Stefan’s weekly: One Defensive Equity Market

Dear Ladies and Gentlemen

I am looking at the markets and I am surprised. There are so many reasonably intelligent and well-informed people out there with a negative view on markets looking for a crash to happen.

Usually an equity markets crash does not happen when the markets have come down roughly 10% over the last six months already. Usually an equity market crash does not occur when the media and most analysts, brokers, bankers and asset managers are negative. Usually an equities market crash does not occur when interest rates are close to zero or even below.

…and still the Swiss Market Index is down almost 10% this year. What we have experienced so far in 2018 I usually would call a crash in instalments.

With very large companies like Roche, Novartis, Nestle and some insurance companies paying regular dividends of 4% and above, the SMI seems rather defensive but investors don’t seem to care and shun away from it.

I spoke to a friend of mine who manages an investment fund to get his view. He is always very happy to see prices go down because this gives him the opportunity to increase positions in stocks helping him to generate the cashflows needed to invest in even more equities or other assets, which over time helps him to reach his long-term performance targets.

The media but also many investment professionals almost seem to long for an end of days scenarion in markets. This, Ladies and Gentlemen, is very strange because there will be misery and not many winners will come out of it.

I am rather trying to see what’s next. How can we outperform in rough times? This is a very difficult one as precious metals, commodities and hedge funds have seen a rather uninspiring first half of 2018.

What do you think will outperform in the second half of 2018? Will the defensive Swiss Market Index be able to come back and cross out its H1 losses?

Please share 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!

And now Ladies and Gentlemen I wish you a great Friday and weekend!

Yours truly,

Stefan M. Kremeth