Seismograph gives a thunderstorm warning.
We have just received the new estimate of the team around Oliver Schlick, who regularly calculates the capital market seismograph. Since our last report to you, the likelihood of negative turbulence has quickly built up, although the absolute level remains within bounds. The speed at which thick black clouds form in order to remain in the seismograph's image is more of a concern here. "This is problematic and must be taken seriously," says Oliver Schlick and continues: "The seismograph's new positioning is defensive weighting."
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).
The probability of a calm, positive stock market is currently only 14 percent. The probability of a turbulent, volatile market with a positive trend ("yellow") reached 48 percent. And the probability of negative turbulence rose to 38 percent.
"The 'good' probabilities of green and yellow together are still 62 percent. That's actually not awkward. However, the fact that the risk for a market with a negative development has increased so rapidly and significantly in recent days calls for caution. In such weather conditions, it is safer to stay at home and wait and see how the situation develops," 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. At the moment, he is proposing a maximum underweight. This means: Zero percent equity exposure.
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.