Seismograph: Overall picture continues to brighten.
At the end of February, the capital market seismograph had indicated a massive thunderstorm warning. At the end of March, the clouds began to clear. Now, the seismograph is again aligning itself offensively.
As you know, the seismograph combines various economic variables, such as early economic indicators, interest rate developments or price fluctuations on the stock markets. From these, it distills the probabilities for three market states over the next month. Green represents the expectation of a calm, positive market. Yellow denotes the probability for 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.
"Despite the perceived situation - war, inflation, economic worries and the threat of interest rate hikes - the input factors of the seismograph are currently signaling a further brightening of the outlook for equity investors across the board," reports Oliver Schlick, Managing Director of Secaro GmbH, who translates the signals of the seismograph into an allocation proposal: "The probability of calm markets has risen significantly again, the upward momentum of recent weeks for the expectation of a turbulent-negative market has clearly been broken. Red is clearly in retreat. Such a scenario means: the dark cloud band is receding. Equity investors can go on the offensive again,"
Of course, he said, assessing the situation in Ukraine remains extremely difficult. "In sum, however, more and more investors seem to be focusing on the following script for the coming months: Economic activity is weakening around the world. Because this dampens inflation concerns, the central banks' braking maneuvers will probably not be as drastic as recently feared. If we think it through to the end, this could possibly lead to a continuation of the liquidity-driven trends on the stock markets," explains Schlick and continues: "We are aware that increasing equity ratios under these conditions appears bold on the surface. However, it is the data that does not currently allow us to conclude otherwise."
The bottom line:
Faced with massive uncertainty about the future direction of the global economy and warning signals from the seismograph, the private wealth stock market indicator took a more defensive position 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 now considers an offensive stance to be indicated again, the equity ratio suggested by the private wealth stock market indicator rises to 75 percent of the individual's intended equity allocation.
The current situation clearly requires a high degree of flexibility from investors. So that we can send you a "private-wealth-alert" immediately if the stock market indicator's assessment changes, please leave your mail address at www.private-wealth.de or register with your mail address for a free six-month trial subscription.
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.