In Common Sense We Trust

Good Morning Ladies and Gentlemen,

The largest homogeneous global investor is the cohort of pension schemes. Pension schemes invest the funds entrusted to them either directly or via theme or style based mandates or funds from local but predominantly global providers.

Money flow

Currently, it looks as if global pension schemes will see monthly inflows of fresh capital at least until the largest cohorts of the babyboomer generation are sent into retirement. Why is this important, you may ask. I believe this is a widely neglected fact. Even if we see capital moving out of financial assets, i.e. markets, because of fears of war, inflation, economic downturn, etc., fresh capital piles up every month, sitting on the sideline, waiting to be invested eventually. At the end of the day, it is always money flows that make an asset move up or down.

Does this mean

Does this mean crashes can not occur? No, of course not, but it merely means there is always a fair chance for asset prices to recover due to money flows, as long as there is nothing wrong with the underlying business.

What about financial forecasts and research?

Financial forecast and research help us understand a business, company, sector, macroeconomic environment, etc. However, the point is that no one can predict the course of a market, asset class or single asset with certainty. Therefore, analysts’ forecasts are expressly not suitable as an “instruction manual” for any sort of trading that investors should follow uncritically. On the other hand, research can make a solid educational contribution to market participants.

In common sense, we trust

Ladies and Gentlemen, if pension schemes represent the most significant homogenous market player and if this market player receives monthly net new inflows, then There Is No Alternative. TINA, as I read the other day, Ladies and Gentlemen, because this time is no different to other times, no matter what calamities occur in the short to medium term. Investing needs capital, a solid strategy, patience and some common sense. And a reasonable investment strategy should somehow be balanced and include more than one asset category and even generate positive cash flows, at least in my opinion. The magic word here is certainly yield harvesting.

Last week’s Stefan’s weekly

I received many messages regarding my last weekly on the topic of purchasing power during the imminent presidential election in France. I will share with you some of the key messages I received next week. Until then, we should have a first impression of who will become President in France for the next five-year term. The candidate Marine Le Pen heavily exploited the topic of purchasing power, and it was interesting to see how she gained ground on President Macron in recent polls.

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, peace!

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