Jump Into Stocks Now?

The answer is always yes! Investor Irving Kahn, who was still investing in stocks at the age of 109 and passed away in early 2015, knew why:

There is always something to do. You just need to look harder, be creative, and be a little flexible! 

Take a stand, define positions

On an ongoing basis, the Gutmann equities team analyzes existing securities positions and looks at new business models. Because in our asset management, too, there is always something to do to keep our finger on the pulse.

In addition, we adjust the equity allocation. This means that we take a position on how much we vary up or down from the strategic equity position that you yourself have chosen for your portfolio.

If we do not deviate from this, the equity ratio is neutral. This positioning is like an intermediate gear for us before we switch up or down again. This is because a neutral orientation tempts us to remain in this feel-good position for too long. One does not expose oneself by signaling a positive (overweight) or negative (underweight) stance. 

Less movement, less emotion

For us, the strategic equity weighting is the most important point of information about how much setback you, as our valued portfolio management client, can withstand. Therefore, we passionately advocate changing this ratio up or down by a maximum of 10 percentage points. 

U.S. investor and author Joel Greenblatt (born 1957, New York) explains particularly well, why we advocate narrow bandwidths:

You have to understand yourself. It’s not a question of should you invest in the market or shouldn’t invest in the market. No one’s smart enough to be all out or all in, or very few people are. And a lot of people can’t take the pain of losing 40-50% of their money. So you have to decide what’s the most you can put into the market with that caveat that it could always fall by that amount. Because it does. History would say. People are emotional for any number of reasons. Bad things happen! You have to be prepared for a 40 or 50% loss.

So let’s say you can only handle a 60% exposure to the market. I said in the Big Secret. If you’re really optimistic about things, bump that up to 10%. Go 70% long. If you’re really pessimistic go to 50%. Not because you’ll be right, cause you’ll be wrong. But I want to limit how much you’re wrong by. … So you say, you’re going to be emotional, so put those brakes on before you start. I think that’s prudent for most people. 

Our task, our decision

In the role of Chief Investment Officer, I stand for transparency and clear rules. You, as Gutmann customers, need to know what to expect. We will not exit the market completely at the peak of the equity markets and invest fully again at the low. We cannot do that consistently over time. Nor can anyone else, for that matter, because no one can perfectly predict or define these moments.

However, this does not stop us from actively making decisions to set up your portfolio with opportunities. This year, we have already reduced the equity quota and significantly changed the composition at the end of January and the beginning of March. 

More quality, more opportunities

A bear market is the term used by stock market experts to describe a broad, sustained decline in stock market prices. The media like to use the term for index declines of more than 20%. Currently, we are reading more and more about this, because share prices are going down. This is true no matter how good the business model is. However, over time, the wheat is separated from the chaff; in the long term, the share price reliably follows the company's profits. 

That is why quality remains our most important asset. Everything is in motion, some business models are getting better and others are deteriorating. Yet one thing is certain, dear clients, we will continue to actively seize the best possible opportunities for you in the future.