Short-term thinking vs long-term investing

Dear Ladies and Gentlemen,

Many thanks for all the feedback I received for my last weekly mail. There were a few typos for which I apologize. It seems I was rather tired when I went through my notes.

Short-term thinking or long-term investing

Ladies and Gentlemen, from time to time, I get the impression that some of my readers and probably many, many investors who are not or not yet part of my readers are somewhat uncertain about the time horizon of their investments. However, I believe one of the most crucial factors for investors is to have a clear picture of the time horizon of their investments. It is utterly important not to make the mistake of mixing timeframes. Investing in value, harvesting dividends, and exploiting compounding effects need time, usually much time. On the other hand, investing in aggressive growth companies needs nerves of steel and sometimes selling quickly and taking profits. These are two different approaches. Neither is good or bad, right or wrong; they are just different.

What is the issue, then?

The issue starts when investors expect short-term returns from long-term strategies. Or low volatility from short-term opportunistic trading approaches. This is not easy to achieve, and I highly recommend that every investor have a clear picture of any investment’s time horizon.
Of course, one may have a somewhat mixed approach, as long as the investor does not expect a low volatility global food producer to show the same short-term spectacular returns the stocks of, for example, game stop at times delivered last year. Alternatively, on the other hand, if one invests in game stop stocks and expects the same low volatility features as in Nestle, disappointment will probably arrive without delay.

Precious Metals Mining Stocks

Let me quickly share something with you before we close today’s weekly.

We hold a small position in a precious metals mining ETF listed in Canada for our private clients. Now, the ETF is distributing regular dividends (you remember, I just cannot get enough cash flows) and looking at the dividend for the last quarter of 2021; I was impressed to see it going up nicely. So I suppose mining precious metals is currently a reasonably good business even if gold’s performance disappointed last year. Just imagine what would happen if the gold price went up by 10% or 20% and looking at the present political tension we experience, I can fantasize (even if my preferred scenario is quite a different one) inflation to increase further. Because never forget; wars and disputes have always been inflationary price drivers in the past.

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