Perception

Dear Ladies and Gentlemen

COVID-10 has received coverage in the media for approximately two months by now. However, the effect it developed over the last two weeks was rather unpleasant for financial markets’ participants. While in the beginning people were looking at the news and thinking the poor people in China had a problem, suddenly the same people seem to realise that viruses do not necessarily respect a country’s borders. The virus came to Europe. I guess this was not the initial idea of the official European “welcome culture”.

Ladies and Gentlemen, we are in a phase where perception is not necessarily matching facts. People do not know what is going on and how coronavirus will develop and this uncertainty is very bad for financial markets and it may go on for some time. Financial markets do not like uncertainty!

Nevertheless, these may also be the moments when one can buy into great opportunities. It may still be too early but then again, if the general public is afraid of investing, the ones who dare may buy at attractive prices.

From what we have seen, experienced ever since the GFC (Great Financial Crisis), I think we can expect the central banks to be on the side of the markets in the event of a crisis. I believe they will not hesitate to respond to possible losses of momentum in the global economy by cutting interest rates and flooding the markets with cheap money over and over again. Furthermore, President Trump aims for a re-election. If the U.S. economy is in a desperate state of a looming recession and financial markets are down, his re-election hopes will most probably evaporate at the ballot.

Ladies and Gentlemen, I am cautious too but if I see an opportunity to buy into a well-managed net free cashflow producing company at low prices, I will do it. I am fully aware that most probably I will not buy at the lowest prices possible and yet, I will still do it. I buy in small steps and over many days, if not weeks and I am looking forward to harvesting dividends, interests and the like in the months and years to come. Investing is long-term by definition, investing is what we are doing. I always ask myself during turbulent markets if I still would shed an investment applying a five to ten years investment horizon and if I can’t answer with a clear yes, I will not sell.

What is your opinion, Ladies and Gentlemen, please let me know about your ideas,  fears, your investment experiences, but please don’t forget (instead of hitting the reply button) to send your messages to:

smk@incrementum.li

Many thanks, indeed!

And now, Ladies and Gentlemen I wish you a great day and weekend.

Yours truly,

Stefan M. Kremeth
Wealth Management
Incrementum AG

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li
Web: www.incrementum.li