Warum würdest du auf nur ein Szenario setzen?

Dear Ladies and Gentlemen

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But now let us quickly check out the question “why would you bet on one scenario only?” which was asked by one of my regular readers and try to find an explanation for this.

Well, I think the reason why an investor would bet on one single scenario is quite simple, if you get the scenario right and if you get the timing right, you can make a lot of money. Therefore and to some extent betting on one single scenario is speculation. But if you don’t get the scenario right or if you don’t get the timing right or if you don’t get either right you will lose money and maybe get frustrated. As one of my partners keeps saying: “it’s not about being right, it’s about making money” and he is totally right there. Now, when managing other people’s money, like in my case, because that is what I mainly do, the goal must be to protect my client’s assets and to deliver some sort of positive return over time. This is why I wrote about the toolbox-approach some time ago. Various tools for various scenarios and even better a combination of tools to reach some minimal diversification.

The world, nature, people, politics, financial markets, currencies, etc. are in constant motion. Even if you are using various tools for different market cycles and investment scenarios within your strategic or tactical asset allocation it is difficult to make money these days but by betting on one single scenario only, you most probably will miss out on a lot of (other) opportunities. Therefore, and to answer the question, I think betting on one single scenario may lead to very large profits but from my point of view I prefer at least some minimal diversification.

What do you think? Please let me know your points of view!

But please don’t forget (instead of hitting the reply button) to send your messages to:

smk@incrementum.li

If you are still happy to spend a quick moment with me, feel free to read this short text under the following link:

Independent and Flexible Boutique Approach

Many thanks indeed for your interest and participation!

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

Kind regards.

Yours truly,

Stefan M. Kremeth