Kategorie: Stefan’s Weekly

Dear Ladies and Gentlemen

Thank you very much for all your feedback to the video interview. My friend Robert made me laugh when he wrote in response to my quote that wine may become currency, that he just invested in some excellent “currency” during his recent trip to Slovenia and is enjoying it very much.

I also received some feedback to my views on equities and on gold and this is why today I would like to look at a phenomenon which is bothering me to some extent.

Do you know the story of Peter and the Wolf? I guess you do.

As most of you know, I am a reasonably humble investor. I am aware of the fact that sometimes I make mistakes when investing and I am also aware of the fact that we live in a world of increasing government debt and I can’t say I like it and on top of that I am also a humble gold bug, knowing about the positive and specific core features of gold as a means for very long-term value, i.e. capital preservation.

However, I also really don’t want to pay the opportunity cost of only investing in one asset class and I really like cashflows and gold doesn’t deliver those. Now, since I want cashflows but can’t find them on the fixed income (bonds, etc) side, I am constantly forced to screen the markets for equities of cashflow producing companies with solid and sustainable business models, whose valuations are not too stretched. Clients sometimes ask me why I would buy equities of companies when they just had missed their quarterly results. Well, Ladies and Gentlemen, to explain this in a very simplified manner, if the underlying business of such a company is solid and the cashflows are even coming in during difficult market periods and the company gets hit because it missed quarterly results estimates produced by some financial analysts, I usually look at it as a gift by the market and buy into the company at somewhat lower prices, wait, see and collect dividends for my clients and if over time market participants start to forget the fact that the company had missed their targets or the company even beats some quarters down the road unexpectedly analyst’s forecasts, the stock usually starts climbing again and the investment delivers a capital gain next to the dividends. It is not always that simple, but I think you get the idea.

But now you may ask, what this has to do with Peter and the wolf? The thing is that I share some of the views of gold bugs but unfortunately many gold bugs are behaving like Peter, they are shouting “wolf”, “wolf”, “wolf”, a little louder year after year, but there is no wolf coming. In the beginning people (investors) are concerned and are (still) listening but over time less and less people are concerned and at the end no one believes in the wolf anymore, they begin neglecting protection – and that may be the moment the wolf is arriving.
The phenomenon I see is that some gold bugs have the right intention but instead of staying humble, they do get bored or even frustrated because the wolf is not quite arriving yet and so they start shouting louder and louder. At Incrementum AG we try to avoid this by producing the Incrementum “In Gold We Trust“ gold report only once a year because in the end any very long-term “protection” shouldn’t be influenced by monthly or quarterly market noise and/or chatter.

To sum it up, Ladies and Gentlemen, I believe the wolf will be coming one day and this is why my tool box approach offering a combination of various asset classes makes so much sense to me. But paying the opportunity cost of a dogmatic investment style doesn’t make sense whatsoever.

Please do not hesitate to share your thoughts with me on the interview or on whatever seems interesting or bothering to you. Please feel encouraged to do so 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

Dear Ladies and Gentlemen

Many thanks for the encouraging messages I received to my last weekly mail containing a link to the latest edition of our Incrementum Crypto Research Report. My colleagues from the Incrementum Crypto-Team have again invested a lot of time and effort to make it a worthy product. If you have not had the chance to look at it, maybe you do want to spend a moment to do so over the weekend, I think it is well worthwhile.

Now, for this week I would like to look at what is happening at financial markets right now. You know, the large European indices don’t look so cool with the SMI being down 7.92% so far this year, the DAX down 10.67% and the EuroStoxx standing at minus 8.41% year-to-date.

What is happening you may ask. Is this just a healthy correction, a crash or the beginning of a bear market?

First, I personally think there is not much wrong on the corporate side. Almost all companies we are screening have reported decent numbers so far this year, some of them even reported very good numbers.

Second, statistically the fourth quarter in U.S. mid-term election years, such as 2018, is usually a positive one for U.S. equity markets. Yet (and we have to keep that in mind) those statistics only show a picture of aggregated numbers and while the aggregated numbers may show a positive result over time, individual years may still be negative.

Third, investors are worried about higher yields. Large US bond ETFs have taken quite a beating lately.

Forth, the general news flow seems somewhat tilted towards the negative. According to mass media we seem to see more and more tensions stemming from global political leaders and other global political forces.

Well, Ladies and Gentlemen, this somewhat kills the vibe, no? In such an environment, investors are just not willing to commit for the purchase of equities, investment funds, ETFs, etc.

…and to answer the initial question if this is just a healthy correction, a crash or the beginning of a bear market, I can only answer that: “I don’t know!”, as I can’t possibly foresee the future which I admit is a pity but nevertheless a fact.

However, if you are in the game for the long run and you have done your due diligence before investing and you are convinced to have the right stocks in your portfolio, during periods like this you may want to consider buying more of the same at lower prices.

…and it pays off to keep a reasonably balanced portfolio. For example, look at the performance of gold over the last few days. If you have a small allocation of gold in your portfolio it must have added positively to the total return during the last days and thus took some of the negative volatility out of your portfolio

Diversification helps during difficult times but in order to have a diversified portfolio for difficult times you may want to consider building it up while markets still look healthy.

And now, Ladies and Gentlemen, please keep in mind that I can’t foresee the future and whatever I am sharing with you in my weekly mails reflects my very own personal opinion and please keep on sharing your thoughts and ideas with me. Please feel encouraged to do so but please don’t forget (instead of hitting the reply button) to send your messages to:

smk@incrementum.li

Many thanks, indeed! Your comments keep me going!

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

Kind regards.

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

Dear Ladies and Gentlemen

If you do want to receive this weekly message in future, you will have to confirm your subscription under:

https://www.incrementum.li/publikationen/incrementum-newsletter/

and tick the box “Stefan’s weekly” and/or the box of any other publication we produce on a regular basis.

I am sorry for the inconvenience, but we are forced to do this because of the newly introduced “General Data Protection Regulation”, which came in law this year in Europe.

But now let us quickly check out the question “why would you bet on one scenario only?” which was asked by one of my regular readers and try to find an explanation for this.

Well, I think the reason why an investor would bet on one single scenario is quite simple, if you get the scenario right and if you get the timing right, you can make a lot of money. Therefore and to some extent betting on one single scenario is speculation. But if you don’t get the scenario right or if you don’t get the timing right or if you don’t get either right you will lose money and maybe get frustrated. As one of my partners keeps saying: “it’s not about being right, it’s about making money” and he is totally right there. Now, when managing other people’s money, like in my case, because that is what I mainly do, the goal must be to protect my client’s assets and to deliver some sort of positive return over time. This is why I wrote about the toolbox-approach some time ago. Various tools for various scenarios and even better a combination of tools to reach some minimal diversification.

The world, nature, people, politics, financial markets, currencies, etc. are in constant motion. Even if you are using various tools for different market cycles and investment scenarios within your strategic or tactical asset allocation it is difficult to make money these days but by betting on one single scenario only, you most probably will miss out on a lot of (other) opportunities. Therefore, and to answer the question, I think betting on one single scenario may lead to very large profits but from my point of view I prefer at least some minimal diversification.

What do you think? Please let me know your points of view!

But please don’t forget (instead of hitting the reply button) to send your messages to:

smk@incrementum.li

If you are still happy to spend a quick moment with me, feel free to read this short text under the following link:

Independent and Flexible Boutique Approach

Many thanks indeed for your interest and participation!

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

Kind regards.

Yours truly,

Stefan M. Kremeth

Stefan M. Kremeth gibt den Lesern einen detaillierten und genauen Einblick in die unabhängige Investment- und Vermögensverwaltungsgesellschaft Incrementum AG.