Quarterly Reporting

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