Seismograph signals renewed improvement in the stock market climate.

The seismograph is a kind of weather forecast for the stock market. Using a complex mathematical model that includes both economic variables and direct market indicators, the model estimates the probability of three market conditions in the coming month. Green" means that a calm market with a positive trend is expected - investors can invest without hesitation. "Yellow" indicates a turbulent market with positive expectations - buying stocks is okay, but hedging is indicated. And "red" indicates a turbulent market with negative expectations. The advice is then: Do not invest.

The editorial team uses these results to determine the short-term equity positioning within the range suggested by the private-wealth stock market indicator.

The seismograph has been signalling an improvement in the situation on the stock markets since mid-April. Until then, the "red" probability had dominated, but since then "yellow" has gradually taken over. In the meantime, the probability of a positively turbulent market (yellow) clearly dominates events. "And although the probability of a calm market is still extremely low, the approach allows for an even higher overall equity ratio. The market wants to go up", explains Oliver Schlick from the analysis company Secaro.

For the private-wealth stock market indicator, this means that the recommended equity weighting, derived from the ifo indicator and a fair value calculation, remains in the corridor between 30 and 70 percent. Specifically, however, 60 instead of 50 percent of the capital earmarked for equity investments should now be invested. Only 40 percent remains in cash as liquidity to be prepared for any setbacks.

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 informational purposes only and does not constitute an invitation to buy or sell securities.