Interest is the price of money. According to this premise, investors should design their personal portfolio statement. But what does that mean? Well, if you compare the interest burden when buying a property in 2010 with the interest rate in 2020, you will quickly notice that with a sum of 250,000 euros, around 100,000 euros in interest were due over ten years. Now it is about 25,000 euros for real estate loan interest over the duration. Ergo, the property can also be noticeably more expensive.
It’s the same with stocks. The price-earnings ratios have reached the record levels of the 2000s. Only then, the risk-free interest rate was four percent or more. Currently it is at best zero. Stocks like Daimler, Munich Re or BASF, with a dividend yield of four to five percent, should therefore be viewed differently than they were back then. Of course the entire monetary system can implode, of course upheavals can always happen.
Pessimism is useless
However, 2020 has shown one thing – whoever believes the promises and warnings of crash prophets, buys their services or follows their advice, will burn money. Because while the Dax has been up 60 percent on the clock since March and the US markets are at record levels, crash prophets have a minus or, with luck, a black zero in the performance. Bitter, the biggest equity opportunity in the last 50 years simply spoiled.
And that doesn’t have to be the end. Because the interest rate landscape remains the number one factor. In the very short term, however – and that is the water in wine – partial safeguards should be drawn up. No pure short commitments, but intelligent tactical additions such as a Dax discount put with a base of 14,500, a cap of 14,000 points and a term in mid-2021. The appropriate WKN is HZ2TEA. Such intelligent warrants with sideways yield can also be optimized when purchasing, because they can be traded free of charge on the Gettex stock exchange, as can the Unicredit Cashbuzz app. 2020 had numerous improvements ready for active investors in the zero interest rate environment, particularly those relating to trading in securities.
The interest counts
This is also different from the 2000s. At that time, some securities orders still cost 10 or even 20 euros, even for small orders. Nowadays, new providers such as Smartbroker have extensive options on offer to permanently stay below 5 euros per order.
At the time of the Neuer Markt, providers like ING were twice ahead. With overnight money you could get high interest rates there and ING was competitively priced when trading. Today savers do not receive anything for overnight money and the bank has fallen far behind the new brokers in terms of fees. Everything has changed and a lot depends on the interest factor, with stocks as with real estate. If you want or not.
Daniel Saurenz runs the stock exchange portal Feingold Research with his team. It offers a daily market letter that you can test free of charge for 14 days. Sign in at Info@feingold-research.com or try the stock exchange service under this link out. Training days and coachings can be found NEW under feingold-academy.com