Peak Pessimism

Good Morning Ladies and Gentlemen

How much pessimism is priced in? If only I knew, you might think. So do I! I do not know if the market is clean, the crash is over, and a less volatile period lies ahead of us; however, one thing I know is that fear is not of great help when investing.

«Victory belongs to the most tenacious.»

The Philippe Chatrier court at Roland Garros has the line «Victory belongs to the most tenacious» on one of the walls between ranks, which I think, besides tennis or other sports, also most suits asset management.

Your Feedback

I very often collect feedback for my weeklies. There is one piece of feedback I would like to share with you on my «de-globalization» Stefan’s weekly from some weeks ago. I received various comments that went in the same direction. Thus, I allow myself to only share the one below with you.

David’s feedback (de-globalization)

«You are absolutely correct. Comparative advantage will always be a dominant factor in global markets and has served us well during globalization. Geological endowment (e,g, Australia) or lower wages (e.g. China) provides obvious advantages on the supply side, feeding into demand from the large, affluent advanced economies. Australia exports commodities, given its vast resource base, but imports cars because of its relatively small market. The consumer is prepared to support local industry geared towards local requirements, but not at a significantly higher price. Concerning diversification of suppliers, I see this happening, but one small-scale manufacturer is tied up with his supply chain issues that compound other problems involving one minor but crucial component that is missing. Globalization is credited with raising almost a billion people worldwide from abject poverty – estimates vary but are enormous. Having worked extensively in remote regions of China, India and elsewhere over the past decades, I have witnessed a transformation. For the first time, paid work became more widely available, living standards were raised, schools and clinics were established, and people were far better off. Children are properly clothed and nourished, and lower-income parents are happy to own a few more chickens and goats and perhaps a transistor radio and bicycle for the first time. What concerns me is the warning of possible global food crises in the coming years because of conflict, reduced grain exports, fertilizer shortages, and perhaps a slowdown in the global economy. If this transpires, shutting down of manufacturing facilities, even sweatshops, in developing regions of the world due to the de-globalization process could not come at a worse time.»

Thank you very much, David, for sharing your thoughts!

Peak Pessimism

Ladies and Gentlemen, what do you reckon? Are we currently experiencing «peak pessimism» already, or is more to come?

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 great 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