Category: Stefan’s Weekly

Good Morning Ladies and Gentlemen

«You can always tell when a man’s well-informed.
His views are pretty much like yours.»

Bob Hope

No big fan

I receive many emails from readers who seek total financial protection from the next financial crisis, global economic crisis or worse, World War III. The ones following my “Stefan’s Weekly” for the last few years know I can not think much of this. Unfortunately, there is no such thing as total protection in life. I too, do like to have some protection, like a place I own and live in, insurance and healthcare coverage, some small bills of different currencies, some physical precious metals in small denominations, water and food. However, hoarding such assets and perhaps even cryptocurrencies in vast amounts is not my thing and is far too ideology-driven for my taste.

The world off the rails

If the world goes off the rails as some people may think it will, one can perhaps buy a lot with very little precious metal and the like and maybe even become relatively wealthy for some time. However, if such a scenario comes to pass, I have no difficulty imagining the new world currency would be “food” and “shelter”. In such an environment, large cohorts of humanity may fall back from the top of Maslow’s pyramid of needs to its bottom, and I fear that even by owning so-called hard assets, you may not be able to escape any of this. Civil wars, brutalisation and perhaps a prolonged global conflict could follow as probable scenarios. Yet, I do not believe at present in such a development.

My rather personal view

I have absolutely no understanding for people who indulge in disaster romance. In such thought games, I see an outgrowth of boredom of a spoiled, somewhat too wealthy, and without reasonable tasks living small cohort of people who believe to know it all. I hope you, Ladies and Gentlemen, dear readers, will not associate with such people. It cannot possibly make you happy to think about such dark scenarios.

Furthermore and conclusion

From an investment point of view, it certainly makes sense not to put all eggs in the same basket. Alternatively, it probably makes sense to try weighing the probability of your scenarios and not only trying to protect yourself from tail risks with your entire fortune. Also, I believe it makes sense to keep ideology out of your investment principles. Think about it.

Seasonal Reflections

Moreover, Ladies and Gentlemen, Incrementum’s top performer on the fund management side, Hans Schiefen, publishes his “Seasonal Reflections” every quarter, hence the name. Last week, I quoted him or someone he had quoted in the latest edition of his thoughts on paper. One or the other of you asked me if I could add a link to the full paper, which I gladly do. Please feel free to click on the link below for your convenience:

Incrementum All Seasons Fund Seasonal Reflections – 2023/03 – Incrementum

As always, my thoughts do not necessarily fully match Hans’ or anyone else’s. This is why, at Incrementum, we have lively discussions during our asset allocation meetings.

Your point of view
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

Good Morning Ladies and Gentlemen

«I’m not getting old – I’m evolving»

Keith Richards

Extrapolation of bad news

I do not want to be part of the people sending negative news. By my nature, I usually see the glass half full. However, the media plays an essential role in extrapolating bad news. It seems that short-term negative changes are often turned into negative trends. On the one hand, this is based on the scientifically proven fact that humans are characterised by a psychologically inherent risk and loss aversion. On the other hand, as I repeatedly pointed out in various publications, because of this deep-seated risk and loss aversion, bad news sells better than good news, which the media is ruthlessly exploiting. Nevertheless, the impact of the cost of money can not be neglected.

What about U.S. government bond yields

But first, let us have a look at U.S. government bond yields. This is important because they represent the price, i.e. cost of money. Now, this may be mainly concerning market participants anticipating fewer interest rate cuts next year, and yet I still find it interesting to look at and think about it.

Slightly easing

U.S. government bond yields are somewhat easing again, while they were rising sharply during the summer when trading was weak. After a survey on Wednesday signalled that U.S. business demand for labour cooled in September, yields slipped again, falling to less than 4.1% on 10-year Treasury bonds – they had been more than 4.3% last week. Two-year U.S. paper also fell by 0.2 percentage points within a week. (As a result, the interest rate advantage over the euro area was also falling, boosting the euro against the U.S. currency. From the daily low of around US$1.078 on Tuesday, it went up to more than US$1.092 on Wednesday).

However

As my partner, Hans Schiefen pointed out in his “Seasonal Reflections”, Michael Lewitt from Credit Suisse concluded, “Low rates lowered I.Q.s along with the value of the financial instruments they debauched, leading people to buy worthless SPACS and cryptocurrencies, grossly overvalued IPOs, even more grossly overvalued stocks after they went public, and egregiously overvalued credit instruments of all kinds. Now, the cost of money is being reset by central banks because they lost control of the inflation narrative (particularly financial asset inflation – long ago). Investors have yet to adjust to the cost of money, which is not going back to zero (or below zero) absent another financial crisis (which, if you look at government finances, is a real possibility, but that is a topic for another day). For now, rates will remain well above zero, which means all the assumptions that led public and private actors to borrow trillions of dollars will be tested (and borrowers will flunk those tests).”

The cost of money

Ladies and Gentlemen, as Michael has so aptly formulated, the significant impact the cost of money may have on various financial instruments (and he pointed out some of them) should never be underestimated.

Closing remark

Although I am a genuinely positive person, I am always concerned by the cost of capital or money, as Michael named it. I am considering it when investing for our private clients, and today I have the impression that, at least in some financial instruments, some of the effects are already priced in. Yet, if interest rates continue to go up for a few more quarters, market participants may not be impressed.

Your point of view

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

Good Morning Ladies and Gentlemen

«Prosperity is a state of mind. It is your expectation. Expect to expand your wealth, your wealth of knowledge, your relationships, your income and your wisdom.»

Anonymous

What is the best environment for people to prosper? The other day, I was thinking about China and Russia, the U.S. and Europe, and I asked myself in what sort of environment and as a young person I would try to find my way to prosperity today.

Why?

You may ask why I was thinking about that. The thing is that I was asked to write an article about the advantages of Liechtenstein as a centre for financial services and I was thinking about the difference between Liechtenstein and other places. Let me share some of my thoughts.

My basic belief

Any sensible national economy moves in the triad of freedom, peace and prosperity. Freedom and prosperity are closely linked. Freedom in a constitutional state and as a private law society of potential and actual owners is a society that supports its citizens in creating and maintaining prosperity. A society of free people will be a prosperous society in the long run. To me, prosperity means access to material goods and services and human freedom. It includes well-being, peace, security, independence and the chance to participate in society.

Liechtenstein

The Principality of Liechtenstein has created and offered almost ideal conditions to prosper for its population over the past decades. Freedom, peace and prosperity are a cornerstone of these conditions.

Tax and prosperity

The spiritual fathers of modern Liechtenstein realised early that no social safety net could be built without monetary means and that any state has such monetary means only when its economy is functioning. They installed incentives to maintain a flourishing economy, such as competitive tax laws or allowing its communities to secede, thus granting them ultimate self-determination under the country’s constitution. The other day, I read that “no nation ever taxed itself into prosperity.” I could not agree more!

Too much politics

Some short-term political trends may seem very tempting, as they promise votes at least in the short-term, but in the longer term, as can be seen in various examples of Western economies, they usually lead to a reduction in competitiveness and, thus as a result, less prosperity for the country’s population. Looking at long-term cross-border movements of human- and financial capital offers a good insight into any economy as both human- and financial capital go where it pays to invest labour and/or capital. For decades, the tiny principality has attracted human and financial capital and offered by far more jobs than it has inhabitants. Liechtenstein has a healthy social market economy, no government debt, follows a strict budget discipline, and is open for business but not at any price.

Copy paste

Why other countries are not taking the political and economic basics of Liechtenstein, and trying to create a prosperous environment along those is a mystery to me. Obviously, we are talking about a small country with a small population but 120 years ago that population was among the less fortunate in all  Europe.

Your point of view

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

Good Morning Ladies and Gentlemen

«I always felt that failure was a completely underrated experience.»

Kevin Kostner

After my last weekly mail, I got involved in exciting conversations with some readers. The recession topic is certainly not off the table, and especially for our friendly northern neighbour, Germany, I believe a shrinking German economy is something we all have to get accustomed to under their current government.

However

I would not be surprised to see attractive returns in the financial market still this year. The adverse reporting by many media, banks, analysts, etc., is quite often a good counter-indicator and yet, any broader recession in the coming year also seems possible to me. Cooling labour markets in Western economies at a time when China cannot pull us out of the muck could have unpleasant consequences for the real economy and, thus, for capital markets, which would probably and traditionally anticipate such.

Do you know what you want?

Today’s «Stefan’s Weekly» runs under the title «Do you know what you want?». I came up with this topic because I am gaining the impression that many market participants do not know what they want or expect from their investments. Making money certainly is one expectation, and low volatility is probably another. Unfortunately (No.1), there is a relation between volatility as a risk measure and return. There is no free lunch, Ladies and Gentlemen, and the price you pay for your return is risk (or volatility). Unfortunately (No.2), by taking on the risk, you cannot expect automatically to receive a return.

I know

This seems utterly unfair, yet this is just how it is. Ladies and Gentlemen, I know of people with millions of cash sitting in their bank accounts. They are losing purchasing power year after year, which they know and readily accept as long as they do not have to accept market volatility. They cannot handle it and know that and are willing to pay the price of a loss of purchasing power in return for their peace of mind. Fair enough; at least they know what they want or do not want.

Tangible and productive

As an owner of equities, you are a co-owner of a business. This seems like a pretty good deal because co-owning a business means you have a somewhat tangible and productive asset in your portfolio. However, it is crucial to choose suitable investments; overpaying on price/earnings ratios and/or book value, etc., never seemed very attractive to me. If you invest in a cash flow-generating business with a proven track record and are not stressed out in the short term, you will probably be compensated for your investment in the long term. You will probably not have the fantastic returns of the (Nasdaq) potential high-growth companies, but you will not have to endure the, at times, nerve-wrecking volatility of such an investment either.

This is why

You need to know what you want, i.e. expect from your investment. If you are clear about that and invest accordingly, your peace of mind will come about.

Your point of view

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

Good Morning Ladies and Gentlemen

“Imagination is more important than knowledge. For knowledge is limited to all we know and understand, imagination embraces the entire world, and all there ever will be to know and understand.”

 Albert Einstein

Last “Stefan’s Weekly”

In my last “Stefan’s Weekly”, I claimed that any environment with economic growth exceeding current inflation, i.e. real economic growth, could be described as a goldilocks environment for financial markets. To me, it seems some market participants anticipate goldilocks rather than a recession, at least for some time.

U.S. inflation

Due to base effects, inflation in the USA rises slightly. However, this should not be overinterpreted after the overall inflation rate had declined significantly in the previous months. I believe that developments at the preliminary stages give reason to hope that the downward trend will continue in the coming months. This also applies to core inflation, where the previous month’s increase of 0.2% probably does not pressure the U.S. Fed to further raise interest rates. Since the numbers came in just below expectations, they should rather ensure that interest rate expectations remain subdued for the time being, especially as initial jobless claims, published simultaneously, rose more strongly than expected.

U.S. third-quarter economic growth

The GDPNow forecast for the third quarter of 2023 showed real U.S. growth of 4.1%. In contrast, analysts’ consensus forecast stood at a meagre 0.9%. I would call this a significant discrepancy, showing how negatively inspired most analysts still are. If we recall my last “Stefan’s Weekly”, a goldilocks environment asks for real growth, and this, Ladies and Gentlemen, it seems is where we are. Any further economic growth and/or falling inflation rate would further influence real growth positively and thus may lead to a prolonged goldilocks environment. In addition, Ladies and Gentlemen, U.S. consumer spending has recently remained high.

Minor concern

I believe a possible cause for concern is the increase in inventories. Because inventories have also risen, not dramatically, but still, and let us face it increased inventories could lead to production cuts over time and this of course, would not be positive.

Your point of view

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

Good Morning Ladies and Gentlemen

“A certain lack of solutions characterises many current political leaders.”
 From a discussion I had with one of our clients.

Latin in German

For the ten years of Incrementum, we received many truly unique presents. One of our clients came up with a remarkable book on the influence of Latin on the German language by Karl Wilhelm Weeber. Totally unnoticed, we use words and expressions with Latin roots in everyday language. That book I casually read through during our summer vacation made me think last week of one or two of the Greek or Roman historians I read over thirty years ago.

Ancient historians

Why on earth would I think last week about ancient historians? Ladies and Gentlemen, I received feedback on my last “Stefan’s Weekly” on “A Whole Bouquet of Fears”. In there, I mentioned that people (rather ruthless ones, if I may say) are happy to make money with other people’s fears. And now, what is interesting about reading ancient historians at least once in a while is that they show that humans have known the need to consult oracles ever since the time of the Greek and Roman historians and most probably even well before that. People have felt comfort in listening to some higher power for thousands of years. Interesting, no? Needless to say, the signs those oracles saw served primarily them personally, i.e. those who knew how to interpret them or at least pretended to know how to interpret them. Until today, especially in the financial industry, “oracles” still create hope without promise, without having to take responsibility; what a clever business concept.

U.S. inflation

Back to the real world, the U.S. inflation rate stood at +4.0% in May (with a high in June 2022 at 9.1%). I would not be surprised to see the U.S. inflation rate decline below 4% within the next two or three months. An inflation range between 2% and 4 %, with real growth of 2%, implies a pretty strong nominal growth of between 4% and 6%, which could be described as a so-called goldilocks situation. Financial markets would certainly appreciate this. Perhaps the current favourable market performance can be partially explained by anticipating such a goldilocks environment. However, the Federal Reserve raised the key interest rate by 25 basis points yesterday, and for the moment, financial markets are no longer pricing in any further rate hikes in the U.S.; the next Fed meeting will take place on September 20, 2023.

Never boring

What I like about my industry is that it is never dull. The decisions we have to make daily are based on research, experience and always on several unknowns. To me, not being able to foresee the future remains a feature. Think about it.
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

Good Morning Ladies and Gentlemen

“As much as people refuse to believe it, the company you keep does have an impact and influence on your choices.”
By: unknown person

Your messages

I keep receiving messages from readers who write about their worries and fears in connection with their investments. Many are hoping for advice from me or a recommendation that I cannot give for regulatory reasons. In general, I have the feeling that there is a lot of negative news circulating and that many of our contemporaries see the glass half empty instead of half full. Therefore, I take the liberty of dedicating today’s “Stefan’s Weekly” to anxieties.

Apology

Ladies and Gentlemen, I apologise for being maybe slightly cynical in today’s “Stefan’s Weekly” edition. I do not want to offend anyone. I only hope to provoke one or the other thought. Thanks for your understanding.

Fear; a definition

Fear is a natural, powerful, and primitive human emotion. It involves a universal biochemical response and a high individual emotional response. Fear alerts us to the presence of danger or the threat of harm, whether that danger is physical or psychological (one of many definitions by psychology research).

Wallow in fear

Fear of the so-called greatest dangers seems to change in people’s perception. Either it was the effects of Covid 19 or the effects of the vaccination against Covid 19. There are fears about the strengthening of China, but also of an economic downturn in China, and fear of a banking crisis in Europe, China, the U.S., Switzerland and the entire World. About the crash of the U.S. dollar, the fear of a real estate crisis, the fear of high energy prices, the fear of climate change, the fear of people demonstrating against climate change, the fear of nuclear power plants, the fear of microplastics, of inflation, stagflation, reptiloids, Russia’s war against Ukraine, Putin and the Wagner soldiers, religious fanatics and alienation, etc.

Pick your fear

Go ahead, Ladies and Gentlemen, pick your fear or even fears. There are so many fears around. I am sure you will find the appropriate fear for yourself as there is something for pretty much everyone. But never forget, it is your choice to live in fear or to see opportunities.

The ultimate fear for market participants

To me, it seems, but then I am undoubtedly biased; the ultimate fear for anyone in the financial industry is the fear of the next stock market crash. Nevertheless, eople in the financial industry should be used to this as the fear of a stock market crash always hovers over our heads.

The next crash

Some people within the financial industry are even making lots of money with the fears of other market participants by predicting the next crash. They can only do that because an audience is willing to pay attention (and sometimes even money) to them, and you know what? Eventually, there will be financial crashes; because crashes are merely a feature of any financial market, they help to reduce exaggerations. Boom and bust cycles are nothing more than a regular part of the game. Predicting a financial crash is a bit like predicting the nightfall. There is no magic, Ladies and Gentlemen; it is part of any market’s behaviour. Markets go up and down and up again; no big deal.

Wrap-up

It is your choice to live in fear or not. If you read the quote at the beginning of today’s “Stefan’s Weekly”, it may inspire you to choose well the sources of your information. Because your environment, your newspapers, radio and tv-channels, TikTok, WhatsApp, Telegram and whatever sources have an imprinting effect on your psyche, please be aware of that and choose well by whom or by what you want to be influenced or inspired.
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

Good Morning Ladies and Gentlemen

“Be fearful when others are greedy and be greedy when others are fearful.”
Warren Buffett

Difficult Market Environment

Liquidating stock positions when prices fall is generally terrible advice because it pays to remain patiently invested even in a challenging stock market environment.

History I

A look back shows that sharp price corrections and bear markets are a recurring feature in the financial markets. This was the case on Black Monday during the 1987 stock market crash, in 2001 after the bursting of the dot-com bubble, in 2008 with the great financial crisis, in 2020 with the stock market crash when the Corona epidemic broke out and also when Russia started its war on Ukraine last year. What all these events have in common is that prices went up again.

History II

All it takes is time, well, almost (it helps to implement a sensible strategy and invest in solid companies). Anyway, anyone who invested in the S&P 500 Index over 20 years always made a profit. During the 1987 stock market crash, it took 3.5 years for the S&P 500 Index to recover its losses. At the low during the financial crisis, it took five years until 2013 before the index rushed to a new record high. The fastest recovery was during the Corona pandemic when the S&P recovered a 25 per cent loss within five months. The losses from last year’s crash have yet to recover, but we are getting closer.

Dividends

While the markets go up and down, dividends are usually much more resilient. In our private mandates, we have raked in the highest cashflows ever for the year 2022, and it looks like 2023 will be no less successful in terms of the dividends expected from the companies we invest in for our clients.

Sitting out the bear market

Sitting out the bear market more than pays. Warren Buffett’s philosophy: buy shares in a well-performing company when the market is dumping them in panic and take profits when the whole world only believes in an eternally rising stock market statistically makes enormous sense. However, quite a few investors do the opposite of what Buffett recommends. They fall into panic mode when prices plummet or the mood on the stock market is terrible and sell everything when prices have practically hit rock bottom. Looking back, it is not only the realised losses that hurt. Far more severe is that one usually misses the right time to get back in. The consequence is to be underinvested at the beginning of the upswing.

Stats – 25 vital days

A study by Blackrock, the world’s largest asset manager, shows how much profit potential investors are giving away. Those who missed the 25 best days on the stock market in the last 30 years gave away a great deal of return potential. This is almost impossible to recover.

Holding period

In the long run, shares bring the most significant return if held in the portfolio over several decades. The successful investors Peter Lynch, Benjamin Graham, Jesse Livermore and Warren Buffett have done well to invest in solid companies in uncertain times or during crises, or as Warren Buffett put it, “our preferred holding period is forever”.

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

Good Morning Ladies and Gentlemen

“Know nothing, understand nothing, say everything can find a majority these days.”
My friend Peter S. in a WhatsApp message yesterday

Last week’s competition

Ladies and Gentlemen, the quote from last week’s competition stems from the book “Melody” by Martin Suter. No one did find the correct answer, and thus the silver coin rests in the drawer for our next competition. Thanks for your participation!

Incrementum All Seasons Fund

This week an investor wrote to me about our flagship fund’s unusually moderate performance this year. I quickly asked my partner and the principal portfolio manager, Hans Schiefen, to write back to the investor. His reasoning makes sense, and I thus want to share the main arguments with you.

Reasoning

The reason for the recent IASF NAV decline has been that, on the one hand, equity markets in economically sensitive areas (incl. energy, shipping, and commodities) have been hammered as investors increasingly anticipate a recession, affecting many of IASF’s long positions. On the other hand, the AI-driven narrative and the familiarity of past investment successes have had investors chasing after the major tech platform companies in an echo-bubble to 2020/21, thus negatively affecting our exposure on the short side to NDX and SPX. At the same time, volatility has been plummeting amid a surprising degree of complacency towards potential risk in this environment. Meanwhile, fundamentals look increasingly less supportive of risk assets. Growth globally is slowing, (core) inflation remains too high and central banks are thus proclaiming higher for longer interest rates, a scenario the market is responding to in the customary manner of buying long-term bonds, whose yields remain profoundly negative in real terms. LEI, the yield curve and many other (historically highly reliable) indicators suggest a recession is on the cards for H2 2023, which still points to a rather stagflationary environment. (If growth does not disappoint as expected, it will keep inflationary pressures higher, and if it does, it would typically end in lower corporate top lines, coupled with pressurised profit margins, lower cash flows and earnings).

Scenario

Given this scenario, tangible assets remain the place for (rationale) investors, while remaining partly hedged long-duration assets remain sensible. If we had not experienced similarly frustrating developments in 2021 (and earlier), we might be more concerned, but our experience tells us that these kinds of pain trade periods are part and parcel of the investment process and experience. The difference, however, compared to 2021 is that risk-free rates are double or triple the levels they were back then, which, if one uses DCF-based valuation, should result in a (significant) contraction of overall valuations, which has not (yet) happened.

Last week

Last week I mentioned, “To invest, you may want to think positively about your investment. Else you might as well let it be.” Today I would like to add; when buying a style-based product, one needs primarily to understand the asset manager’s investment style, have confidence in it, and, as always, show some patience.

Questions

I am always happy if investors come back to us with challenging questions. Investors should write much more questions to their asset managers; questions make huge sense. We cannot foresee the future, and having to explain our different investment solutions (style and/or theme-based) supports our effort in calibrating our thinking.

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

Good Morning Ladies and Gentlemen

“But I do not believe everything he says. He is a writer; they love fiction more than truth.”
By whom?

Thank you very much

Thank you very much for all the heartwarming messages we have received for our 10th anniversary. We have received cards, presents, letters, emails and best wishes via LinkedIn and other social media channels. Many thanks, indeed!

Quick competition

Ladies and Gentlemen, do you know by whom the above quote is? I am happy to offer one ounce of silver to the first to reply with the correct answer.

Investing

In order to invest, you may want to think positively about your investment. Else you might as well let it be. Many financial markets were reasonably strong this year, but few institutional investors could capture any of it. Why is that? I think because of all the harmful noise we get to read in the daily news. Most investors are getting excited too quickly about the upside but also about the downside. While investing needs time and offers opportunities to the brave and patient, in a time of maximum excitement and instant gratification, neither time nor the will to take on risk as an opportunity seems to be widespread. You will not believe the number of negative investment cases I receive daily. Some of them I read and use as counter indicators. Ladies and Gentlemen, most of those who believe to be smarter than the markets are not, however convincing their arguments may seem.

Risks

Investing without risk is not possible. However, some investors, pampered by our Western government-induced complete protection societies, which they often happily criticise, cannot take on risk, and you know what? This is perfect and offers excellent opportunities to buy into fantastic companies at low prices, harvesting cashflows and waiting for the next upswing. Ladies and Gentlemen, most of the risks the average investor or analyst writes about are known; they are not news! Whatever is known to market participants is mainly priced in. Reading the same storyline ten times should elicit a weary yawn from investors. Surprisingly, the opposite is very often true and even reinforces the negative attitude and the more they see their investments underperform, the more they try to find reasons to confirm their (obviously wrong) views.

Stay open

Successful investors must stay open, know they will not always win, and are more inclined to perform well than want to be right!

Silver coin

Please do not forget our quick competition from the beginning of this «Stefan’s Weekly.» The first one to reply will receive the coin. This time it is a little more tricky.

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