Tidbits - market reviews, special events and interesting patterns

  • What is the benefit of a savings plan after 20 years ?

    Share savings plans are the second pillar of wealth accumulation alongside real estate. If you have enough confidence and discipline, you can save €300 a month in a stock ETF at a low-cost online investment bank.
    How high will the assets be after 20 years?
    And what amount can one then pay out monthly?

    A complete stock market cycle takes forty years. A bull market lasted in the past sometimes 20 years, sometimes 30 years. The following bear market 10 years or a longer sideways phase 20 years – depending on the width of the ruler.

    The different results of savings plans in equity funds or equity ETFs are correspondingly large. For example, in the upswing initiated by Reagan in 1981, a €300 savings plan would have accumulated a whole €470,000 in assets by the peak in 2000. Lucky, who would have saved so solidly in exactly this time, but the end of the cold war was such a century event also pure saver's luck. For our consideration this phase is no yardstick, because e.g. starting from the turn of the millennium would have become from the deposits ( in sum 72,000 €) until 2020 only approximately 107,700 €. One has experienced in this time the bursting of the dot.com bubble, a substantial financial crisis and 9/11. That things didn't get worse, as they did in the 1930s, was because central banks reacted more aggressively.

    Hide the "window dressing" with simulations

    The historical results are so different depending on the time window that they cannot be applied to the present, i.e., they are not suitable for forecasting. Here we use the SENSIS simulation method, which is independent of past events. At its core, it is also based on current surveys of banks and asset managers on their return expectations.

    Simulations independent of past values lead to more realistic results for the 300-euro savings plan over 20 years

    After 10-15 years at the latest, you make up for most of the losses

    From this point of view, a stock savings plan is always successful over longer periods of time, even if you have to "hold out" for 40% losses in between. In the long run they grow out, as the following chart shows. Where the light blue minimum scenario crosses the red line from bottom to top, 15 years have passed in the worst case. This is how long it takes before even a savings plan no longer has a negative return - we experienced this phase in the recent past between the years 2000 and 2015.

    Translated with www.DeepL.com/Translator (free version)

    Stress does not stay away even in good times

    So much for the theory proven by the past. But even in "normal times" the stress increases with increasing wealth, then when the annual fluctuations far exceed the amount saved and the personal, monthly income. Without expert advice, an investor then usually finds himself in distress, unless he has a high degree of resilience, understanding and coolness.

    The following chart shows how with increasing wealth accumulation this fluctuates considerably more. If it was still a few thousand euros at the beginning, a savings plan with increasing years quickly generates asset fluctuations of 10,000 or 20,000 euros per year and even more. This generates initial, unscheduled flight reflexes, a non-rational inclination to sell, which counteracts the idea of the savings plan. Emotional interventions then usually reduce the return sharply, even for professionals.

    What is the benefit of a savings plan in old age?

    In this analysis, we assume the most probable value of the €300 savings plan after 20 years: approx. €150,000 in assets. We continue to hold 100% shares and come to the following results with the help of the SENSIS® simulation:With a withdrawal of 700 € (1st chart below) monthly, the assets of 150.000 € can be preserved on average.With a withdrawal of 1.000 € (2nd chart below) monthly, the assets are probably used up after 20 years. In the quite rare best case the fortune remains and worst case it is already used up after 12 years.

    Conclusion: Stock savings plans are worthwhile at any time.

    • With 300 € monthly one reaches after 20 years 700€ distribution for further 20 years, which are on the one hand very surely "consumable" and even not improbably thereby the nominal fortune receipt.
    • If one takes 300€ more, i.e. 1.000 €, then it is obvious also for laymen that the fortune is consumed in the same way after further 20 years, as it was saved before in 20 years.
    • The fact that an additional €400 is "created" from €300 after 20 years is strongly related to the high expected return of 6.5%.
  • Shopified

    Google announced new e-commerce collaborations at its I/O conference two days ago, with its expanded partnership with Shopify taking center stage. Shopify has been attracting attention from industry insiders for some time with its offering to simplify the organization and logistics of its own online store for store owners and merchants without having to be an Amazon merchant.

    More boutiques

    This is Google’s way of supporting a trend that could, in the medium term, add some value to city centers. It’s not without reason that the well-done “be with you in 10 minutes” offer from Gorillas is getting a huge boost in many cities. Specialty stores and boutiques in pedestrian areas can very easily use the combined offering of Google and Shopify to offer their display online and rank above Amazon in Google rankings. If they search for a product in Google Shopping, they’ll get a hint when the store is open nearby and a prompt asking if you want to reserve the scarf or pants now. So you can find out much faster if building materials, a certain tool, an Apple Watch, a razor, a certain LED lamp, battery, cooking pot or a cashmere scarf can be found nearby before you check Amazon and have it delivered. 

    Movies, series and advertising are networking our living rooms

    Google must stand up to Amazon, because Amazon’s advertising revenues are growing at 40% annually, so that there is already talk of an advertising platform with a connected online store. Still the advertising incomes with 14 billion USD are only one tenth of those of Google, but Amazon has still more core businesses. After online shopping and the cloud business, Amazon has successfully placed itself in the living rooms of more than 200 million households of both the young and older generations with its Prime video service and Alexa (Echo), the permanent listening device. With the revenues from Prime, Amazon not only produces high-quality series itself, but will soon also buy the well-known film studio MGM for 10 billion euros. MGM is suffering greatly from the Corona-related cinema closures, but could not bring itself to sell the new James Bond flick exclusively to Apple. So subscription services like Netflix and Prime continue to shift the power over exploitation chain of movies away from the studios to the streaming platforms, like Netflix, Amazon Prime and Apple. Imagine being allowed to watch your series for free with ads inserted in the future, or Alexa just asking, “Do you want Fresh to deliver this delicious pasta to you in 15 minutes ?”

    Google is not a marketplace

    Google will use artificial intelligence to automatically link Shopify merchants’ listings in YouTube videos and photos as well, without the Shopify merchant having to worry about tagging them in the visuals themselves. So you take a photo of your friend’s handbag and seconds later you find out how much it costs and which nearby store has it.

    Because unlike Amazon, Google doesn’t see its role as a marketplace, but rather a platform to browse, discover and buy. To the 1.7 million small and mid-sized merchants on the Shopify platform, Google is giving “free listings” a chance to succeed in the digital commerce space.

    Long-term consideration

    With the free listings Google earns no money with ads, but promises itself through the higher volume of dealers a higher attractiveness for users and through this quasi-monopoly position in the consequence again more advertising revenue. The dealers can be found on Google Maps in the vicinity, their reputation is known and their offer reliable, provided they are disciplined enough to take online or in the store sold goods also immediately from the store / online offer or reserve.

    To browse regional stores from home and have them delivered directly is a long-cherished wish of stressed families and singles. Since then also lockdown for all the rest.
    Google’s strategy of linking everything in texts, photos, videos, films and maps makes the search engine giant the new superpower in regional shopping. In the medium term, entirely new business models and logistical infrastructures could emerge around the city centers.

    Translated with www.DeepL.com/Translator (free version)

    (This article was and translated with deepl)

  • The Bitcoin is purely liquidity driven – but even placebos have a value

    Once upon a time …. Clay stones shards and finally coins. With the coin-monopoles came trust, with the government bonds the sheer size of the currencies. The Bitcoin was invented by digital pioneers and coders as an alternative currency, as an alternative way of keeping money safely. The Bitcoin was modeled to substitute gold and as a counter model to the “FIAT” currency and the associated national debt. Bitcoin was by design restriced in its quantitative development and in addition to that anonymized, because the technically feasible had to be made.

    Hopes for an alternative to gold quickly came – one speaks of “mining” – that inspired the media! Unfortunately, just as fast the anonymous Bitcoin fueld as black money illegal businesses, such as extortion. The most obvious is the still spreading plague of crypto-trojans. But the difference in comparison to gold is, that anyone can build alternatives to Bitcoin and that is done every day. If you tried that with gold in experiments, you would probably create very radioactive elements.

    To summarize: The bitcoin digging is artificially limited in a rather pointless technical way, a kind of self-pulling loop. The Bitcoin is a popular black money and an equally popular story in the media.

    So why is the value of bitcoin increasing? Is Bitcoin a self-reference, a Ponzi scheme, like the tech bubble in the late ’90s, or the Dutch tulip bubble in the seventeenth century? Yes, because

    The last Bitcoin miners even steal computing power or electricity to make a profit in mining, which otherwise would not be possible even in countries with cheap electricity like China.
    The already existing Bitcoins enjoy demand money launderers, but this disappears as soon as the authorities stop the convertibility, as already seen with some Bitcoin enthusiastic banks or at Visa
    and finally, the immensely growing demand from the public, who face a constantly limited supply.

    That is precisely what can be demonstrated by comparing Bitcoin development and Google Trends analysis. The following graph shows the Bitcoin (black) and the demand for the search term on Google (red).

    We therefore assume that the keyword request on Google for the search term “Bitcoin” has approximately a fixed relation to the demand for bitcoins. As a result, scientists may consider whether rather the rising Bitcoin price has increased the search demand on Google or the media writing about it. Realists would think that the media has the power to influence people.

    The Bitcoin is thus the prime example of a liquidity-driven bull market. Because bitcoin does not reflect any economic value at all, it is the perfect scientific object to study a purely liquidity-driven hausse. The bitcoin is some kond of the placebo for anyone who feels, that the value of gold is not growing fast enough.

    It can be considered that a decreasing demand on Google will be an early indicator of a decreasing demand for bitcoins. The price spiral for Bitcoins would go downwards as a vicious circle and opposite the way it has turned upwards since 2013. In addition the spread betting and CFD contracts of the various Brokers as well as the futures at the CBOE and CME in Chicago fuel the Bitcoin as firing accelerators, since their demand is catching up with Bitcoin only after a time lag.

    A look at the details of the past six months would lead us to a Bitcoin forecast of $ 8,700 (instead of $ 14,439 as of yeasterday, January 9, 2018) for the next 2-3 weeks, provided Bitcoin follows the red line in the chart given as a forecast by Google Trends.

    So – lets wait for it, but please do not write so much about it  😉

    update (16.1.2018): updated chart, new forecast as of 15.1.2018 : target lowered to 6.700 USD

    Sources: Google Trends, www.bitstamp.net


  • Fintech Forum Cologne

    Our customers, business partners and readers are invited to join the Fintech-Forum Uhlenbruch Fintech Forum in Cologne on 6th December 2016 in Cologne.

    Most speeches, except the first and last one will be Held in German, attendees will be Asset Managers, Investors, startups and founders.

    For registration please use our discount : FTPIF173

  • SAP Vora gives HANA another advantage

    SAP HANA is a modern real-time database that combines advantage of traditional SQL databases with some innovations in the NoSQL area, in particular data compression, as with Google’s “Bigtable”. The compression allows to evaluate large amounts of data “in-memory”, i.e. is much faster without disk access.

    But it does not work with any amount of data. We tested it together with SAP in a joint project on HANA extensively: The detailed XETRA overall market data required zip-compressed on average 250 MB per trading day and are stored in our own Hadoop infrastructure. A HANA with 70 GB of memory, was capable to store about 120 days of XETRA data or 30 GB of compressed data to evaluate it in memory. A HANA with 130 GB of storage made up to twice as much availalbe, i.e. one year of XETRA history (trades, no quotes) or compressed 60 GB of data.

    We had heard Project Vora by the end of 2014, and are grateful, that the integration of Hadoop and HANA is available as an SAP-supported architecture and starts to find friends.

    The benefits of HANA infrastructure are enormous, there are many old and new tools available, last but not least BI applications and ways of migration from the old SAP R/3 infrastructure to the new “S/4” (HANA). We were able to integrate our risk management libraries in large parts into the HANA kernel. Vora now proves that SAP eliminates the last weak points successively. We will try it.

  • Best german institutional consultants in 2016

    In the latest test we evaluated the portfolio management strategies of consultants, most of them banks in the german region. This time we ranked the portfolios in the context of two simple Multi-Asset strategies, one “optimal” and one low-risk/low-return allocation. Most consultants did their job well, however there were significant differences in diversification and expected risk/reward ratios.

    More details published here: Pressemitteilung Stiftungsberater 2016

  • review of 3rd december 2015

    The upward trend of 2-3 month gone in one day (see. Chart) ! A “year-end-rally” is rather unlikely.



    DAX 2015-12-03 um 21.32.42BUND 2015-12-03 um 21.32.35EURUSD 2015-12-03 um 21.32.28

  • Risk and Return of 150 asset manager in daily competition

    This dynamic graphic gives insight into quarterly performance and risk figures in a public contest of 150 well-known asset managers in various mid europe countries.

    The Asset Manager manage these portfolios daily since mid-2011 (red), mid-2012 (green) and November 2014 (blue) and compete against each other based on risk and return figures.

    The size of the dots shows the overall performance since the project began. x- and y-axis show quarterly volatility and quarterly performance per quarter. More information is publicly available under www.performanceprojekt.de.

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