Prosperity Favours the Patient

Good Morning Ladies and Gentlemen

“US national debt passes $40tn after doubling in a decade.”

BBC Headline News in August 2026

Reflecting on the mid-1990s, one vital lesson emerges for long-term investors: time is often a more formidable ally than attempting to time the market. When considering an investment horizon of at least three years, equity markets have experienced negative returns in fewer than 25% of rolling three-year periods. This suggests that approximately three-quarters of the time, investors who exercised patience were rewarded with positive outcomes. This observation carries significant implications. Any decision to significantly reduce risk, shift entirely to cash, or position for a market downturn essentially amounts to a wager against a historical trend that has held true for decades. While short-term setbacks, recessions, and market corrections are inevitable, the long-term trajectory of productive assets has typically remained upward. Therefore, a persistently negative investment strategy not only requires a pessimistic outlook but also assumes that established historical market dynamics will suddenly become irrelevant.

Last Week’s Edition

Last week’s edition of “Stefan’s Weekly” examined the implications of 10-year U.S. government bond yields exceeding 5% for market participants. However, it did not adequately address the fundamental factors driving inflation and rising interest rates. This week, I use my home country, Switzerland, as a case study to illustrate why inflation and interest-rate levels may differ substantially across countries.

The Swiss National Bank

The Swiss National Bank’s (SNB) recent decision to maintain its policy rate at 0 per cent once again underscores Switzerland’s distinctive position within the international monetary landscape. Whereas the US Federal Reserve and the European Central Bank have maintained considerably higher policy rates in response to stronger inflationary pressures, Swiss inflation remains firmly within the range consistent with price stability.

How Is This Possible?

Well, Ladies and Gentlemen, Switzerland’s comparatively low interest-rate environment can be attributed to several structural factors. First, the country has historically experienced relatively low inflation, due to high productivity, strong market competition, and moderate wage growth. Second, the Swiss franc functions as a safe-haven currency and therefore tends to appreciate during periods of heightened global uncertainty. By reducing the cost of imported goods and services, this appreciation further moderates inflationary pressures and diminishes the need for restrictive monetary policy. Third, Switzerland’s sound public finances, government budget discipline, low level of public debt, and strong institutional stability contribute to lower risk premiums in capital markets, and finally, the country has maintained a structural savings surplus for several decades, resulting in an abundant supply of capital and exerting downward pressure on the natural equilibrium interest rate.

Conclusion

Collectively, these factors enable Switzerland to sustain lower interest rates than either the eurozone or the United States over the long term without compromising price stability or economic growth. The combination of fiscal discipline, institutional credibility, monetary prudence, a structurally strong currency, and a persistent savings surplus has created an economic framework that many nations would undoubtedly find desirable. Yet one cannot help but wonder why these principles often fail to resonate with voters elsewhere. Perhaps it would be worthwhile for electorates to reflect more carefully on a simple but fundamental question: where is the money for the ever-growing list of political promises, subsidies, entitlements, and benefits ultimately supposed to come from?
Which brings me to an additional and very personal observation. Investing and public finance share a common truth: sustainable prosperity rarely results from shortcuts. Just as successful long-term investing requires patience, discipline, and a willingness to resist the temptations of short-term market noise, sound economic policymaking demands restraint, accountability, and an acceptance that today’s excesses often become tomorrow’s burden. The lessons of financial markets and the Swiss example point in the same direction. Wealth creation, whether for individuals or nations, is typically the product of consistency rather than expediency, of deferred gratification rather than immediate consumption. History suggests that those who embrace these principles are rarely rewarded overnight, but over time they tend to fare considerably better than those who choose the seemingly easier path.

Additional Comment

The contemporary condition of many Western societies invites a profound and, at times, disquieting reflection on the influence of quasi-monocratic political structures and the emergence of what may be termed an agnosticism of conscience. This phenomenon encompasses not only the increasing concentration of political authority in the hands of a limited elite, but also the gradual erosion of moral and ethical reference points within public discourse. As political decision-making becomes increasingly guided by considerations of power, short-term expediency, and ideological orthodoxy, questions of responsibility, truth, and individual conscience risk being marginalised. The implications, Ladies and Gentlemen, of this development extend far beyond the political sphere. They shape economic institutions, influence entrepreneurial behaviour, and ultimately affect the functioning of the global economic order. Sustainable economic activity depends upon trustworthy institutions, legal certainty, social trust, and a shared moral framework. When these foundations weaken, uncertainty rises, capital allocation becomes less efficient, and social tensions intensify. Economic history suggests that lasting prosperity is not merely a function of capital accumulation or technological progress. Rather, it rests equally on the preservation of individual liberty, institutional integrity, and a deeply rooted sense of personal and collective responsibility. I think it is worthwhile to keep that in mind when considering any important political issue, because our personal well-being ultimately depends on it, no?

Ladies and Gentlemen

Feel free to send your messages to smk@incrementum.li. Many thanks, indeed!

I wish you an excellent start to the day and weekend!

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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li