Crash Influencers

Good Morning Ladies and Gentlemen

«The crash influencers who run their investment funds earn money themselves with expensive tips.»

NZZ am Sonntag; May 21, 2023

Perception

Financial markets are all about perception, at least short-term and bad news sells better than good news; I understand that. However, even with this in mind, and to be upfront, I think the news we hear, read and watch about the fundamental state of financial markets is overly pessimistic. In my last Stefan’s weekly, I elaborated on the latest data from Bank of America’s monthly survey. According to that data, investors seem already quite pessimistic. The cash levels are high, and investors’ confidence is low. It almost seems most investors are only waiting for the next crash to happen, and usually, it does not work like this. Usually, the opposite happens to what the majority of investors hope for.

But where is the rally in bonds?

Yes, Ladies and Gentlemen, bonds’ failure to rally (interest rates’ failure to decline), despite declining inflation rates, a somewhat subdued economic environment, and a recession in Germany may suggest, indeed, that a supply/demand mismatch in the market may materialise even as the debt ceiling has forced the U.S. Treasury Department lately into some sort of austerity. If such a supply/demand mismatch turns out to be the case, it suggests that once the debt ceiling is lifted and the U.S. Treasury Department begins to refill its coffers, interest rates could be pressured higher, possibly significantly higher. Would that be positive for equities? Probably not, but it loses its terror once that effect becomes priced in. To think about questions like this is part of any portfolio manager’s daily routine.

Portfolio management

So, what does it take to become a solid portfolio manager in times like this? Well, I am still convinced that it takes a lot of work, patience and composure to succeed in the financial markets in the long term, and it certainly helps if you see opportunities as well as risks. Pessimism, fear and alarmism inhibit investment taking and can lead to significant opportunity costs. This Ladies and Gentlemen, is true for challenging and easy market environments.

Crash influencers

But now, allow me to return to the quote at the beginning of today’s “Stefan’s weekly”. I was quite astonished to notice in the last issue of the “NZZ am Sonntag” that even journalists seem to have understood and were taking up the topic of the so-called «crash influencers». Those guys earn big heaps of money with expensive tips and by running investment funds banking on people’s fears. Unfortunately, even in today’s ever more regulated world, average investors are still shamelessly plucked like Christmas geese by some market participants. So my advice is not to let yourself be distracted by negative noise too much but to stick to your investment principles.

Ladies and Gentlemen, please share your opinion with me, but please remember (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 and a wonderful 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 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li