Stefan’s weekly: Crash, Greed and Fear

Dear Ladies and Gentlemen

Investors don’t like uncertainty.

Yesterday’s financial markets plunge, triggered primarily (but not only) by fears of a global trade war, marked the fifth-largest point decline in the Dow’s history. CNN’s fear and greed index, measuring seven different market indicators, currently shows extreme fear. A potential trade war leads to uncertainty, uncertainty is fuel for bad performing markets.

I am often being asked by friends and investors what would be best to do, and I keep repeating the same over and over again and I believe it really seems fairly simple and usually works fine for me:

1. Don’t leverage your portfolio.
2. Do the nitty, gritty work and analyse potential investments.
3. Buy mainly (or even only) into net cashflow producing companies.
4. Keep the bulk of your assets in the currency of your expenses.
5. Keep a fair amount of cash so that you can invest (buy more) when others need to sell.
6. Buy on weak days.
7. Sell on strong days, take profits. Taking profits is wonderful. Don’t get too greedy!
8. Invest in companies distributing stable dividends, interests, capital reductions, etc. The cashflow from such investments will keep you afloat during difficult market times and there will always be difficult market times, like the one we are experiencing so far this year or maybe even worse!
9. Don’t try to time markets, it is very difficult to time markets because you will most probably not be able to foresee the future.

Ladies and Gentlemen, this is only a selection of investment principals I am living after. Obviously, they do not represent a recipe for the construction of an all-weather proof portfolio. Portfolios need to be custom tailored according to clients’ needs, age, risk awareness, etc. If you think about what is important to you, you may come up with your very own list of investment principles.

In any case, investing is not speculating. It is not playing around with financial instruments either in search/hope of a quick buck. It is a serious exercise and it is by definition: long-term.

Please share your thoughts, ideas, fears and questions with me. Let us put together a great list to look at during difficult market conditions. Many thanks!

…and therefore, Ladies and Gentlemen, if you are happy to share any of your thoughts with me, please feel encouraged to do so but please don’t forget (instead of hitting the reply button) to send your messages to:

smk@incrementum.li

Many thanks, indeed!

And now, Ladies and Gentlemen I wish you a great day and weekend!
Kind regards

Yours truly,

Stefan M. Kremeth