Our own stock market indicator delivered a sell signal at the end of February. As you know, this is not about forecasting trend reversals on the stock markets exactly. We only try to find out when the relationship between opportunity and risk changes when investing in equities. The logic: If stocks are valued low and the economic trend improves, there is a high probability that the stock market will develop positively in the long term. If, on the other hand, equities are expensive and economic expectations are worsening, it is time to become more cautious. That's exactly what's happening today.

Most titles are very highly rated, and the business expectations of German industry are declining (details on the indicator can be found in the "News from the editorial staff" section at www.private-wealth; user ID: privatewealth, password: rethink).

That this warning is coming right now is interesting. Perhaps it is at this very moment that the great "narrative" that has determined stock market developments since 2009 is changing. Since then, the basic assumption has been moderate growth, ultra-low interest rates and no inflation - in other words, the end of the classic economic cycle. In this ideal world for investors, higher corporate earnings were paid for with ever higher price-earnings ratios. It was the stuff that was made into a boom.

Now current developments raise doubts about the validity of this narrative motif. Wages are climbing, inflation rates and interest rates are rising - will this be at the expense of company margins? Are the expectations of future profits perhaps too high? Should not price-earnings ratios also be reduced if the central banks tend to take their foot off the accelerator? And what risks are hidden in a system that provided debt capital at zero interest rates for a very long time? As the saying goes: "Only when the tide returns does it show who went into the water without swimming trunks.

Preserving wealth is more important in this situation than trying to increase it further. The stock market indicator itself even only suggests an equity quota of between zero and 30 percent. That sounds extreme, of course. Nor is it intended as a concrete allocation proposal for the mainstream. But as a food for thought for a special target group. In the first issue of private wealth in December 2004, banker Eric Syz told us: "You know, we are already wealthy. We don't have to be. We just want to stay it." Those who pursue this goal should now switch from attack to defense.

Sincerely,

Klaus Meitinger Editor-in-Chief

Moritz Eckes publisher