In August and early September, after a long period of maximum defensiveness, slight easing signals for equity investors came from the capital market seismograph. The probability of negative turbulence had fallen somewhat in favour of the probability of positive turbulence. "In the meantime, however, the probability landscape has shifted significantly towards negative turbulence again," informs Oliver Schlick, Managing Director of Secaro GmbH: "It is therefore advisable to reinforce the underweighting that still exists anyway."

As you know, the seismograph combines various economic variables - early economic indicators, interest rate developments or even price fluctuations on the stock markets. From these, the probabilities for three market states in the next month are distilled. Green stands for the expectation of a calm, positive market. If green dominates, investors should invest in shares. Yellow indicates the probability of a turbulent positive market - investing, but with a sense of proportion. And red indicates the probability of a turbulent-negative market. Abstinence from equity investments is then called for

"Since red is now again heading towards new highs and the two counter probabilities are insignificant, the risk for further setbacks on the stock markets is high," concludes Schlick, who translates the results of the capital market seismograph into an allocation proposal.

The bottom line:

The economic traffic light of the private wealth stock market indicator is on red, but the Dax - based on our fair value calculation - is still undervalued. Therefore, the private wealth stock market indicator provides for a corridor for the recommended equity quota between 45 and 75 percent of the individually intended equity share.

Within this range, we are guided by the results of the capital market seismograph. Since the results of the seismograph are currently significantly more negative again, the equity ratio suggested by the private wealth stock market indicator has been reduced from 60 to 50 percent of the individually envisaged equity share.

Yours sincerely,

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 and is not an invitation to buy or sell securities.