. One can look at extreme examples such as Zimbabwe, where purchasing power was reduced to almost zero due to unbridled money printing. The only hope for the developed nations is that inflation declines as economic growth slows, which is not a very attractive scenario.» Feedback by David.

Thank you very much, Gentlemen, for your feedback!

Back to the French Elections

Ladies and Gentlemen, in something over a week, we will know the outcome of the French Presidential Elections. If Marine Le Pen was elected, we might face a «FREXIT». This is because Marine Le Pen claimed for years that if she were going to be President of France, France’s relationship with the EU would have to be reassessed. A potential FREXIT would most probably have a significant impact on the value of the Euro and on purchasing power. I have difficulties believing purchasing power would increase in such a scenario, at least not in the short- to medium-term.

…and Politics in General

In recent years, I seem to have noticed that whether a politician is a genius or a failure is becoming less and less critical, as party affiliation increasingly determines the success or failure of a politician or her/his political campaign. This is, I am convinced, dramatically bad for society!

Last but not Least

As per Wednesday’s survey, the bullish expectations of U.S. private investors fell to 15.8% (one of the lowest numbers ever) versus 24.7% in the previous week. In April 2005, that number had dropped to 16.5%, which represented a low in the S&P 500. Ladies and Gentlemen, when confidence is low, potential gains often are high.

Ladies and Gentlemen

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 Easter weekend, and above all, peace!

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,

The largest homogeneous global investor is the cohort of pension schemes. Pension schemes invest the funds entrusted to them either directly or via theme or style based mandates or funds from local but predominantly global providers.

Money flow

Currently, it looks as if global pension schemes will see monthly inflows of fresh capital at least until the largest cohorts of the babyboomer generation are sent into retirement. Why is this important, you may ask. I believe this is a widely neglected fact. Even if we see capital moving out of financial assets, i.e. markets, because of fears of war, inflation, economic downturn, etc., fresh capital piles up every month, sitting on the sideline, waiting to be invested eventually. At the end of the day, it is always money flows that make an asset move up or down.

Does this mean

Does this mean crashes can not occur? No, of course not, but it merely means there is always a fair chance for asset prices to recover due to money flows, as long as there is nothing wrong with the underlying business.

What about financial forecasts and research?

Financial forecast and research help us understand a business, company, sector, macroeconomic environment, etc. However, the point is that no one can predict the course of a market, asset class or single asset with certainty. Therefore, analysts‘ forecasts are expressly not suitable as an „instruction manual“ for any sort of trading that investors should follow uncritically. On the other hand, research can make a solid educational contribution to market participants.

In common sense, we trust

Ladies and Gentlemen, if pension schemes represent the most significant homogenous market player and if this market player receives monthly net new inflows, then There Is No Alternative. TINA, as I read the other day, Ladies and Gentlemen, because this time is no different to other times, no matter what calamities occur in the short to medium term. Investing needs capital, a solid strategy, patience and some common sense. And a reasonable investment strategy should somehow be balanced and include more than one asset category and even generate positive cash flows, at least in my opinion. The magic word here is certainly yield harvesting.

Last week’s Stefan’s weekly

I received many messages regarding my last weekly on the topic of purchasing power during the imminent presidential election in France. I will share with you some of the key messages I received next week. Until then, we should have a first impression of who will become President in France for the next five-year term. The candidate Marine Le Pen heavily exploited the topic of purchasing power, and it was interesting to see how she gained ground on President Macron in recent polls.

Ladies and Gentlemen

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, peace!

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,

Ahead of the presidential election in France, the Corona pandemic has slipped far down voters‘ worry barometer.

Presidential Elections in France

While there seems to be less interest in the current presidential election in France than in the presidential decision five years ago, one can still gain knowledge from polls and statistics during this period. According to Ipsos, 75 per cent said they were interested, 18 per cent were moderately interested, and 7 per cent were not interested. Interest is thus apparently four percentage points lower than at the same time before the 2017 election.

Fine, but what can we learn from the French Presidential Elections

In the presidential election in France in a bit more than a week, purchasing power is the overriding issue for most voters. For 58 per cent of them, the issue is one of the three most important, the opinion research institute Ipsos reported in Paris on Monday. In second place comes the health system (27 per cent) and in third place the environment (25 per cent), followed by immigration and pensions (24 per cent each), the Ukraine war (23 per cent) and social inequality (19 per cent). For only eight per cent of respondents, the Corona pandemic still plays a significant role, and unemployment (nine per cent) is of only moderate interest given the recovering economy in France.

Why would I mention this

France is one of Europe’s leading economies, a member of the G7 and currently, I am writing this to my surprise (I feel I may say this as I own French citizenship and passport next o my Swiss one), a political stronghold in Europe. So if voters in France are worried about purchasing power more than anything else, they merit to be taken seriously, and I would not be surprised to see them as an early indicator for other members of the European Community.

Purchasing Power in Private Households

It would not surprise me a bit to see the French population as a proxy for populations across G7 or, even better, G20 member states. People all over the globe seem worried about the purchasing power of their income and wealth.

What Is your opinion, Ladies and Gentlemen?

Do you see the loss of purchasing power becoming a serious problem over the years to come and if, how would you protect yourself against it?

Ladies and Gentlemen

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, peace!

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,

My job is to make money for our clients. I do this by investing in capital markets, i.e. managing our clients‘ capital in a volatile environment and in line with our clients‘ mandates. I love managing assets. It is an exciting job that allows me to read books, research, newspapers, etc. and listen, and talk to interesting people.

Just another Job; no Art

However, Ladies and Gentlemen, managing assets is just another job; no art, just another job. A job that demands considering many different factors, acknowledging that the picture will never be complete and still having the guts of taking investment decisions for other people’s wealth.

Today’s Challenges for Asset Managers

Exogenous factors are increasingly determining stock market activity. While a relatively stable political environment and a stable (albeit escalating) monetary policy have boosted the economic prospects of private households and companies in recent years, political and monetary policy disagreements are now increasingly influencing financial markets. Moreover, next to the war in Ukraine, Central Banks seem less and less able to fulfil their mandate of maintaining purchasing power. As a result, I think we are entering a period of less return with more risk. Due to the mentioned political and monetary policy disagreements, I expect inflation to remain above the central banks‘ targets for somewhat longer than anticipated.

Today’s Chances for Asset Managers

Where there are challenges, there are chances. I think it is fair enough to assume that Central Banks will only approach inflation with significant interest rate hikes as long as homeowners, pension funds- and financial market participants do not come under massive pressure. This, I think, is especially true for the U.S. because otherwise, consumption and therefore the economy will suffer big time. Classically balanced portfolios between bonds and equities are not good enough to bring positive returns in an environment like that. If low, if not negative real interest rates remain, portfolio structures will have to be aligned accordingly. The question is, how? That, Ladies and Gentlemen, depends on the personal perception of risk, personal risk appetite and personal risk capacity. I have always liked investing in production factors and positive cash flows. Therefore equities have always made up the bulk of my investments, and today, I would add cash and precious metals (preferably in the form of cashflow-positive miners).

Never forget

Investing, by definition, is for the long term. Therefore, do not try to find the right timing; very few people are good at this and can thus do it successfully in the long run. I know I keep repeating myself; please accept my apologies for it.

One last thing

If you are investing and want to continue investing but can barely handle the current, primarily negative, newsflow, you may want to stop reading newspapers too often, stop watching the news too often, and stop paying too much attention to the negative newsflow on your social media accounts.

Ladies and Gentlemen

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, peace!

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,

Many thanks to all who have participated in last week’s quick competition. I received many answers, and most participants guessed Hobbes‘ „Leviathan“; one reader mentioned Nietzsche’s „On the Genealogy of Morality“, another one „Jenseits von gut und böse“ by the same author and another one Arthur Schopenhauer’s „Die beiden Grundprobleme der Ethik“. Those are great books, however, were not the names I was looking for, but now I do not want to keep you in suspense any longer and reveal the solution to the riddle.

…and the Winner is:

So the correct answer is: „Der Schwarze Obelisk“ from Erich Maria Remarque, and the winner of the one-ounce silver coin is Rainer. The book is worth reading, and it sort of fits into today’s geopolitical and geoeconomic setting. Thanks again for participating, and congrats to Rainer; the coin was posted on Wednesday.

This Time is Different

Very bluntly, Ladies and Gentlemen, if this time is no different to other times, stock markets need to go up eventually again. Market participants can not handle uncertainty; that is why markets are volatile and in negative territory this year.

Excerpt from a Message to our Private Clients

Have a look at an excerpt from a message to our private clients: «War in real-time also leads to nervousness among investors. The SMI stands at -13%, the DAX at -18% and the Euro Stoxx 50 at -19%. However, the fear of an overheating economy has faded with the war. Currently, it looks more like a recession and a so-called bear market. In a bear market, indices fall or no longer rise sustainably. The average bear market lasts between 12 and 15 months (depending on the source).»

«Therefore, the conclusion would be to sell all shares and wait for the end of the bear market and then get back in. The problem with such a strategy is that events like an end to the war in Ukraine, a possible overthrow of the government in Russia, a diplomatic solution with both warring parties saving face are difficult to predict. Moreover, even during the horrible war in Ukraine, as during the pandemic of the past two years, the companies in your portfolios are paying regular dividends, some of them even higher than a year ago, none of the companies has announced a dividend cut and this even though many sectors of the economy have suffered due to the pandemic. The past 120 years have impressively proven that equities have been the best investment instrument over the various cycles and that a sustainable return could be generated with them. Unfortunately, this sustainable return came at a price in enduring volatility. Against the backdrop of dividends flowing even in crises (and the resulting compound interest effect), I tend to hold positions, but understand if investors no longer like to endure the pressure of volatility.»

Current Valuations for the Swiss Equity Markets

Since mid-2020, valuations have tended to decline. According to Bloomberg data, the SPI P/E ratio was around 21 at the end of 2020; at the end of 2021, a figure of 16 was measured, and currently, a level of 13.5 is on the books. This means that the valuation of the SPI is below the long-term average of 16. At the end of 2022, the analyst’s consensus expects an average P/E of almost 18. Whether this will come to pass remains to be seen, and we all know that most analysts do a terrible job at forecasting, not that I would be any better at it. However, long-term data shows clearly that equities outperform about every other asset class on the planet in the long run.

Warren Buffet

In May 2018, Warren Buffet told in a CNBC interview: “The best single thing you could have done on March 11, 1942 — when I bought my first stock — was buy an index fund,” if someone invested $10,000 in an index fund back in 1942, it would be worth $51 million today. 1942 was in the middle of WWII, Ladies and Gentlemen.

Clooney and Kremeth

„Equities. What else?“ (I admit; I borrowed from George and enhanced),

Ladies and Gentlemen

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, peace!

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,

«Human beings are only there to live the short period between birth and death with as much egoism as possible.»  Do you know the author of this sentence and the respective book, and the book’s name?

Intriguing thoughts

In order to prevent more significant harm to the people of Ukraine, the neighbouring countries and even the rest of the world’s population, I think it is worthwhile for global leaders to put their egos aside. I do not think many people want this war; let us end it.

Limited Benefits of Sanctions

Multiple studies show that the benefits of economic sanctions are elusive; the costs mostly are not. Furthermore, I believe that sanctions levied against a state with limited democratic processes usually affect less the ruling upper class than large parts of the population already suffering from repression, which in addition has to bear the economic consequences of the sanctions.

Lose-Lose Situation

Ladies and Gentlemen, we are in a lose-lose situation. Further escalation of the situation can not be in the interest of the world population.

Saving Face

If the political nomenklatura in Russia is not offered the possibility of saving face in the event of an exit from belligerent actions, then at present, I cannot imagine why they would be inclined to end the war. I hope the political elite of the West will consider this.

Next week

Next week I would like to look at the meaning of «this time is different» in the context of financial markets.

Competition

To end today’s Stefans’s weekly on a slightly positive note, I am happy to offer a one-ounce silver coin to the first reader writing back to me the correct answer to the question mentioned at the beginning of today’s Stefan’s weekly.

Ladies and Gentlemen

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, peace!

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,

The Prussian general and military theorist Carl von Clausewitz once said:  „The greatest enemy of a good plan is the dream of a perfect plan.“

Your Thoughts

In my last weekly, I asked you to share your thoughts on the current political crisis, and I also asked how you would invest your money in a situation of such great political tension. I received many emails. Thank you very much for all your messages, comments, charts, videos and links.

Many people rightly pointed out that gold was doing its job as a hedge against a crisis. This is true; gold performed very well and decorrelated against the large indices this year, and as one would expect, yesterday during the bounce in the U.S. markets, profit-taking in gold was setting in. On the other side of the spectrum, we had Bitcoin disappointing. No decorrelation to the large indices whatsoever. On the contrary, Bitcoin correlates strongly with the S&P; instead of a hedge, it looks more like a proxy, a proxy on steroids, I would say.

I very much liked a short and snappy comment by Adrian, who wrote: «keep it simple, invest in value». Yes, I agree, I think, value, regular dividends and time can do wonders.

My View

What do you expect? Ladies and Gentlemen, the price you pay for return is volatility; if you want to receive a return, you have to accept paying the price. Nevertheless, time usually helps. Volatility curves tend to flatten out over time. Of course, at the time of a crash, of a market setback, volatility still leads to sorrow, but it may offer some comfort to look at very long charts and see that even high short-term volatility loses its significance in the long term. This most probably means in reverse that If you want or need a low volatility investment, the price you pay for it is a somewhat lower return.

If you have an investment plan, question it regularly; no matter if markets are going up or down, question it and if you are happy with your investment plan, stick to it because as Carl von Clausewitz probably correctly said: „The greatest enemy of a good plan is the dream of a perfect plan.“

One Last Comment

Looking at the news and listening to the global political elite, I get the impression to see a fair amount of stupidity coupled with ideology. A mix I cannot think much of. Who elected those guys? Next time when voting, please ask yourself how the person you are to elect will represent your ideas during a crisis.

Ladies and Gentlemen

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, 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

Good Morning Ladies and Gentlemen,

The great Wayne Gretzky once said: «I skate to where the puck is going to be, not to where it has been.»

U.S. Private Investors

Some weeks ago, I pointed out that U.S. private investors‘ bullish expectations were on low levels. Guess what? This Wednesday, that number dropped again. The number now stands at 19.2% versus 24.4% in the previous week. 19.2% represents a new trend low. Readings below 20 are rare. This was only the case at the beginning of the 2015/2016 bear market in the past five years.

Ukraine Crisis

The Ukraine crisis is determining the current price trend on the stock exchanges. Almost all other developments are being pushed into the background. Among traders, a famous saying goes: «political markets have short legs». „Short legs“ may mean, in the event of an actual outbreak of war, that the adjustment to the new circumstances would take place quickly, in the form of significantly falling prices. However, the first buying opportunity would occur within a few days. If, on the other hand, a conflict can be avoided, at least for the time being, there would be a relief rally due to an already built-in war premium. A positive diplomatic solution would come as a surprise, be unexpected, provide relief, and lead to higher prices.

Wayne Gretzky

In that situation, what would Wayne Gretzky do? Would he buy into the market, expecting it to go up, assuming a diplomatic solution to be reached? Or, would he reduce his holdings, assuming further tensions escalating into a war and thus falling markets?

What do you think?

Do you think global leaders are capable of finding a diplomatic solution, or are they sacrificing the Ukrainian people to their unclear visions? Furthermore, how do you invest your money in a situation of such great political tension? Please let me know, because I would love to be able to do it the Wayne Gretzky way and skate to where the puck is going to be!

Ladies and Gentlemen

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, 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