Kategorie: Stefan’s Weekly

Year-End Competition …and the winner is…

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen!

Welcome in 2020! May 2020 be a prosperous, an interesting and a friendly one for all of us.

Today I am happy to announce the winner of our year-end competition. The goal was to guess the year-end prices for one ounce of gold in USD, for the S&P 500 and for one ounce of silver in USD. I looked up the prices on: https://marktdaten.fuw.ch/ and compared them to all the suggestions in all the emails I had received at the time. The year-end prices were the following:

Gold:  1’517.40                                Silver:  17.86                        S&P:  3’230.78

Congratulations! You did a great job at foreseeing at least one or two out of the three year-end closing prices. For every person who participated in the competition I calculated the price deviation in % each for gold, silver and the S&P, added those together and divided them by 3. Like this I received the average price deviation per person.

….and the winner is: my friend Andreas, with whom I used to study at the university of Liechtenstein and who during many times had helped me big time by sharing his study notes and even better, his perfect summaries prior to exams we had to take! Congratulations Andreas! The average price deviation of his guesses was 3.61% – which is pretty amazing!

Maybe and just for the sake of it, the highest estimate for gold came from Rainer at 1’611, the lowest from Robert at 1’385. The highest estimate for Silver also came from Rainer at 20.56 and the lowest again from Robert at 16.37. The highest estimate for the S&P came from myself at 3’240 and the lowest from Scott at 2’623. Many thanks to all of you for participating. Maybe I will run another competition in 2020. Maybe in a year from now silver stands at USD 50 or 100 and thus it will be even more interesting to participate in the competition.

As always, Ladies and Gentlemen, please share your comments, remarks, suggestions with me, but please don’t forget (instead of hitting the reply button) to send your messages to:

smk@incrementum.li

Many thanks, indeed!

And now, Ladies and Gentlemen I wish you a great day and weekend.

Kind regards.

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
Web: www.incrementum.li

Gold in the Age of Eroding Trust

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen
 
They did it again! As every year, my partners Ronni Stöferle and Mark Valek have invested a considerable amount of time into what we believe to be the most extensive research piece that has ever been written on gold.
 
The narrative of this year’s edition is “Gold in the Age of Eroding Trust” and how the widespread as well as multi-facetted erosion of trust affects gold and may affect the price of gold. Among others, the following topics are covered this year:

  • Review of the most important events in the gold market over the past 12 months 
  • “The Monetary U-Turn” and its impact on the gold price
  • The increasing importance of gold as reserve asset in a time of de-dollarization
  • Gold stocks: reasons for our confidence (ESG, technology, valuation)
  • Outlook for gold price development 

Further highlights of the report include exclusive interviews and guest contributions from and with many well-known personalities, such as Jim Rogers or Prof. Steve Hanke.
 
In the following please find the download links for all editions of the report:
 
English version:
Extended Version – English (340 pages) 
Compact Version – English (100 pages) 

Please feel free to share our Incrementum In Gold we Trust report with family, friends, and colleagues.
 
If you should have any questions, please feel free to contact my partner Ronni Stöferle under: rps@incrementum.li 

Enjoy the reading, Ladies and Gentlemen and have a great day and weekend. 

Kind regards.
 
Yours truly, Stefan M. Kremeth
Wealth Management
Incrementum AG

There is no magic!

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen

There is no magic! Financial well-being and prosperity need a minimum amount of economic growth.

You know, I received a fair amount of positive feedback to Anton’s article on increased productivity and economic growth thanks to cheap and all time readily available (fossil) energy and again, Ladies and Gentlemen, there is no magic, economic growth demands cheap and 24/7 readily available energy.

… and without economic growth, large parts of populations will not be able of keeping their standard of living on current levels and even less of increasing it, unfortunately there is no magic there either.

I believe if large parts of a population feel economic pressure, eventually those people will want to vent their feelings, and this may lead to unpredictable and inconvenient consequences. The yellow vests movement in France is only one very recent example right in front of our doorsteps.

The cost of such protests is enormous and, there is again no magic, will have to be borne by the country’s population. While the wealthier cohort will not really feel any impact, it is a twist of fate that the less fortunate cohort, the ones that are in the street protesting for a better life, will be hurt even more over time through indirect tax increases, inflation, general increase in cost of living.

The question for me and my readers is how to invest in such an environment. I firmly believe there is again no magic. If you want to have some sort of cash return on your assets in a 0% or negative interest environment, you can get it by accepting volatility. If you are ready to accept volatility you can have easily 4% – 5% cash return on your investments. But volatility is not for everyone. People get very quickly very nervous. Long term statistics show that equities beat bonds but the price you pay for the extra performance of equities over bonds is volatility. No magic, Ladies and Gentlemen! I don’t mind volatility; I prefer low volatility to high volatility, but I don’t really mind it that much.

Besides equities, where do you want to invest your money and receive a cash return if not in equities?

What is your opinion, Ladies and Gentlemen, as Anton did, please share your thoughts, ideas and/or experiences with me and my readers, but please don’t forget (instead of hitting the reply button) to send your messages to:

smk@incrementum.li

Many thanks, indeed!

And now, Ladies and Gentlemen I wish you a great day and weekend.

Kind regards.

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

Inescapable Realities of Prosperity

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen
 
One of my readers sent me a link to an article he published on LinkedIn. I think the article is fundamentally sound, proposes some of his very personal interesting ideas and assumptions and is well written. I have thus asked him permission to publish his article or the link to his article in my weekly mail and was granted that. Thank you very much for sharing your knowledge and thoughts, Anton!
 
Now, the original title of the article is: “Energy, Productivity & Debt – Inescapable Realities of Prosperity” and the original article with some illustrating charts and graphs can be found under the following link:
 
https://www.linkedin.com/pulse/energy-productivity-debt-inescapable-realities-anton-f-balint/
 
I highly recommend reading the original article. However, one or the other passage may need some second reading especially for non-native English speakers, I think it is worth it.
 
What is your opinion, Ladies and Gentlemen, as Anton did, please share your thoughts, ideas and/or experiences with me and my readers, but please don’t forget (instead of hitting the reply button) to send your messages to:
 
smk@incrementum.li
 
Many thanks, indeed!
 
And now, Ladies and Gentlemen I wish you a great day and weekend.
Kind regards.

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

In Gold we Trust

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen
 
I am happy to announce that our yearly report “In Gold we Trust” on monetary policies and gold will be published on May 28, 2019. Please have a look at our website and maybe even the teaser video we produced under the following link:
 
https://ingoldwetrust.report/
 
You may be sure to find many interesting charts and stories, illustrating known and lesser known aspects of the special situation of monetary policies we’re in for so many years already and which will last for some more time I suppose.
 
In my humble and slightly bias opinion we can be certain that Ronni, Mark and their helping colleagues have been digging into the dirt to bring to light facts usually not covered by mainstream media.
 
Another 18 days and Incrementum’s 2019 “In Gold we Trust” report will be published, this year for the first time in Chinese, next to English and German.
 
Ladies and Gentlemen, in anticipation of our Incrementum “In Gold we Trust” report I wish you a great day and weekend.
 
Kind regards,
 
Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

Michael J. Burry

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen
 
Michael J. Burry is an American, physician, investor, and hedge fund manager. He was founder of the hedge fund Scion Capital, which he ran from 2000 until 2008. Burry was one of the first investors to recognize and profit from the subprime mortgage crisis and became famous when he was portrayed in the biographical drama “the big short”.
 
Why would I dedicate my weekly mail to Michael J. Burry you may ask?
 
I got the idea when communicating with Robert, one of my regular readers after my last weekly mail on my personal investment style. The conversation went very much into the direction of the difficulties I am facing when managing my clients’ assets. Prior to the conversation with Robert I have had a similar conversation with David from Australia.
 
What I wrote to them was that the difficulty for me as a money manager is to see and recognise facts that make an investment an interesting one or a not so interesting one. This may seem obvious but with the amount of information available today, I still want to stress the fact that sometimes it is very hard to see the obvious because our mind gets distracted by market “noise” and headlines and maybe colleagues and/or a client who calls and tells me what he just had learned from a friend, etc.. Thus to recognise the obvious and if possible to recognise it ex ante, is not such an apparent thing. Also, and this is utterly important, it is vital not only to see the risks of an investment but potential chances of it as well. As you know, I am getting paid for investing my clients’ assets and for achieving positive results. Looking at the risk side for too long keeps me from seeing chances.
 
I try very hard to stick to my investment principles and to keep all the noise outside of my focus. I do not read investment-advise from banks and brokers and don’t go to their investment meetings. Most of my investment decisions I take on weekends, as I don’t want to be influenced by prices going up and down and I usually inform my partners during our weekly asset allocation meetings on Monday afternoon about my ideas, which I generally implement afterwards. In this respect I am rather focused and structured.
 
…and still, I do make mistakes and I am really not very good at timing the market. But the long-term results nevertheless are rather inspiring. My client’s portfolios show less volatility and better performance in the long run than any of the markets I am investing in. I am only able to capture a part of the gains on the upside (in average roughly 65%) but during difficult periods, downswings, etc. our portfolios are mainly very stable and, in the past, only lost roughly 15% – 35% of what the markets would lose.
 
You know, I think it is important to question one’s investment approach from time to time and make sure that one’s expertise (especially strong expertise) is not holding one back of seeing chances outside the field of expertise. Michael J. Burry was very successful with sticking to his principles and with seeking chances and exploiting opportunities. The mix was perfect at the time.
 
What is your opinion, Ladies and Gentlemen, I am asking you again, will we see a major market correction or soaring markets? Let me know about your investment style and please share your investment experiences with me and my readers, but please don’t forget (instead of hitting the reply button) to send your messages to:
 
smk@incrementum.li
 
Many thanks, indeed!
 
And now, Ladies and Gentlemen I wish you a great day and weekend.

Kind regards
 
Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

„Die Nullzins Falle“

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen

Due to the Easter weekend I decided not to send out my weekly last Friday.

Now, today I would like to mention a book called “Die Nullzins Falle”. My partner Ronald P. Stöferle acted as one of the three co-authors of the book. As the title suggests “Die Nullzins Falle” describes the authors’ views on long-term socio-economic effects of the current ultra-low interest rates. The book takes on purpose a rather critical view and intends to elaborate on the riskier, more unpleasant, maybe even dangerous side of current monetary policies.

The book certainly makes an interesting read and it can be ordered in any online bookstore under the ISBN number: 978-3-95972-019-9.

These days I receive a fair number of messages and phone calls from private clients and investors. As we are approaching new highs in the markets one part of the people calling me or writing to me suggests a sudden market crash, while the other half is seeing even higher prices.

I simply don’t know where the markets are heading but I must admit I like taking profits and that is exactly what I am doing now. I sell bits and pieces here and there. I am selling small positions into the strength. Taking profits is a very satisfying thing to do and even if I may miss out on another up-move, I simply don’t care. Just to be clear, I am not liquidating any portfolio but am rather selling very small positions here and there and only into the strength.

While I am currently a net seller of equities, I am still a buyer of equities of companies that seem somewhat out of favour. However, even the companies I am currently considering as add-ons to the portfolios always have to be net free cash-flow positive and not suffering from any negative structural issues. Sticking to that rule I might have to wait a little until such companies’ equities will be traded up again at some time in the future but until then the positive cash-flows will deliver cash returns on capital invested.

What is your opinion, will we see a major market correction or soaring markets? Let me know about your investment style and please share your investment experiences with me and my readers, but please don’t forget (instead of hitting the reply button) to send your messages to:

smk@incrementum.li

Many thanks, indeed!

Kind regards,

And now, Ladies and Gentlemen I wish you a great day and weekend.
 

Stefan M. Kremeth
Wealth Management
Incrementum AG

Yield or how to receive cashflows in a negative yield environment

Posted on by Stefan Markus Kremeth
Dear Ladies and Gentlemen I received a few mails on my very provocative statement that house pets, farming and children produce an enormous amount of greenhouse gases. I was provocative on purpose. It was my intention to trigger some reactions. I received two mails on the indirect financing of (nuclear) weapons via government bonds. It seemed most of my readers were never really looking at it that way. Fact is that you will never know what a government is doing with the money you pass on to them when subscribing to one of their bonds. They may buy weapons or build a children’s hospital with it – it is entirely up to them. I generally receive several mails per month from readers asking me how they should invest their money to achieve the best possible results. As always, I can’t tell you and I am not allowed to give any advice to you just like that, but I am happy to elaborate quickly on what I think seems a decent strategy to still get some yield in a negative yield environment. You know, Ladies and Gentlemen, my goal always is to receive cashflow with limited volatility. Some of my readers already know about my investment style. My investment style is real asset based and enjoys a rather large equity portion. However, the equity portion is limited to equities of companies producing positive net free cashflows and I like rebalancing the position in my clients’ portfolios from time to time. This means I define a “normal” weighting, i.e. around 5% for any equity position in a portfolio and harvest the dividends or capital reductions the underlying company shares with its investors. If the price of an equities-position appreciates over time and thus the weighting within the client’s portfolio goes up, I will start cutting back the position down to its initial 5% weighting. If, however, the price of an investment goes down and I can’t find any dramatic change in the strategic and/or earnings perspective and the company still produces positive net free cashflows, I harvest the cashflows and increase the position until it reaches its intended weighting of 5%. The result of this strategy is astonishing. Volatility decreases massively and performance increases. When markets are moving up, we only capture a part of the positive performance, because we like to keep a large cash position at hand. But when markets are going down, we usually only lose a fraction of what the market loses. It is during the down moves that we generate alpha. You can have a look at the monthly development of one of our portfolios on our website. https://www.incrementum.li/en/wealth-management/ It still needs the “right” equities and this is probably the most difficult part. Please let me know about your investment style and please share your investment experiences with me and my readers, but please don’t forget (instead of hitting the reply button) to send your messages to: smk@incrementum.li Many thanks, indeed! And now, Ladies and Gentlemen I wish you a great day and weekend.
 Kind regards,Stefan M. Kremeth
Wealth Management
Incrementum AG

Environmental, Social and Governance (ESG) friendly (Part one)

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen
 
In last week’s part one on ESG investing, I shared some very basic information on ESG investments. Today I would like to point out some of the difficulties one faces when investing in ESG-friendly products. However, the short format of my weekly mail will not allow me to go into the topic very deep, but I am convinced I will make you reflect.
 
Let me start with an interesting and somewhat extreme example. Just imagine you were running a portfolio with an ESG-friendly touch and now just imagine for risk (volatility) reasons you were holding government bonds. No problem you may think, and most investors wouldn’t even think a second about that part of the portfolio. But it strikes me that even though most investment managers who offer ESG-friendly strategies would never invest in a weapons producing company, they are happy to give loans to countries spending enormous amounts of money on weapons of all sorts and sometimes even nuclear devices.
 
Ladies and Gentlemen, by buying government bonds and/or treasuries of the United States of America, Israel, the U.K., China, India, Pakistan, etc. investors are supporting the financing of weapons of mass destruction. The average investor does not think badly about it, I even think the average investor would not think about this at all and yet by buying government bonds and/or treasuries, investors are providing loans to governments, which the respective governments may use to buy and/or build weapons of mass destruction.
 
This is why I am of the opinion that if so called ESG-friendly products contain government bonds and/or treasuries and/or gilts or whatever one wants to call such papers, no truly ESG-friendly investor should touch such products.
 
You see my point, right? When investing in ESG-friendly products you have to be careful because sometimes you do not get what you expect. On the other hand the run on ESG-friendly products is important these days, especially as regulation forces investment managers in that direction. Trouble is, realistically there are simply not enough truly ESG-friendly investments available and therefore investment banks and financial product designers must become “creative”.
 
Anyhow, there is one more thing I want to add. Today everyone is fixed on CO2 emissions even if “greenhouse gases” in general are a much more important factor than CO2 emissions only. By now just about everyone should appreciate the fact that it is greenhouse gases we have to look at because greenhouse gases (GHGs) are absorbing infrared radiation and cause the so-called greenhouse effect. As you may know GHGs are both natural gases, such as carbon dioxide, water vapor, methane, and nitrous oxide, as well as human-made gases, including chloro- and hydro-fluorocarbons. Yet, it is very easy to blame a diesel car taxi driver for polluting our cities but let’s face it keeping for example a house pet for the sheer pleasure of keeping a house pet is probably even worse. According to the Humane Society of the United States, there are 86.4 million cats and 78.2 million dogs in homes around the U.S.. Just imagine, the enormous amount of greenhouse gases the global population of house pets is producing directly and indirectly.
 
Now tell me, why is the media not tackling this issue, why are they so concerned about fossil carburates but do not seem to be considering house pets, or children, farming, etc? I would almost assume, because you cannot win elections by telling the electorate to put to sleep their house pets and to stop reproducing, i.e. stop having children. It is much easier finding one weak opponent – today it’s the diesel car producers and drivers – and bang on their heads until everyone believes that producing diesel cars is the worst thing that ever happened to humanity.
 
What drives me crazy is that large masses of people can be irritated and thus manipulated so easily.
 
Ladies and Gentlemen, I urge you to ask questions, always. Do not just believe what the media and politicians want you to believe. The first ones have only one interest, to catch your attention for as long as possible, like this they can charge higher rates for adds and thus earn more money, the later ones only interest is either to be elected or to be re-elected. This is it! They don’t care about you, they either want your attention to make money or your vote to get power and make money.
 
As always, I encourage you to send me your feedback and/or questions but please don’t forget (instead of hitting the reply button) to send your messages to:
 
smk@incrementum.li
 
Many thanks, indeed!
 
And now, Ladies and Gentlemen I wish you a great day and weekend.
Kind regards,
 
Yours truly,
 

Stefan M. Kremeth
Wealth Management
Incrementum AG

Environmental, Social and Governance friendly (Part one)

Posted on by Stefan Markus Kremeth

Dear Ladies and Gentlemen

Once every few weeks I receive messages by readers that ask me about Environmental, Social and Governance (ESG) friendly investments. I think it is about time to take up this topic.
 
This week, in part one, I would like to share some basic information and explain some of the terminology used in connection with ESG friendly investments. Next week I would like to offer my point of view on the difficulties arising when trying to choose ESG friendly investments.
 
Let’s start with ESG. ESG stands for Environmental, Social and Governance and defines certain standards used to screen investments.  You may have read or heard of the following terms, like SRI and/or CSR. SRI (Socially Responsible Investments). SRI basically covers as the name would suggest the field of socially responsible investing and looks for investments that are considered socially conscious because of the nature of the business the company conducts, while CSR (Corporate Social Responsibility) is a business model that may help companies be socially somewhat accountable to it its stakeholders and the general public.
 
When looking for an investment, one my come across the terms of “Impact Investing” and/or “Green Fund”. Impact investing aims to generate specific beneficial social or environmental effects in addition to financial gains and green funds should invest only in sustainable or socially conscious companies, avoiding the rest of the investment universe.
 
When looking at ESG investments, statistics on CO2 (carbon dioxide) emission are probably one of the most common denominators used to explain negative environmental effects. However, I prefer statistical data on so called “greenhouse gases” as such statistics offer a wider, more complete picture. The most commonly known greenhouse gases are water vapor, carbon dioxide, methane, nitrous oxide and ozone.
 
Ladies and Gentlemen the above basics are needed for my next weekly, which I promise will be somewhat more spicy.

As always, I encourage you to send me your feedback and/or questions but please don’t forget (instead of hitting the reply button) to send your messages to:

smk@incrementum.li

Many thanks, indeed!

And now, Ladies and Gentlemen I wish you a great day and weekend.

Kind regards,

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG