About Perception

Dear Ladies and Gentlemen

I receive a fair amount of messages from readers puzzled by the performance of equities markets. The arguments are similar, high valuation, Covid-19 crisis not priced in yet, general public suffering from lockdowns, etc. While I understand the arguments, the reality is much more about perception. Let me elaborate quickly:

Financial Markets

Financial Markets do not necessarily move based on what analysts regard as being fairly priced but are mainly driven by supply and demand. If billions of multiple currencies are pumped in financial systems locked into a zero- or negative interest „investment-prison“, investments will seek the seemingly best return for the seemingly lowest risk. However, the seemingly best return for the seemingly lowest risk always remains a question of perception, and that perception may change.

Perception; Definition by Cambridge Dictionary

According to the definition by Cambridge Dictionary, the word „perception“ means: „belief or opinion, often held by many people and based on how things seem„.

The critical words in this definition are „belief“, „opinion“ and „seem“. Perception is not necessarily about reality; it is about what seems to be the reality; it is about opinion and belief.

The market is always right

„The market is always right“ is one of the first things a young investor will learn from older investors. There are thousands of quotes defending but also renouncing to this theory.

I often get the impression that some market participants underestimate the power of perception by large investment cohorts and at the same time are overestimating their own investment knowhow. Investing sometimes also means going with the flow, the so-called market momentum. However, if this means investing against one’s principles, Ladies and Gentlemen, I would always recommend taking money off the table. Gorden Gekko’s „greed is good“ is probably not the right strategy for everyone. Investing has to feel right; otherwise, it will very quickly become a rather stressful exercise.

Please feel free to share your ideas and thoughts with me, 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 a good start into 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