The markets are constantly in motion. That is why investors often feel pressured to act. Samantha Blattner, wealth advisor at our branch in Stuttgart, explains why it pays to pursue your own strategy at quirion consistently.
Many equity markets have already broken records this year. Some suspect that this raises the risk of setbacks. What does the current price development mean for your investment strategy?
Wherever the market happens to stand right now: that is only a snapshot and is not decisive for a long-term investment strategy. Anyone already in the equity market can be glad about rising prices. Anyone who has not yet put money into equities should not be put off by the current price level. With a world portfolio like quirion's global ETF portfolio, the right moment is "always now." The main thing is to be invested with broad diversification – and then to stay the course consistently.
So you are sure that prices will keep rising?
Take a look at the long-term price movements of well-known indices such as the S&P 500 or the MSCI World. There you can clearly see: there have been setbacks time and again, but the long-term trend points upward. Whatever happens, the economy keeps developing: people consume. People invest. There are innovations. The engine of the equity markets is the global economy, and it is geared toward growth.
But prices do not rise forever. Often the positive performance is concentrated in a few stocks or particular markets. If I want to invest optimally, don't I have to keep realigning my strategy accordingly?
On an emotional level, I can understand the wish to always bet on the "right" stocks at the "best" moment. But that attempt can also cost you return opportunities. Viewed rationally, no one knows in advance which stocks will rise or fall, and exactly when. That remains pure speculation. You can get lucky and land a hit now and then, but you cannot repeat it systematically. We do not speculate with our clients' money. Our scientifically grounded investment strategy stays free of forecasts. It relies on the long-term outlook of the world's equity markets. Investors do not need to take action in any market situation. As long as life circumstances or risk appetite do not change, there is no reason to change your strategy at quirion. We take care of the portfolios and make sure the strategy continues to match our clients' risk profiles over the long term.
How do you do that?
For example, we regularly offset the changes that price fluctuations have on the weightings in the portfolio. Without this "rebalancing," the strategy being pursued would drift over time. That is especially true for strategies that contain bonds. Bond prices usually move far less sharply than equity prices. That is why, depending on the investment horizon and risk appetite, we deliberately add bond ETFs, which normally cushion the price fluctuations of the equity portions. But there are also exceptional situations, as in 2022. In the course of the interest-rate turnaround, prices temporarily slumped for both equities and bonds. Situations like that, however, occur extremely rarely. Last year bond prices stabilised and have already risen more strongly again, because market interest rates fell somewhat after the sharp rise of the past 1.5 years.
Right now key interest rates are still high. Some banks, though, have already cut their overnight-deposit rates significantly. How can I keep benefiting from the interest-rate level?
For example, with our Cash-Invest portfolio, an alternative to overnight-deposit accounts. The portfolio focuses on the money market, which generally moves quite close to the key interest-rate level. In principle, though, interest-bearing investments are only something for a short investment horizon. In other words, for when the point is to park money temporarily.
Over the long term, the equity market offers far greater return opportunities. In doing so, you should not let short-term trends confuse you or throw you off your strategy. Even if many people say otherwise.
So why do many people say otherwise?
You always have to ask yourself what interests someone has who makes forecasts. I know this from my own experience. Before I joined Quirin Privatbank in 2022, as a wealth advisor I was urged to keep prompting clients to trade. The best case was when you could reshuffle an entire portfolio in order to generate front-end loads and commissions. That really bothered me personally. A former colleague had switched to Quirin Privatbank ahead of me. She told me about her new job and the completely different advisory approach. No product commissions, no orientation toward selling products, but instead independent and individual advice based on a scientifically grounded investment concept: at first I could hardly believe it myself. But it really is true!
