Stefan’s weekly: What can be expected until year end?

Dear Ladies and Gentlemen

Once in a while I receive mails from one or the other reader asking me, why I am still generally positive for equities, while the world is full of problems with trade wars looming, governments piling up more and more debt and central bank balance sheets exploding and you know, Ladies and Gentlemen, I understand this fear and I am also very, very worried from time to time and a long time ago I even I used to invest my personal money according to my fears and never made money. Today I am somewhat more opportunistic, and I don’t bet all my money on one scenario but am rather using the toolbox-approach I was writing about in one of my recent publications, i.e. I like to think in scenarios, weigh my scenarios and construct portfolios accordingly.

Now, I still think many things are all but perfect, but then again, I believe this is just the way it is and this will never really change, and I certainly don’t want to see politicians and central bankers as a bunch of bad guys who primarily want to steel money from their people. I actually believe most of them are happy to do whatever it takes to keep the economy running and to make life as good as possible for as many people as possible, knowing that it will be difficult to please everybody.

With this way of thinking and some help from statistics I personally expect Q4 2018 to be a rather positive one for equities and for example a not so positive one for crude oil. Why is this you may ask, and you are right to ask that question.

Well, on November 6, 2018 midterm elections in the U.S. will be held. Looking at statistical evidence, one can see that in midterm election-years the fourth quarter is a positive one for equities. The reason behind this is that politicians usually do not want to cause negative market impacts and/or turmoil but rather want to present their achievements and this leads to an overall positive investment environment. Just imagine the U.S. and China reaching an agreement leading to a halt of their conflict on trade, tariffs and taxes. Mr. Trump and his fellow republicans could sell it to the electorate as their achievement. In addition, gas prices at the pump station are always a topic during election periods as Americans see inflation on a daily basis at the pump station. This, I think, is why more than one U.S. president tapped into the U.S. strategic oil reserves to ease any potential price increase at gas stations, which may lead to lower or at least not increasing gas prices and thus wouldn’t be positive for crude oil.

Furthermore, yesterday’s performance in the S&P 500 index marked an important positive technical point and maybe this event can be seen as the starting point for the positive Q4 2018 I am personally expecting.

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!

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

Kind regards.

Yours truly,

Stefan M. Kremeth