Calm

Dear Ladies and Gentlemen,

Many thanks for your feedback on my last weekly mail. I received many messages from concerned investors and emails from “opportunity hunters” as well, happy to buy into stocks that were trading on unattractive price levels for a long time and that suddenly seem attractive after the recent correction.

Stats

It is always interesting to look at some statistics. Stats may offer a slightly different perspective to what we see when looking at the screens and reading research. For example, the bullish expectations of U.S. private investors rose slightly to 23.1% in Wednesday’s survey from 21.0% in the previous week. This is still a very low number, and sentiment among private investors in the U.S. remains palpably pessimistic. According to this number, fear was only higher during the GFC and the bear markets of 2002/03 and 1990/91. In other words, looking at that very number, a lot of fear is priced in. I would never base my investment decisions on only one number and yet it is an interesting one to me.

Intrinsic Auto-Correction

In an email conversation with one of my readers over the weekend, I mentioned that I believed that financial markets have an intrinsic auto-correction feature. Unfortunately, that auto-correction quality was halted for some time thanks to the massive government or central bank interventions ever since the GFC. Still, it seems that at least for a short moment, the auto-correction feature will do its job again, and this will undoubtedly cause pain to some market participants, especially to investors working with leverage. Nevertheless, it also offers excellent opportunities to others, especially those with cash at hand, to invest in great quality stocks that have been hammered down in recent days and weeks.

Fascinating

I have been looking at financial markets for over 35 years and am still fascinated to see that a comment by a central banker and/or a politician can cause financial markets to move more than a few percentage points in one or the other direction. The cumulated productivity, work, successes, failures, etc. of billions of workers and hundreds of thousands of companies globally may be getting blown out of the investment equation because of a simple statement. This, Ladies and Gentlemen, is fascinating and, at least to me, too often out of proportion.

Calm

If you hold a diversified basket of quality investments and stick to your investment principles, and your investment goal lies not necessarily in instant gratification, you probably do not have to worry too much. The economy and financial markets come and go in cycles; maybe unpleasant at times but nothing to worry too much about; it is an integral part of it, whether we like it or not. A little calm may do wonders.

Ladies and Gentlemen

As always, please share your opinion with me, 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

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