Autor: Stefan Markus Kremeth

Dear Ladies and Gentlemen

From an economic perspective, the factors of production include land or its natural resources, capital, labour, and, I would argue, knowledge. Now, I have a fair amount of discussions with people of different backgrounds about the importance of capital, i.e. investments.

Something Neglectable

…and occasionally I almost do get the impression that in some people’s minds, capital is not seen as an important economic production factor but essentially as something neglectable, something close to being ashamed of. I do not understand why one could argue like this. Please allow me to share my thoughts with you.

Misunderstanding – Capital is Key

When talking to people, I often sense some socio-economic misunderstanding concerning «capital» and investments. Not considering capital as an essential economic factor ignores the fact that an economy’s stakeholders could not invest in land, labour and knowledge, produce and offer services, conduct research, drive innovation, promote and accumulate knowledge without capital. Capital is key! In other words, without the production factor capital, the other production factors are not or only marginally available. Therefore, investors, i.e. capital providers, are of crucial economic significance, which some political groups and probably even many participants in an economy, unfortunately, seem to underestimate.

Thank you!

Thanks to investors like you (people who are willing to accept risk and provide capital to companies), economies may prosper, create jobs, wealth and social security. Investors are doing something utterly important by providing capital, i.e. by investing. Investing is an active and productive attitude. If investors kept their money (capital) under a mattress in their bedrooms, this would be a passive attitude and not help any economy whatsoever.

Ladies and Gentlemen, you can be proud of supporting various economies with your capital, and I consider it self-evident that you are compensated for the risk you are taking with a return on your capital invested. Thank you!

Ladies and Gentlemen, what do you think, what is your opinion? Please let me know your thoughts.

… 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

Dear Ladies and Gentlemen

Every quarter, I am reporting to our private clients on an individual basis. I thought it might be of interest to you to receive excerpts from the latest reporting. I left all individual comments away and the part about changes to the individual portfolios.

Introduction

The second quarter of 2021 was convincing on many markets with a positive performance and a pleasing personal portfolio development. On the other hand, the stock markets were increasingly characterised by nervousness and volatility. Inflation worries, growth worries, political worries, Covid 19 variant worries, worries about vaccination side effects, vaccination refusers, worries about societal upheaval, etc.

Extraordinary Times?

From ordinary citizens to big investors, there seem to be people who just do not want to miss the opportunity to wallow in any worry, often strongly supported by new and old media channels that can hardly be surpassed in terms of irresponsibility. I do not want to judge, but I cannot always understand this. For us, extraordinary times is the new normal and, therefore, part of our business. However, the line between normality and calamity is thin, and it never ceases to amaze me how little we are aware of it.

Volatility

On the one hand, this is exhausting for us asset managers, as all these concerns can lead to short-term volatilities in individual stock corporations, sectors or entire markets. But, on the other hand, volatilities can also unsettle our investors and possibly trigger new (additional) worries for them.

Long-Term Chances

For us asset managers, however, all these concerns also offer opportunities to make acquisitions for our investors at attractive prices. After poor quarterly results, we have taken the opportunity to build up positions in companies with a solid business model offering the possibility of generating positive cash flows over the economic cycle while showing a willingness to share their cash flows with investors.

Prepare, Sow, Foster, Harvest

This way of investing is a bit like planting seeds. Prepare, sow, foster, harvest. So we sow now and harvest in nine to twelve months. We also have taken profits in some stocks, and we have already repurchased one or the other of those at lower levels.

Equities?

It still looks to us as if there is no way around equities. Interest rates remain low; inflation is likely to be more of a temporary issue. Even if not, it would not automatically lead to a dramatic rise in interest rates by central banks. Therefore cash flows can currently only be generated through equities.

Outlook

At present, I remain cautiously optimistic for the coming months. Of course, I cannot rule out the possibility of profit-taking and even distortions, but I believe these will only occur in the short term and in stretches and yet again and as I have mentioned above, the line between normality and calamity is thin and this is why it makes sense to always keep in mind what my partners Ronni and Mark publish once a year in Incrementum’s „In Gold we Trust“ report and just in case you would have missed this year’s edition, please feel free to use this link:
Full Version – English  (346 pages).

Ladies and Gentlemen, please let me know your thoughts.

… 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

Dear Ladies and Gentlemen

This week’s Incrementum advisory board meeting, hosted by my partner Ronni Stöferle, was all about uranium as a source of energy, undoubtedly a controversial topic for many people. Incrementum’s Chairman, Dr Christian Schärer, held a presentation on the subject.

Key Argument

The investment case for uranium as a source of energy is based on compelling arguments, of which I would like to share the most important with you. For those interested in the other arguments and the presentation by Christian, please feel free to click on the link below to have full access to the video of the advisory board meeting, including the presentation on uranium as a source of energy.

A Question of Supply and Demand

It probably will not come as a surprise to you, but supply and demand make up the most powerful argument for an investment case in uranium as a source of energy. Besides that, nuclear power plants do not produce CO2.

Supply Side

Ever since 2016, the supply side has seen a cut in production of roughly 25% due to low uranium prices.

Demand Side

The shock after the Fukushima nuclear power plant catastrophe has led to shrinking demand for many years, and only recently the demand side became increasing, however with relatively high visibility and still for many years to come. Why would I say this? Because currently, 443 reactors are being operated globally. Fifty-five reactors are currently under construction. Another 100 reactors are in the planning phase, and some 325 reactors are in a «proposal phase».

Link

Ladies and Gentlemen, please feel free to get an in-depth picture of a market few people really know something about from an expert within the Incrementum team. Christian is researching uranium for well over ten years, and he is happy to answer your questions.

Please enjoy the show:
https://www.youtube.com/watch?v=z1s0l0J-ewc

Ladies and Gentlemen, please let me know your thoughts.

… 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

Dear Ladies and Gentlemen

I received some messages to my last weekly mail and one, by Jan, was extraordinary in the sense that it contained questions of great deepness. I am not sure if I have been able to reply to Jan expectedly, but even if not, it was inspiring to me thinking about the questions and sharing my humble points of view.

Why am I telling you this? Because I want to encourage you to share your questions and thoughts as they help me thinking about aspects of our business, I would perhaps miss otherwise.

Nassim Taleb on cryptocurrencies

I have tried to elaborate on the value of cryptocurrencies in the past, and there are many different points of view. While we do not necessarily agree with everything Mr Nassim Taleb comes up with, we have referred to him on various occasions and in various publications. Nassim Taleb has been known as a big fan of Bitcoin.

However…

Link

It seems Mister Taleb has changed his point of view. I personally do not entirely agree with his paper, yet I think it is worthwhile reading it, which is why I encourage you to check it out.

For this, please find the following link to his latest thoughts on «Bitcoin, Currencies, and Fragility.»

Please enjoy the read :

BTC-QF.pdf (fooledbyrandomness.com)

Holidays

Ladies and Gentlemen, I will be on vacation for a few days and therefore not publish a «Stefan’s weekly» next week. The next regular issue can be expected for Friday, July 23, 2021. Until then, I wish you a great summer and hopefully some sunshine. Despite my vacation, please let me know your thoughts.

… 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 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

Dear Ladies and Gentlemen

Many thanks for your messages and for sharing some of your investment ideas and concerns with me. Bob, John, Tom, Roger and Peter thank you very much for your extensive messages!

Thoughts on Cash

The following thoughts I have shared in one way or the other with some of my readers. Given the circumstances and current market conditions, I genuinely think a certain level of cash does not hurt. Tom also let me know that he is building up cash by selling into the strength. If the market or individual stocks are going to correct, cash can help to acquire positions at compelling prices.

Thoughts on Market Timing

However, in general, investors should stay invested (there is tons of statistical data showing that long-term performance is becoming more attractive by staying invested than by trying to time markets). While the investment style may change according to the risk profile or whatever preferences an investor may have, investors should thus and according to statistics, stay invested at least partially. Now, this is fine for me, and it is what we are doing in our private clients‘ mandates.

Thoughts on Cash-Flow

However, I like positive cash-flows and companies that share positive cash-flows with their investors. Because if an investor can harvest dividends regularly and long term, the underlying price of the investment becomes somewhat less important. This, of course, given that the company’s future cash-flows will cover future dividends. Thus, to me, investing also means finding companies that will offer sustainable net free cash-flows even during difficult market conditions. Yet, because even stocks of such companies may suffer from setbacks during a crash, investors with cash have the opportunity to buy more of the same and hence harvest ever more dividends in the years after that. I very much like the effect of compounding positive cash flows in our private clients‘ mandates.

Thoughts on Bond Yields

I was asked why the 30-year treasuries‘ yields went down. Well, in the aftermath of the Fed meeting, yields rose at the short end and fell at the long end. This movement can be called a bearish flattening of the US yield curve and may be considered a leading indicator of a contracting US economy. Why is that? A flattening of the yield curve is consistent with the finding that interest rate movements at the long end are driven by economic conditions, which in turn are partly due to central bank actions. Which is what the market is currently pricing in. Because if the US central bank tightens the reins, i.e. QE reduction, interest rate hike (as market participants currently believe the Fed will do), and thus reduces liquidity, the probability of a weaker economic development in the future increases. A weaker economic development in the future causes interest rates to fall at the long end.

Please, Ladies and Gentlemen, let me know your thoughts!

… 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 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

Dear Ladies and Gentlemen

Please let me start this week’s edition of „Stefan’s weekly“ with a short administrative message on the publications front of Incrementum AG.

LinkedIn

I do not know if you know, but Incrementum AG has a LinkedIn account. If you are interested in reading regular posts from the partners of Incrementum AG, please feel free to follow us on LinkedIn.

Still no crash detectable

Ladies and Gentlemen, I receive many questions on how to invest and on if the market is going to crash and if we will see massive inflation. The fact is I can not foresee the future, but let me give you my point of view.
I know there is risk, i.e. volatility, in equities, and many companies‘ valuations seem expensive, and all major Dow indices (Industrial, Transport, Utilities) showed relative weakness in the last week, and I would not rush in and buy stocks across the market franticly, but if you see an opportunity, why not starting the building up of a position?

What is the alternative?

We see oil with unwavering strength, and the trend in the Nasdaq 100 futures remains up and if we consider bonds a no-go, where to put the cash? Well, first of all, I am a big fan of cash. When markets are shaky for a few days, weeks or even months, cash comes in handy and can help build up positions at reasonable prices. However, I am also a big fan of equities. Long-term, it makes sense to me to be and to stay invested in equities of companies producing positive cash-flows without trying to time the market too much. Market timing is challenging, and few people do get it right.

Risk Assets

In any case, investing in so-called „risk assets“ involves primarily the capacity of handling risk, i.e. the capacity of accepting volatility. People are different and thus feel different about accepting risk. That is why a portfolio should always be structured according to your personal desires, needs and your very personal risk appetite.

What is your way of managing assets?

Please, Ladies and Gentlemen, let me know about your experiences in asset management. What is important to you, and how do you handle risk? Do you think the market is a ticking time bomb?

… 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 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

Dear Ladies and Gentlemen

My partner Dr Christian Schärer, Incrementum’s Chairman, is an expert on uranium investments. Christian is a long-time industry professional and accumulated know-how in a sector many investors are shunning away from.

Uranium Report 2021

He is often called in as an expert and interviewed on the subject, and therefore I take the liberty of sharing one of these interviews from SRC’s latest uranium report with you.

Interview

The interview he gave is based on uranium stocks‘ recent positive price moves but gives you an impression and a lot of background information of a market very few people know about. Please enjoy the read:
Interview with Dr. Christian Schärer – Incrementum

Please do not hesitate to write back to me, and please let me know your views or share your personal experiences!

… 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 day, a wonderful weekend, and above all, good health!

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

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

Dear Ladies and Gentlemen

Thank you very much for your positive feedback on the article about Liechtenstein. Many of my readers seemed surprised that Liechtenstein only 100 years ago was an impoverished country. The example of Liechtenstein shows that many things are possible if only people stick together and are willing to work hard.

Interesting Study by J.P. Morgan

There has been a study by J. P. Morgan on the effects of «permanent investing», and I know this is nothing new to you, and I have been writing and talking about the effect of staying invested permanently in markets for years on many occasions, and yet, I know how it is, we all keep forgetting it.

Now, according to that study by J.P. Morgan, USD 10’000 invested in the S&P between the beginning of 2000 until the end of 2019 resulted in USD 32’421. In those 20 years, trading on the stock exchange happened on roughly 5’000 days. If an investor missed the ten best days of those 5’000 trading days, the result of the USD 10’000 initial investment would have amounted to USD 16’180, only.

Losses and Sorrow

The problem is that the returns of such a 20-year investment are not evenly distributed. Over those 20 years, investors experienced massive volatility, and unfortunately, very few investors can handle high volatility. The fear of losing everything triggers panic-sales on stock exchanges and leads to losses and sorrow. Mind you, I fully understand that, and while greed and fear dominate the exchanges, they are perceived very differently by investors. The same is valid with volatility. The sensitivity of investors is a very individual thing, and while one person does not get stressed if markets are moving up or down five or even ten percent, for another one, such may lead to sleepless nights.

Conclusion

In the long run, I believe investors should be invested and stay invested as suggested in J. P. Morgan’s study. However, optimising investment returns and volatility is an individual thing, and if it makes you sleep better to hedge your portfolio, take profits, and/or reduce your exposure, I think you should definitely do it.

Ladies and Gentlemen, please share your thoughts, experiences and views with us.

… 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 day, a wonderful weekend, and above all, good health!

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

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

Dear Ladies and Gentlemen

Many thanks for your feedback on my last weekly. Cryptocurrencies seem to be an intriguing thing for many of my readers. Especially the «value» of cryptocurrencies is something that led to all sorts of comments. Another aspect that raised concerns was the inflation of tokens.

My partner Mark J. Valek (Head of Crypto Assets at Incrementum AG) has his own view on the inflation of tokens, i.e. issuance of new cryptocurrencies, and I would like to give him the chance to share his view and thoughts with us. I suggest that I publish a special edition of Stefan’s weekly on this topic in the weeks to come.

Link

Now, for today, I have a link to share with you :
Liechtenstein; a Golden Path to Prosperity – Incrementum

Executive Global

I was asked to write an article about Liechtenstein for the Executive Global Business Magazine. I hope you will like my work and I am looking forward to your feedback!

Please do not hesitate to write back to me and please let me know your views!

… 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 day, a wonderful weekend, and above all, good health!

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

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