• Klaus Meitinger

Seismograph signals slight all-clear.

(Reading time: 2 - 3 minutes)

Capital market seismograph

At the end of February, the results of the capital market seismograph had made it appear advisable to significantly reduce the equity allocation. Now the situation is easing again slightly.

As you know, the seismograph combines various variables, such as early economic indicators, interest rate developments and price fluctuations on the stock markets. From these, the probabilities for three market states are distilled. Green stands for the expectation of a calm, positive market. Yellow indicates the probability of a turbulent positive market. And red indicates the probability of a turbulent-negative market. If this rises significantly, a massive stock market storm is looming and it's time to get out.

Since the red probability - signal for an impending stock market thunderstorm - had risen very quickly a month ago, Oliver Schlick, managing director of Secaro GmbH, acted, translating the seismograph's signals into an allocation proposal: "Such a scenario means: a dark cloud band is approaching rapidly. Investors have to act to avoid getting wet. Under the rules of the model, this calls for being strongly defensive," he explained in late February.

Now the mix has improved again somewhat. "The overall picture of probabilities brightened. The upward momentum of the probability for negative turbulence has broken. The probability of calm markets, on the other hand, has risen again. Apparently, a certain habituation effect is now occurring in the capital markets," explains Schlick and continues, "A defensive stance is no longer indicated, but a cautious build-up of the equity quota is."

The bottom line:

In view of the massive uncertainty regarding the future development of the global economy and the warning signals of the seismograph, the private wealth stock market indicator positioned itself more defensively at the end of February. Since then, the corridor for the recommended equity allocation has been between 45 and 75 percent.

As the capital market seismograph abandons its defensive stance, the equity allocation suggested by the private wealth stock market indicator rises to 60 percent of the individual's intended equity allocation.

Clearly, the current situation requires investors to be highly flexible. So that we can send you a "private-wealth-alert" immediately if the stock market indicator's assessment changes, please therefore leave your mail address at www.private-wealth.de or register with your mail address for a free six-month trial subscription.

Sincerely 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.

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