Updated: Apr 12
You remember our chances/risk assessment from 2018-12-30 (details can be seen in our blog post of this day in our Facebook-group)?
Here ist our new chances/Risk assesment (04/2020)
In 2018 - but also before that, we at its-my.money ltd waited for a major crash and warned of it. It is also the reason why its-my.money ltd has no shares in fixed assets to date. Unfortunately, what we have seen in share prices since 2008 is only largely the result of an absolute misallocation of money. The flood of money - triggered by the central banks worldwide - and the zero interest rate policy (or negative interest rate policy) massively put money in stocks. The crash we saw in 2008 was immense, but unfortunately the money was pumped directly into the markets.
The current crash, which has been going on for a few days, is different in many ways, but it was inevitable. No one could have known that a small virus would ultimately be the trigger in combination with the oil price crisis at OPEC +, nor could it be known when this would happen.
Massive amounts of money have been destroyed worldwide in recent days. This is especially sad for people who have made their retirement plans based on stocks. Pension funds and other institutions that have invested the money of their employees / clients / customers in shares are now also in ruins. For all those who need their money now and have to sell stocks, funds or ETFs, this is a real disaster.
In our chart you can unfortunately see that those who bought shares in 2008 at the height of the bull market (before the crash in 2008) and held them until today have not made a cent profit to date (possible dividend distributions minus custody account fees, administration fees, management fees, etc.). The sad thing is that very few people keep their shares throughout. Most of them follow the herd instinct and the stock exchange is a single playground for psychology and so most private investors sell their shares at the moment when prices really fall and therefore unfortunately too late. It is not much better to buy. Many investors only buy shares when they see that others have already made money with them and often jump on the train that is already moving. The result is that the normal small investor never gets the right time and actually always acts when it is already too late.
The only question is whether fund companies and insurance companies do it better.
Everyone has known insurance whining since 2009 that due to the low interest rate policy, large surpluses can no longer be achieved, and so the guaranteed interest rates for life insurance policies worldwide have been pushed down further and further. But how can that be?
Let's look at the chart again. It has never been so easy to make money on the stock exchanges as if you invested in stocks in 2009 and have kept them invested to date. And the insurance companies were not able to generate enough surpluses? Actually crazy, isn't it?
Shares We reduce the risk from 100% to 25%. From the current perspective, we assume that we will get further lows and that a recession cannot be ruled out. On the other hand, the chances increase. Some stocks can be bought today under their actual book value and that is a clear "buy" for us.
Tip: As long as the markets are as volatile as they are today, a purchase is still a bit early, but if you shop here in tranches in the next few weeks and possibly months, you can build up a long-term portfolio here for which a few weeks ago other people almost paid double.
Here we differentiate between the real estate market in Europe and the real estate market in the world (means the rest of the world). In the context of the stock market crashes, we see the risk that the real estate bubble could burst at the same time. We see this problem above all for the European market, which has fueled inflation in the real estate sector with the negative interest rate policy.
We at its-my.money continue to buy real estate, but outside the European market.
Precious metals and diamonds
Gold and silver, but especially palladium, have gone very well in the recent past. Silver has already declined sharply (industrial metal) and gold as a “safe haven” is likely to run sideways from now on. We have the precious metals / diamonds and the commodity markets on our radar, but would not invest in precious metals and diamonds at the moment.
The situation is different in the area of oil as a raw material, which was imploded in the course of the oil price war at OPEC +. The long-term opportunities here are excellent and a clear purchase.
Forest / plantations
its-my.money ltd continues to invest heavily in the areas of land, plantations and forests. Above all, we are building up a long-term reserve here, which represents a security cushion for our company.
With the purchase of disused plantations, we get cheap land. We reforest this land with trees, east and vegetable planets (as part of a mixed culture) and increase the value of the land massively. The planted trees grow "almost by themselves" and so the value of our properties increases automatically every single day of the year. We will continue to invest in this area and, above all, also invest in the infrastructure (machines, tractors, excavators, etc.) in order to further increase efficiency and improve our plantations and the ways to get there.
We buy a few selected works of art from time to time. After the art market imploded in 2012, we still believe that selected art can experience an increase in value in the long term. We are careful here and do this with small sums. It is important that we will offer our artists a platform in the long term, which will also make them known worldwide and so their art will become more valuable. We are still at the very beginning, but calmly build up a small, exquisite art collection, which we will soon be presenting in some places.
All other real assets that have not yet been mentioned are still on our radar, but our assessment has not changed fundamentally, so we do not want to repeat them here.
We will present further real assets over time and then update our assessments on this in due course.
If you have any questions, please do not hesitate to contact us at firstname.lastname@example.org. Sincerely your team from