Skip to main content
  • Klaus Meitinger

Seismograph becomes (slightly) less defensive.

(Reading time: 2 - 3 minutes)

Capital market seismograph

It remains exciting with the indicators that determine the private-wealth stock market indicator.

On 25 January, the ifo business climate provided an economic buy signal for German shares. Currently, the capital market seismograph, which has been very cautious for a long time, is beginning to loosen its defensive stance somewhat.

As you know, the seismograph combines various economic variables - early economic indicators, interest rate developments or 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 - invest, but with a sense of proportion. And red indicates the probability of a turbulent-negative market. In this case, abstinence from equity investments is the order of the day.

For some time now, the red probability has been dominant. Yellow and green do not really play a role. In such a constellation - according to the seismograph's message - equity investors should be very cautiously positioned. But now there is movement in the probability landscape. "The current data on the yield curves, the global economic climate and volatility led to a slight increase in the green probability," informs Oliver Schlick, who translates the seismograph's signals into allocation suggestions for Secaro GmbH. Since red still dominates by a large margin, Schlick says, it is too early to give the all-clear. Nevertheless, the change justifies a slight increase in the equity allocation.

The bottom line:

The economic traffic light of the private-wealth stock market indicator is green and the valuation of the German stock market is still below its fair value. For this reason, the stock market indicator currently defines a strategic corridor for equity investments between 65 and 95 percent of the individually planned equity share.

Within this range, we are guided by the results of the capital market seismograph. Because the seismograph is now positioned somewhat less defensively, the equity quota suggested by the private wealth stock market indicator is moving slightly away from the lower edge of the strategic corridor. It increases from the previous 70 to 74 percent of the individually envisaged equity share.

This reference to the individually envisaged equity share is important to us. Models like the private-wealth stock market indicator can only ever be based on economic data. How high the individual share quota should be in times of war must be decided by each investor on the basis of his or her own risk appetite and risk-bearing capacity.

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.

Publishing address

  • Private Wealth GmbH & Co. KG
    Montenstrasse 9 - 80639 München
  • +49 (0) 89 2554 3917
  • +49 (0) 89 2554 2971
  • This email address is being protected from spambots. You need JavaScript enabled to view it.


Social media