Conversely Investing
Pfäffikon SZ, Switzerland – Investing is very simple according to many. The information available today gives the investor access to all the necessary, so is the thought. In addition, products are offered in a variety of ways to suit any item you want. Apparently, today’s investor is turning around everything. The products offered are simple, but because of this, investing is harder than ever.
Composition
For example, if you confront investors with the demographic composition of a country in which they invest, they are often unable to give an answer; not to mention the demographic shifts. Additionally, about the construction of the individual wealth of the poor and wealthy in a country investors won’t say a single coherent thing. The relationship of demographic composition with the development of deflation or inflation is an important issue but for many investors no point of attention. The role played by a central bank of a country is also crucial. Everyone knows that central banks are too happy to manipulate their currencies. It is, therefore, important to know what the status is of the country’s currency.
Money flows
Obviously, the structure and composition of the debt of a country and its population are worth researching. 2008 is known for its debt mountain, but debt has grown by roughly 40% since then. It is important to know from where a country derives its prosperity. Does this wealth come from only one city and a top layer, or is wealth generated diversified? Also, a small analysis of a country’s money flows may not be lacking. Are the so-called ‘outflows’ too high then you know enough. These are just a handful of items to pay attention to for investors.
However, investors do not worry. With the products they are offered, they think they can conquer the whole world. Whether these products behave like a chameleon, they do not know. The above points do not interest the investors or are unknown terrain. Daily, these investors read the newspaper and see that the economy is financially sound. There is only one problem; when it is in the newspaper, it is also priced in. Investing is not only difficult but also requires a lot of patience and stamina. Conversely investing equals bicycling in a dark room. Circling rounds can go well for years until one reach the invisible wall.
It remains for me to wish you a good weekend.
Jan Dwarshuis is CIO at Thirteen Asset Management AG. Dwarshuis writes his columns in a personal capacity. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in above mentioned shares and has no intention of doing so in the next 72 hours.
