• Klaus Meitinger

Capital market seismograph says "sell."

Dear Readers,

The new data of the capital market seismograph reach us just now. "The climate shift on the capital market, which has been the subject of discussion for quite some time, is now reflected in the probabilities of the seismograph and leads to the recommendation of a strong reduction in the share quota", Oliver Schlick informs, "the advice is to reduce the weight of shares considerably."

As you know, the capital market seismograph distinguishes between three phases: "green" (quiet market = buy), "yellow" (turbulent market with positive expectation = invest, but with hedge) and "red" (turbulent market with negative expectation = do not invest).

For a long time, the seismograph showed a relaxed picture despite the political squabbles. The probability of a calm, positive stock market ("green, buy or hold") has always been well over 90 percent in recent months. At present, however, it has fallen significantly to 71 percent. The probability of a turbulent, volatile market with a positive trend ("yellow") is 5 percent. The probability of a bear market ("red") rose significantly to 24 percent. "The rapid rise in bear market probability is a clear warning signal. That went too fast to remain heavily invested in the stock market," Schlick concludes.


In view of the decline in business expectations since the end of February, the private-wealth stock market indicator only suggests an equity quota of between zero and 30 percent.  For the short-term positioning within this corridor, we use the results of the capital market seismograph. Due to the positive indications, it therefore seemed appropriate in recent months to position ourselves closer to the 30 percent. The sharp increase in the probability of a bear market now makes it advisable to further reduce the equity quota.

However, there remains a risk for investors. Should the situation in the trade conflict suddenly ease, the prospects for the stock markets would suddenly become much more optimistic.


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.

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