What Comes Next?

Good Morning Ladies and Gentlemen,

The Prussian general and military theorist Carl von Clausewitz once said:  “The greatest enemy of a good plan is the dream of a perfect plan.”

Your Thoughts

In my last weekly, I asked you to share your thoughts on the current political crisis, and I also asked how you would invest your money in a situation of such great political tension. I received many emails. Thank you very much for all your messages, comments, charts, videos and links.

Many people rightly pointed out that gold was doing its job as a hedge against a crisis. This is true; gold performed very well and decorrelated against the large indices this year, and as one would expect, yesterday during the bounce in the U.S. markets, profit-taking in gold was setting in. On the other side of the spectrum, we had Bitcoin disappointing. No decorrelation to the large indices whatsoever. On the contrary, Bitcoin correlates strongly with the S&P; instead of a hedge, it looks more like a proxy, a proxy on steroids, I would say.

I very much liked a short and snappy comment by Adrian, who wrote: «keep it simple, invest in value». Yes, I agree, I think, value, regular dividends and time can do wonders.

My View

What do you expect? Ladies and Gentlemen, the price you pay for return is volatility; if you want to receive a return, you have to accept paying the price. Nevertheless, time usually helps. Volatility curves tend to flatten out over time. Of course, at the time of a crash, of a market setback, volatility still leads to sorrow, but it may offer some comfort to look at very long charts and see that even high short-term volatility loses its significance in the long term. This most probably means in reverse that If you want or need a low volatility investment, the price you pay for it is a somewhat lower return.

If you have an investment plan, question it regularly; no matter if markets are going up or down, question it and if you are happy with your investment plan, stick to it because as Carl von Clausewitz probably correctly said: “The greatest enemy of a good plan is the dream of a perfect plan.”

One Last Comment

Looking at the news and listening to the global political elite, I get the impression to see a fair amount of stupidity coupled with ideology. A mix I cannot think much of. Who elected those guys? Next time when voting, please ask yourself how the person you are to elect will represent your ideas during a crisis.

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