The End of the World does not take place that often

Dear Ladies and Gentlemen,

Once again I would like to thank you for all your comments, and as I did answer to Bob, who asked me if I was referring to the «calm» in my last weekly as the calm before the storm, I, unfortunately, do not know. How should I? I cannot foresee the future. But, as an investor, it helps to stay calm; at least, that is what I believe in.

January

January 2022 was not necessarily a good month for investors. Most traditional asset classes finished the month in the red and looking at the level of uncertainty in various fields, I can easily imagine the remainder of 2022 to offer a very bumpy ride, and yet, and as I have pointed out in my last weekly, it is all part of the game.

Catastrophe or the End of the World

Look, Ladies and Gentlemen, even if one wants to conjure up the ultimate crash, the collapse of the financial system, some other catastrophe or the end of the world, so often, these things do not take place. Yet, the doomsday scenarios come up all the time, again and again with rewarmed arguments.

Trading successfully

If you are a gifted trader, you may use volatility in your favour and buy at low prices and sell at high ones and trade your portfolio successfully. Trading news-flow, market-noise, fear and/or greed can be a strategy; however, very few people are successful at trading in the long run. On the other hand, substantial investors like pension funds are very often successful in the long run by buying and simply holding on to their positions very, very long-term. They rake in dividends and reinvest and thanks to the effect of compounding their returns grow exponentially. For the average investor, long-term investing beats market timing. Therefore, most successful investors pursue a long investment horizon, even if this means holding on to your positions during tough market conditions.

Stats show a clear Picture

A look at past returns shows very clearly that the long-term pays off. Those active in the market long enough survive slumps and are compensated with attractive returns. Alternatively, even better, they use a crash to buy up more of the same at favourable prices. As a result, short-term fluctuations degenerate long-term into what they are: unnecessary noise.

Quality

Quality stocks may be boring at times, but they usually keep paying dividends and, most importantly, let you sleep in peace. Long-term investments in quality assets is what I am striving for.

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