• Klaus Meitinger

The weather forecast of the capital market seismograph - still sunny

Kapitalmarkt Seismograf 2The current news draws a fragile picture. The infection figures in Europe are rising significantly, government travel warnings are increasing, the conflict between the USA and China continues to smoulder, in Belarus the population is taking to the streets and the Turkish lira is plummeting. Could this be a harbinger of a difficult phase on the stock market?

"Although the markets are currently facing headwinds from politics, the economic data is falling, but many market participants are obviously positive about the situation," analyses Oliver Schlick, Secaro. The capital market seismograph calculated by Schlick therefore continues to suggest a clear overweighting of equities.

As you know, the seismograph is a kind of weather forecast for the stock market. Using a complex mathematical model that incorporates 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.

Since the end of April, the probability of a positively turbulent market (yellow) has clearly dominated events and justifies a significant overweighting with possibly indicated hedging. Slowly, the probability for calm markets ("green") is now also beginning to rise. "On balance, the seismograph therefore suggests that the stock market will continue to enjoy sunny weather," concludes Schlick.

For the private-wealth stock market indicator, this means that the recommended stock weighting, derived from the ifo indicator and a fair value calculation, has been in the corridor between 60 and 90 percent since the end of July. Since the capital market seismograph continues to recommend an overweighting, 80 percent of the capital earmarked for equity investments should continue to be invested.

Yours

Klaus Meitinger

Note: Despite careful selection of the 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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