It is important to us to take advantage of opportunities in the market on the one hand, and on the other hand to have an adequate risk management system to limit risks. Thus, there are phases of euphoria and panic – in both cases, many investors get carried along in the flow. We consistently act anti-cyclically and with a long-term horizon: if euphoria causes individual shares, sectors or the whole stock market to rise significantly overall, we bring them back to their target value and thus take profits through partial sales. In this way we avoid cluster risks and maintain a diversified portfolio structure. If certain investors lose their nerve in bear markets or are forced to sell due to excessive credit and panic prevails, this is an opportunity for solidly financed investors. This is because in such market phases equities switch from weak to strong hands. We remain calm, pursue the defined strategy in a disciplined manner and buy shares at a "discount" compared to the fundamental value.
Because short-term market forecasts are unsuitable, it is impossible to find the optimal time to enter into investments – only if you are lucky. In order to diversify the risk of an unfavorable entry point, we invest new money staggered over months and quarters. Following the anti-cyclical logic, we try to buy positions after market setbacks. The duration of the build-up thus depends on market developments; if market setbacks occur quickly after the start of the mandate, the portfolio is built up more quickly. If we are allowed to take over an existing, fully invested portfolio instead of cash, we advice you to adjust it to our structures as soon as possible.
Long-term investment is a challenge. Even for professionals, news about economic developments, interest rates or company figures often come as a surprise. Anyone in the portfolio who tries to react to this at a short notice is always one step too late. Short-term trading brings nothing but costs, because going back and forth empties your pockets! A strategy defined with the client should be maintained in the long-term; what is important to us is a rigorous focus on quality and solid diversification. If this is given, even hectic market phases can be approached with calm and confidence. After all it is crucial to be invested in the long-term. The greatest risk is not to be invested in the long-term.
This question is decisive for the choice of the appropriate investment strategy. Historical returns over almost 100 years show that equity losses become very unlikely from an investment horizon of 10 years and longer. As a rough rule, therefore, you should only invest those funds in equities that you will only need in the long-term, i.e. in 10 years at the earliest. Money that is needed earlier should be held as bonds and cash.