Monat: Oktober 2024

Good Morning Ladies and Gentlemen

”Maturing hurts.”

Richard David Precht

Entitlement Society: last week’s topic

Thank you all for the emails I have received. Many people shared their thoughts in response to my views on an entitlement society, and I genuinely appreciate it. I was especially pleased that I am not the only Supertramp fan out there.
Now, please allow me to add one more personal thought before getting into today’s topic. I believe one major issue is the “share and like buttons” on social media, which have likely been the most significant revolution in social dynamics in the past decade. This has resulted in competition in areas older generations did not have to contend with as much. Ladies and Gentlemen, I realise I am generalising, but consider this: if your happiness is at least partially dependent on being liked by your online followers or if your posts are shared or liked, life can become quite frustrating if you or your posts do not receive the attention you seek or believe to merit. If likes become the new currency and represent a means to self-realisation, humanity is up for some tough years. If people focus more and more on self-realisation and neglect meritocracy, we should anticipate reduced prosperity in the future. Simplified? Yes, most probably, but there is a point, no?

Beige Book

As usual, the U.S. Federal Reserve is preparing for its upcoming meeting by reviewing the „Beige Book,“ which summarises feedback from the twelve regional central banks nationwide. This report outlines the current economic conditions in their respective areas. According to the latest survey released by the Federal Reserve two days ago, economic activity in the U.S. has seen little change across almost all districts since early September. While two districts reported slight growth, most reported a minor decline in manufacturing activity. Overall, employment has increased slightly, with more than half of the districts noting slight or moderate growth, while others experienced little to no change. Many districts also indicated low labour market turnover rates. Inflation has remained mild, with sales prices rising slightly in most areas. The next U.S. Federal Reserve meeting will occur on November 6 and 7.

Uncertainty

Empirical evidence suggests that the stock market tends to perform more favourably during the tenure of a Democratic President. However, this observation is not widely regarded as conventional wisdom within public discourse and is still a statistical fact. For the time being, there is uncertainty. Who will be elected, and what will be the impact on the economy? This uncertainty prevails until we have solid polls or first election results. Because market participants do not like uncertainty, financial markets may still be a little rocky for the next 10 days.

Strong period ahead

However, it’s important to note that the historically best six-month period for the Dow Jones Industrial Average (DJIA) is approaching. This period runs from November 1 to April 30. Since 1980, there have only been six instances where this timeframe ended with a loss. The most significant decline recorded during this stretch was -12% from November 2008 to April 2009. Statistically, one should not be short of the DJIA during that period.

Year-end rally?

Do I think there can be a year-end rally? Yes, why not? With the statistically robust period ahead, the uncertainty about the U.S. elections disappearing in 10 days, and potential further interest rate cuts due to low inflation in a still favourable economic environment (Beige Book), a year-end rally seems possible to me.

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 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

”Anyone can make it, but not everyone.”

Gerd Ziegler

ECB

Before we dig into today’s somewhat philosophical topic, let us quickly look at what happened on the interest rate front. Yesterday’s European Central Bank (ECB) meeting resulted in the widely anticipated 25 basis point interest rate cut. Another 25 basis point cut is also expected for the December meeting. Based on Futures prices, four additional interest rate cuts of 25 basis points each are awaited in 2025. The ECB’s target range by autumn 2025 is 2%. However, that remains to be seen. I am not sure if, at the end of next year, we will see rates below 2%. Anyway, some weeks ago, I wrote that interest rate cuts are positive for stock markets under normal circumstances. This is still the case! And now, Ladies and Gentlemen, enjoy today’s topic.

Today’s Topic: my very personal view!

I perceive a shift from a meritocracy to an entitlement society. Nowadays, it seems, people believe in being entitled to a successful career, a good life, good health, an attractive, intelligent partner, and everything else others may have or may not have. This was different in the past. In the feudal system, only the nobility had the privilege of a good life. Everyone else knew they couldn’t demand much in this life, but if they were decent and submissive, they believed in a good afterlife or heaven. Regardless of desire or merit, having noble blood was the only chance to succeed.

Capitalism

Capitalism has brought significant changes to society. In theory, there are no glass ceilings anymore, and everyone now has the opportunity to succeed, at least in Western and some other more or less capitalistic societies. However, as a result, people now feel entitled to success, whether they deserve it or not. Capitalism has led to widespread prosperity for large global populations. Yet, it is not evenly distributed and not even present everywhere. Despite this, many more people have a better life today than 20, 50, or 100 years ago. Nevertheless, because not everyone succeeds despite the opportunity, frustration builds, leading to envy, anger, fear, and the desire to find someone to blame for one’s failures and maybe even to seek retribution against them.

Frustration

When ruthless politicians, ruthless gurus, ruthless people in general and criminals manipulate the frustration, envy, and fear of those who have not succeeded by, for example, blaming immigrants, warning of inflation, predicting bank failures, and forecasting a collapse of the financial and political system, managing such fears, they can offer themselves as saviours to those who cannot see beyond the claims. To me, this is nothing more than a fear-based agenda for power, leading to a loss of prosperity for those who need it most. I see repeatedly that even quite sensible people hold views and beliefs that are neither scientifically proven nor would have been morally/ethically justifiable until a few years ago. I think they are prone to disappointment, and I wonder what life has done to those people and where their inner compass has gone.

“I said dreamer, you’re nothing but a dreamer.”

Supertramp

Quote and conclusion

Looking for the culprits does not make sense, but I hope humanity will realise the potential for positive action. Naïve? Yes, probably. Do I care? Nope, not at all!
”Anyone can make it, but not everyone.” This, Ladies and Gentlemen, is probably and, unfortunately, true, and I cannot think of a way to change it. To me, the best, however not flawless, system is an open and liberal democracy where the people can elect politicians and vote on substantive issues. In my opinion, the promise that everyone can make it in an open, reasonably democratic society of capitalist characterisation still stands, but everyone has to do it for themselves; the government cannot do it for its citizens, no matter what frivolous politicians will promise in exchange for some votes. Those who believe the state can do it for them are nothing but dreamers, and by the way, never forget that the flow of people follows the flow of capital because everybody seeks a share of that capital.

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 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

”It would also be nice if I were 6’2”, had a full set of hair, and stayed an even 190 pounds throughout adulthood. However, all these wishes are pipe dreams, so we need to make do with what we have.”

Kevin Muir (the MacroTourist)

Update

Already Q4 again. I have the impression that the quarters are simply passing us by, and thus, I figured sending you an update on the Incrementum 2024 Year-End Competition would be appropriate. When I was writing this “Stefan’s Weekly”, the prices for the S&P 500 stood at 5’793.81 Points, higher than in June; gold at 2’627.39, way higher than in June and Nvidia at 134.94, look that, lower than in June.

S&P

The highest bet on the S&P still comes from Dario, at 5’651; Barbara’s bet is only one point behind (5’650), and the lowest, at 4’000, comes from Attila. The S&P even outperformed the most bullish bet.

Gold

So far, Hans’s highest bet on gold is 2’500, and Barbara’s lowest is 2’050; what’s true for the S&P is certainly true for gold. Gold even outperformed the most bullish bet.

Nvidia

Okay, Ladies and Gentlemen. Barbara’s highest bet on Nvidia is 1’250, and Adrien’s lowest is 195 a, before the split. For me, almost anything is possible in this stock. But it looks more like a closing above Barbara’s bid.

My bets

I like to be transparent, so my bets are still gold 2’250, Nvidia 999, and the S&P 5’220.

Fingers Crossed

I’m keeping my fingers crossed for all of you, and I look forward to sending this one-ounce silver coin to the winner at the end of the year.

Food for thought

In an upcoming „Stefan’s Weekly,“ I want to discuss what I see as a shift in society from a meritocracy to an entitlement society. We need to be realistic about this, as I believe that some people want to receive things without putting in the necessary effort. This idea seems completely unfeasible to me.

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 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

”Peace is not everything, but everything is nothing without peace.”

Willy Brandt

Weakness

Yesterday, I received a query from a reader regarding the recent market downturn, and I am pleased to offer my perspective. To begin, 2024 has been an outstanding year thus far, and our investment portfolios have shown strong performance. It almost feels out of place to discuss any weakness or downward movement in the market.

Current Market Sentiment

Nevertheless, it is fair to assume that multiple factors contribute to a potential downward trend. On one hand, investors are cautious due to the prospect of heightened tensions in the Middle East. On the other hand, the upcoming US elections are creating uncertainty. Furthermore, investors carefully scrutinise weekly and monthly data to guide their decisions. While this is typical in financial markets, it can lead to short-term fluctuations in both directions. Due tomorrow, the monthly US labour market report has dampened market activity because the recently published US jobs data has indicated a robust labour market, leading to speculation that tomorrow’s monthly report may also be strong. Furthermore, the sentiment in the services sector has experienced a significant and unexpected improvement. This development interests investors as it could potentially reduce expectations for further interest rate cuts by the Fed. In addition, if oil prices continue to rise due to tensions in the Middle East, fear of increasing inflation could increase again.

Switzerland

In contrast, Switzerland is experiencing low inflation, with the rate dropping to 0.8% in September, the lowest level since July 2021. Deflation suddenly seems a more significant concern for the Swiss National Bank than inflation. Moreover, there are expectations of further interest rate decreases in the eurozone, as senior ECB representatives have recently hinted at additional cuts. This is partly attributed to the declining business sentiment in the eurozone, which reached its lowest level in seven months in September.

The Road to Year-End, my 2 Cts

Ladies and gentlemen, I am happy to share my views. Since I cannot foresee the future, I look at the past, consult statistics, question our investment approach, and conclude. Statistically, the weeks before a presidential election are usually not very strong, sometimes even weak. Investors do not like uncertainty, and not knowing who will be the president of the United States for the next four years leads to such uncertainty. Usually, once investors assume they see the outcome, confidence resumes, and markets may turn positive. This could then lead to a post-election year-end rally. This is more or less how I see it for the time being. However, a further escalation in the Middle East and an unexpected negative twist in the war between Russia and Ukraine could worsen it for investors. In contrast, a de-escalation in the Middle East and an unanticipated positive twist in the battle between Russia and Ukraine could make it better for investors. This means you may want to gauge your investment risks and opportunities according to your individual convictions.

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 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