Wir freuen uns, die Veröffentlichung unseres neuesten In Gold We Trust Spezial bekannt zu geben: The Optimal Gold Allocation.
In diesem Spezial erkunden wir die entscheidende Rolle, die Gold in einem diversifizierten Anlageportfolio spielt. Da die Märkte weiterhin mit Unsicherheiten zu kämpfen haben, ist es wichtiger denn je, die strategischen Vorteile einer Goldallokation zu verstehen. Wie viel Gold braucht Ihr Portfolio?
Good Morning Ladies and Gentlemen
„Life is unfair, but remember, sometimes it is unfair in your favour.”
Peter Ustinov
Germany currently needs help with demand. The latest data on the country’s gross domestic product in the second quarter clearly shows that consumption and exports must improve. The weakness in consumption is attributed to a decrease in purchasing power caused by inflation. In real terms, employees earn 2.6% less in gross wages after adjusting for inflation compared to mid-2021. Additionally, real wages fell by 1% in the second quarter alone. The weakened consumption is particularly concerning because 75% of companies rely on domestic sales. While export earnings can contribute to job creation, a growth of approximately 10% annually is necessary to make a noticeable impact. However, exports are stagnant, and the export outlook worsened in August.
I do not consider myself a macro investor. As I have mentioned previously, I have reservations about the accuracy of most macro calls. In my opinion, attempting to forecast the market and make assumptions about economic developments seems akin to fortune-telling. I am a bottom-up investor. I focus on identifying sound companies trading at reasonable valuations that yield positive cash flows. Typically, I include 25 to 40 such companies in the portfolio, capitalise on dividends, and adjust the portfolio by rebalancing, adding new companies, and divesting others. This investment approach has proven effective for me and our private clients. The approach may seem a bit boring, and it certainly does not offer instant gratification, but it delivers sensible returns over time.
As I assess the current macroeconomic conditions in Germany, it seems to me that market participants are perhaps overreacting by selling off strong German industrial companies at undervalued prices. While the reasons for this reaction are not surprising, given the prevailing uncertainty stemming from sluggish economic growth in the USA, China, and Europe, as well as comparatively high interest rates in various regions, I perceive potential opportunities within this environment, which, Ladies and Gentlemen, leads me to question whether this is now a matter of a macro call or a thorough bottom-up approach.
In this week’s edition of „Stefan’s Weekly,“ the headline asks, „Are you considering purchasing a new car?“ This question is timely because of the recent rise in new car prices, causing consumers to be more careful with their spending, even more so in these challenging economic conditions and the still high interest rates, which has resulted in credit financing and leasing becoming more expensive, potentially reducing the desire to make a purchase. As a result, the automotive market is currently more favourable for buyers. There is no longer a supply shortage, purchase incentives are increasing, and transaction prices are decreasing.
The bi-weekly Swiss financial newspaper “Finanz & Wirtschaft” addressed the topic in its Wednesday edition. No significant improvement in the global car market environment is expected in the short term. Given the weakening demand in all leading markets, it is doubtful that the current year’s production forecasts will be maintained. However, looking beyond this, the picture is brightening. The economy appears to have bottomed out, and there are initial signs of improvement. Furthermore, more interest rate cuts by central banks are expected, especially in the USA. When the economy is weak, purchases are postponed, but purchases are made when the situation brightens due to the early cyclical nature of the sector.
Volkswagen and Stellantis trade at a 2025 P/E of 3, BMW and Mercedes at a P/E of 5. Even if the forecasts have to be reduced in the weeks and months to come, the P/Es will go up accordingly; compared to Nvidia, whose stock is trading at a 2025 P/E of over 70, the German car sector seems cheap. We are patient investors and are, therefore, looking a bit closer at the industry.
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 and the weekend!
Yours truly,
Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets
Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li
Good Morning Ladies and Gentlemen
”Emotional intelligence is a crucial social skill for effective management.”
From old course materials from the University of Liechtenstein for the Executive MBA, which I completed a long time ago
The three-day Jackson Hole Economic Symposium, hosted by the Federal Reserve Bank of Kansas City, started yesterday in Wyoming, USA. The event brings together influential central bankers, finance ministers, academics, and financial market players worldwide. This year’s theme is „Reassessing the Effectiveness and Transmission of Monetary Policy.“ I wonder what information we will receive from the weekend press from the event.
I believe the European Central Bank should consider further lowering key interest rates at its next meeting on 11 and 12 September in Frankfurt, just one week before the Fed meeting in September. The slow economic indicators, particularly from Germany, the world’s third-largest economy, justify a rate cut in the current environment of consistently stable inflation. According to the minutes of the last interest rate meeting on 17 and 18 July, published yesterday by the European Central Bank, the upcoming September meeting is seen as a favourable time to reassess the extent of the current restrictive monetary policy. The minutes also state that „this meeting should be approached with an open mind,“ which is hopefully common practice among central bankers.
My friend, Freddie Hasslauer, recently penned a letter to the editor of the Financial Times, which was published a few days ago. In the letter, he delved into the success story of the Swiss central bank’s interventionism. I sought Freddie’s permission to share the link to the letter in my „Stefan’s Weekly,“ and he graciously consented. You’ll find it particularly intriguing, especially if you typically oppose any intervention by central banks, as it offers an alternative perspective. Please enjoy the read: https://on.ft.com/3Xfycf3
Ladies and Gentlemen, I am a little unsure and wonder whether, at the age of 61, I can maintain my conservative values or if I have to recalibrate them. I was taught as a kid by my parents, during many years on the job, and during multiple management courses many, many years, even decades ago, that emotional intelligence and accountability are crucial social skills for effective leadership. For the sake of it, suppose you were an experienced management consultant committed to sustainable corporate governance and communication who authored works on these topics. How would you assess a leader who lacks emotional intelligence, accountability and, possibly, emotional integrity? What key attributes define a great leader? Are qualities such as honesty, intelligence, integrity, and personal charisma still essential components of effective leadership today, or are they overrated? Are they just nice to have, or maybe even irrelevant, because other skills are more important? Again, just for the exercise, what qualities would you demand from a leader or even a global “Máximo Líder” if there was one, and if you had a say?
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!
Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets
Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li
Slidedeck from the Webinar „After the Gold Rush“
Good Morning Ladies and Gentlemen
„I did not need the special equipment. I’m a natural, natural shooter.„
Turkish shooter Yusuf Dikec, Olympics, Paris 2024
The Atlanta Fed’s forecast for the third quarter of 2024 (GDPNow) is 2.9%. A nowcast value of 2.9% means an increase of 0.4 percentage points compared to the previous week. The forecast has not shown any recessionary tendency so far. One could discuss an incipient US recession if the forecast falls into the 1% range. At the moment, things are moving in the other direction.
(Slide 1 (atlantafed.org))
Strong petrol and car sales boosted the unexpected increase in US retail sales in July, surpassing market expectations. Additionally, a surprising decrease in initial jobless claims eased recent economic concerns among investors. Statements by US Federal Reserve representative Alberto Musalem (President of the Federal Reserve Bank of St. Louis) also suggested an ever-stronger perceived possibility of a turnaround in interest rates in September. Next to the good results from US giants Cisco and Walmart, it seems recession fears in the U.S. faded as quickly as they appeared two weeks ago, while hopes of lower base rates were presumed.
As I suggested last week, commodities usually only outperform during perceived times of an economic upswing or a specific crisis. It’s always the same: people tend to feel inclined to call the macro environment with simple models or sophisticated models and still get it mostly wrong. The factors influencing the macro environment are diverse and multidimensional and change dynamically and often in different directions. How can anyone accurately predict the right direction in such an initial situation? That’s why I believe making investment decisions solely based on macro analysis is highly unsuitable. Not everyone will agree, but I seriously doubt purely macro-based investment strategies. At Incrementum, we prefer working with several specific scenarios and showing that if certain events occur, it may create one or the other investment opportunity rather than predicting one macro future.
Currently, I like crude oil, oil service companies, and electricity. Still, I avoid iron ore because I want to see an economic pickup in China or massively lower entry levels for the stocks on my radar. I am not investing in soft commodities due to my lack of expertise. And above all, I like companies that produce cash flows and are willing to share them with their investors. Cash flows are fantastic, no cash flows, no investment! Why crude oil? Because some great companies are producing massive cashflows, the U.S. Energy Information Administration (EIA) reports that current US oil production is at 13.2 million barrels per day, a level that has been consistent for several weeks. US inventories are nearing historically low levels. The August low in WTI Crude could be a significant low for the next few months, mainly because there is typically a seasonal rise in oil prices into October. After that, anything may happen, especially if winter is warmer than expected.
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 and the weekend!
Yours truly,
Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets
Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li
Ronald-Peter Stoeferle, Fund Manager & Managing Partner of Incrementum AG, returns to Soar Financially to discuss the latest developments in the gold space. What’s driving price? Have the expected rate cuts already been priced in?
Good Morning Ladies and Gentlemen
„One must beware of ministers who can do nothing without money and those who want to do everything with money.„
Indira Gandhi
Over the past few months, investors have been optimistic about declining interest rates. However, investor sentiment quickly worsened after the recent Fed meeting, during which Fed Chairman Powell indicated the possibility of an interest rate cut at the September meeting. Was this not what investors hoped to hear?
The sentiment worsened due to unexpectedly poor leading indicators for the U.S. economy. The industry’s widely-watched ISM Purchasing Managers‘ Index fell further into the contraction zone. Additionally, weak U.S. labour market data harmed the markets. In July, the U.S. economy not only created fewer jobs than anticipated, but unemployment reached its highest level in almost three years, with wage growth stagnating. This caused significant concern among market participants and heightened fears of a potential U.S. recession. It’s worth noting that in recent months, news of stagnant wages would have been well-received, as it would have signalled an end to the increasing wage-price cycle, potentially leading to lower inflation and raising hopes of an interest rate cut by the central bank, which was essentially announced for the September meeting.
It’s all about perception! While numbers or actions may be well perceived at one moment, they may be perceived differently in a slightly different environment or context, combined with other data or actions.
While writing this edition of “Stefan’s Weekly”, I would not be surprised if market participants looked back at last week’s and this Monday’s sell-off and realised they might have been exaggerating. This brings me to a topic I have been thinking about for a long time. Analysts, bankers, brokers, and journalists tend to echo each other. We often see similar comments and conclusions from apparently different sources in the media, on social platforms, and so on, especially when they concern “breaking news”. This is not only repetitive but also numbing. It is particularly concerning and potentially dangerous, especially when certain facts are taken out of context. Many analysts, bankers, brokers, and journalists have exacerbated the situation leading to this recent market correction with comments and puffery vocabulary. I cannot think much of that.
Since 1960, August has mostly been a positive month for the U.S. stock market, with a 0.1% increase. The performance was significantly more positive in election years, with a 1.4% increase. In 2022 and 2023, August showed a negative performance. However, the last election year, 2020, when President Biden beat President Trump, saw a strong August performance with a 7.6% increase. Let us see what August brings; today, it looks slightly better than after the hiccups in the first days.
The stock market performance during the last year of a president’s first cycle in office shows a solid upward trend. This year, we already had a solid first half, mainly from seven stocks and also thanks to some sector rotation in Q2 and July. Let us see what the rest of the year brings.
Given the current state of decreasing and yet still sticky ongoing inflation, commodities present potential opportunities. However, the scenario could quickly turn if Western economies slip into a broad-based recession and China struggles to regain higher growth. Such a situation could swiftly and negatively impact the economic environment for commodities. There are always hopes that commodities can do well even during a recession, perhaps because of fear of underlying inflation, but this never really materialises. Again, I cannot think much of such a scenario. If you believe in a recession, you want to think twice about investing in commodities. If you think recession fears are exaggerated, commodities may be an exciting bet, even more so if inflation can not be tamed the way market participants hope.
In my next “Stefan’s Weekly,” I will share my view on commodities. By the way, in my beliefs, gold is no commodity; it is money.
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 and the weekend!
Yours truly,
Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets
Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li
Good Morning Ladies and Gentlemen
„Reason only makes sense in the context of irrationality; it’s not reasonable to always strive for rationality.“
from „unknown“ to me
The compound interest effect is a powerful strategy that can inspire us to leverage small, seemingly insignificant actions to generate significant gains in asset management. This phenomenon occurs when interest earns interest, leading to exponential growth in wealth. The initial capital grows by reinvesting dividends or interest income, generating more interest and creating a growth cycle. Unlike linear growth, where growth occurs constantly, the compound interest effect results in exponential growth. The longer the money is invested and the higher the interest rate, the faster the assets grow. Visualising this effect is like watching a snowball rolling down a hill – it starts small, but with each revolution, it gains size and momentum.
The Swiss National Day is 1 August. It commemorates the founding of the Swiss Confederation, which stemmed from the Federal Charter of early August 1291. Yesterday, we celebrated this significant day with a day off, delicious food, bonfires, and fireworks. It was a celebration that we all, as Swiss citizens, could partake in and enjoy!
Okay, Ladies and Gentlemen, let’s delve into the concept of compound interest in asset management, a strategy that uses small actions to generate significant gains. What if we apply this concept to society by working towards a sensible, respectful society that leverages small actions for significant gains? Let’s consider yesterday’s Swiss national, August 1st, and apply the philosophy of the compounding effect to Swiss society. It seems like our ancestors, over more than 700 years, leveraged seemingly insignificant actions for significant gains, and today, we live in a clean and prosperous place, in a direct democracy where decency and equality prevail. It has certainly been a long journey, but looking back now, we can’t help but feel proud and appreciative of our progress. As I mentioned above, “watching a snowball roll down a hill – it starts off small, but with each turn, it gains size and momentum”.
The question that crosses my mind is whether the effect of compounding also works for negative actions. Unfortunately, I believe it does. Political debates, where political leaders call each other names, purposefully discredit each other, lie, and seemingly are unwilling to accept consensus and/or defeat, create negative momentum, which, in the end, is bad for society. We must take 100% responsibility for everything that happens to us, focus on decision-making and continuous improvement, and, as hard as it may seem, look down the road, drift away from instant gratification, and seek exponential gains by compounding small, seemingly insignificant actions.
So far, so good. The Paris 2024 Olympics have started with an unbelievable artistic explosion. I had never seen anything like that and was impressed by the many different levels of creativity and art incorporated into the opening ceremony in the centre of the fabulous city of Paris. Obviously, not everyone was impressed, which is fine; it is almost impossible to meet everyone’s expectations. Let’s see how this further evolves.
Next week we will try to see what is still in the markets for the rest of the year. Let me already add that from a purely statistical point of view, August is a good month during the U.S. election year.
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 and the weekend!
Yours truly,
Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets
Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li
Wir freuen uns, Ihnen unseren monatlichen Goldkompass für August 2024 präsentieren zu können. Er ist vollgepackt mit unseren beliebten Charts.