No Appropriate Attitude

Good Morning Ladies and Gentlemen

„It’s warmer inside the herd; it can be very cold outside of it.„

Attributed to: Jean Marie Eveillard

Last week’s «Stefan’s Weekly»

Many thanks to all the readers who sent in their comments. It was overwhelming to receive so many positive emails full of compliments. Many thanks, indeed! Let me take my last week’s thoughts just a little further in today’s “Stefan’s Weekly”.

The effects of imprinting

Imprinting is a rapid and relatively permanent learning process that occurs during critical periods. It impacts an individual’s behaviour, relationships, and overall development. imprinting primarily relates to biological and cultural learning, yet it indirectly influences our ideologies. Cultural, political, and cognitive factors interact to shape our worldview, and early imprints play a significant role in this process. In other words, most of us should not overestimate our own ideologies, as they are usually the result of imprinting during critical periods in our lives.

Imprinting in asset management

In asset management, imprinting during critical periods may play a significant role, i.e., losses during a market crash, the Great Financial Crisis, or hypes of tech, biotech, meme stocks, or any other such past and possibly future scenario. Then, by definition, the most sensible allocation of available funds cannot be taken for granted. Fear and greed influence the way we think and act. Ladies and Gentlemen, it is not an appropriate attitude, yet we are not immune to it.

A good way to invest

You may ask, “What is a good way to invest, then?” That is a valid question! The answer is: “It depends!” It depends on your views, investment horizon, investment preferences, risk capacity, and willingness to take risks. I generally like the idea of a competition of ideas for the most sensible allocation of available funds because I believe funds should be able to achieve their maximum effect. Personally, I have always liked cash flow-producing investments, and you know what, when my partners and I started Incrementum in 2013, we went financially through challenging times because cash flows did not match costs during the first years of developing our business, and I probably got further imprinted with this idea of the importance of regular cash flows.

What we do for our private clients

We very much believe in long-term investing. Progress usually takes time, especially in asset management. A good portfolio takes time to develop, grow, and progress; we also think it needs some basic maintenance. For our private clients, we try to find cash flow-producing investments at sensible valuations within the defined investment universe across various sectors, intending to lead to sensible diversification. In those portfolios, we seek to avoid ideological and short-term thinking. It is a predominantly bottom-up approach, yet we always look at the macro environment for indications of the potential development of our investments. Still, we are deliberately not trying to call the market but rather stick to a company’s fundamentals in the expectation of gushing cash flows.

The effect of compounding

Compounding positively influences performance due to the regular reinvesting of cash flows generated in our portfolios. The pleasant side effect of this compound interest effect is its intrinsic inflation protection.

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 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li