The weather is getting a little more relaxed.
"the thunderstorm front, which led us to completely dismantle our shareholding two weeks ago, has now dissipated somewhat," informs Oliver Schlick, who recalculates the capital market seismograph every four days.
As you know, the capital market seismograph distinguishes between three phases: "green" (quiet market = buy), "yellow" (turbulent market with positive expectation = invest, but with hedge) and "red" (turbulent market with negative expectation = do not invest).
In recent weeks, the likelihood of a bear market (red) had quickly risen to 46 percent. The sky darkened so quickly that the danger of a massive thunderstorm had clearly increased. "Meanwhile, the situation has eased somewhat. The rapid increase in the likelihood of a bear market has stopped," says Schlick. At present, the figure is still 43 percent. The probability of a calm, positive stock market ("green, buy or hold") stands at 52 percent. The probability of a turbulent, volatile market with a positive trend ("yellow") is 5 percent.
"Since the sum of the probabilities for a positive market development is over 50 percent and has stabilized there, it would be exaggerated not to be invested in equities at all. The model proposes to venture slowly and cautiously back into the market," explains Schlick.
The private-wealth stock market indicator has been out of the stock market since the end of February 2018. This was triggered by the three-fold decline in ifo business expectations in the industry and the simultaneous very high valuation of the stock markets. Since then, the indicator has proposed a minimum weighting of equities of 0 - 30 percent of the individually planned equity component.
For the short-term positioning within this corridor we use the results of the capital market seismograph. Due to the current easing of the situation with the capital market seismograph, it seems appropriate to move the equity quota from zero to the middle of the corridor again.
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.