“Buy when the cannons are thundering”, because “Political exchanges have short legs” are two common wisdoms on the floor. Michael Gollits, Director of Asset Management von der Heydt, doubts that this is still true.

Two who make the stock exchanges political: Boris Johnson (l) and Donald Trump (r).

“Political stock exchanges have short legs” is one of those investor wisdoms that may or may not be true. It wants to state that political events only have a brief effect on prices, as these are ultimately geared towards long-term economic conditions. The truthfulness of the statement was not always undisputed, but in recent years the attitude has changed more clearly. Political stock exchanges apparently no longer have any legs, wrote Otmar Lang, chief economist at Targobank recently, with a view to the fact that neither the European elections nor the resignation of British Prime Minister May or the world trade conflict seem to have impressed the stock exchanges.

But it is also a question of point of view. “The legs of political stock exchanges are no longer short,” says Michael Gollits, Director of Asset Management von der Heydt. Rather, the capital markets would be permanently overshadowed by rather long-legged political stock exchanges. For Gollits, this is one of the main reasons why the stock exchanges are currently changing so quickly: one day everything that could be dangerous is sold, the next it is closed with verve in the heart and the depot. But the vagaries of daily politics are not the only reason. “The fact that there is no longer any risk-free interest rate also plays a role. Bonds no longer really provide differentiation in the portfolio, ”says Gollits.

Courage for the dollar

Well, the situation has improved somewhat for government bonds. Nevertheless, there is a lack of coupons in the euro area that provide an interest buffer. “In this respect, it is no longer possible to do without high-yield bonds, but you also have to choose carefully.” Gollits currently likes to use bonds from telecommunications, for example from Türk Telecom. “A rock-solid company that pays up to 7.75 percent on its dollar bonds,” says Gollits. “For comparable euro bonds you get 3.5 percent.”

The high hedging costs for dollar investments don’t scare him either. Looking at the United States, these would almost eat up the higher interest rates, but not in Asia. “And there are exciting companies in Asia, such as real estate developers in China, who are benefiting from the recent deregulation, or port operators in Indonesia.”

Asia is also one of the core areas on the equity side, especially when it comes to infrastructure stocks. People are no longer so convinced of Europe. Otherwise, topic-related investing is currently the method of choice: Disruption in consumer goods and the “Generation Z” born between 1995 and 2010. When it comes to low-risk investments, Gollits traditionally relies on liquidity, but also currencies or, to a limited extent, simple derivatives, the performance of which is measured according to price fluctuations on the markets.

The customers go along with this, especially the older generation of the over-65-year-olds is very satisfied with the classic investment. In the meantime, however, the demands of the younger generation have changed. “The new generation is more risk-conscious, is moving away from conservative investments and is thinking more about long-term asset accumulation,” summarizes Gollits. Real estate is a big topic, but it is represented via bonds and REITs: “No high flyers, but a solid investment.”

Socially and ecologically responsible investing (SRI) is also coming to the fore. Something that Gollits supports: “Investors have to take on more responsibility and become more courageous,” he says. “People worry. A not insignificant number of our clients have excluded Nestlé shares because of the negative news about water sales, some again because of the high sugar content of the drinks. ”However, SRI still has to develop further, for example with regard to the valuation models for companies.