Dear Readers,

Investors have had an extremely successful year. And the overwhelming majority of capital market experts expect share prices to rise again next year. In doing so, they refer to the extraordinarily positive economic development in the world.

However, this expectation of sustained high economic momentum is likely to be reflected at least to a large extent in the high valuations on the stock markets. For investors it is therefore crucial: Will it be even better in the future than already expected today? For this reason, the private-wealth stock market indicator attaches great importance to the expectations of managers in German industry. This is surveyed monthly as part of the ifo business climate surveys.

After a euphoric year, expectations deteriorated somewhat in December. This is not yet worrying, but it shows that it is difficult, at the high level that has been reached, to "go one better".

Overall, however, the German economy is still moving very comfortably in the boom quadrant of the Ifo economic clock. And the ifo traffic light also remains green. We would only be seriously concerned if ifo's business expectations were to fall further in the next two months.

The current capital market weather report by Professor Dr. Rudi Zagst's team at the Technical University of Munich also signals that the market on Wall Street continues to be calm and rising in line with the trend.

As you know, the scientists distinguish between three phases in the US equity market: "green" (quiet market = buy), "yellow" (turbulent market with positive expectation = invest, but with hedge) and "red" (turbulent market with negative expectation = do not invest).

Currently, the probability of a calm, positive US equity market is 97 percent. The probability of a turbulent, volatile market with a positive trend ("yellow") holds at 2 percent. And - what is particularly important - the probability of a bear market ("red") has remained stable at only one percent for months (see chart);

Conclusion:

Both the economic situation in Germany and Europe and the seismograph signal a continued positive trend on the international stock markets for the coming month. The private-wealth stock market indicator therefore remains invested, but, in view of the very ambitious valuation of many shares, only proposes an equity quota of 60 percent of the equity component that the respective investor considers appropriate in the long term.

We wish you a relaxed Christmas season and a successful start into the New Year,

yours

Klaus Meitinger

Note: Despite careful selection of sources, no liability can be accepted for the accuracy of the content. The information provided in private wealth is for information purposes only and does not constitute an invitation to buy or sell securities.