Amuletum Invest AB

01/04/2024

High beta risks and elevated price ratios, at levels surpassing the peak of the dot-com bubble, suggest an increasing risk of strong price reversions in the AI and the tech sector.

Access the link below and find more about it in the AM Report ”Beta risk in the tech sector and the AI stock inflation”

https://www.amuletuminvest.com/reports

12/10/2023

The AM Report of September 2023 provides estimates on ex-ante macroeconomic tail risks that continue to build up in the US and are at levels comparable to or higher than in previous recessions. Although tail risks in international stock markets have not emerged yet, they could be on the verge of appearing due to the emergence of systematic macroeconomic risks.

Know more about it and the implications for investments by accessing the AM Report “Ex-ante macro-financial tail risks: what do they reveal?” in the link below.

https://www.amuletuminvest.com/reports

03/07/2023

The Euro Area has technically fallen into recession, with two consecutive quarters of negative GDP growth. Check the following to find more about Amuletum Invest’s early calls on the Euro Area recession, specifically:

1. AM report of January 2023, “On the timing and strength of the upcoming recession” at www.amuletuminvest.com/reports
2. Post from February 1st 2023, showing the nowcast (December 2022) and forecasts through 2023 of recession probabilities for the Euro Area, generated from Amuletum Invest’s model. As probabilities surpassed 0.95, in simple words, they have indicated RECESSION
3. Instagram post (reel) from March 10th 2023, where an ongoing recession for the Euro Area had been called.

Enjoy!

27/06/2023

Sharing the news that the paper “An event-driven bank stress indicator: the case of US regional banks” is to be published in the Finance Research Letters in September 2023.

The paper discusses the stress levels of sixty US regional banks following the failure of SVB, by showing an event-driven framework for identifying distressed banks using equity returns, and by taking into consideration the monetary and financial stability reactions of a central bank towards a banking crisis.

The framework was originally proposed in the AM Report “On the stress of US regional banks”, at Amuletum Invest in March 2023, when six regional banks under high distress were successfully identified, including the most stressed First Republic Bank that went bad later. The report also discusses the implications of the banking crisis for investments and the future of the US economy, with top-notch analyses on financial markets and investments.

Find the paper by accessing the following links,
https://www.sciencedirect.com/science/article/pii/S1544612323005044?via%3Dihub
https://www.amuletuminvest.com/papersandnotes

And gain access to the AM Report through the link below,
https://www.amuletuminvest.com/reports

Financial markets have been shaken by the surge of a banking crisis in early 2023. The failure of Silicon Valley Bank has raised concerns about the he…

15/06/2023

The cost of public debt has skyrocketed in the US as Treasury bond rates have risen sharply and public debt keeps increasing with the large fiscal deficits run by the government.

This is a vicious circle… High fiscal deficits => higher debt => less confidence in the US government => Increasing pressures on Treasury bond rates => Higher fiscal deficits. On top of that comes de-dollarization.

Check out the AM Report of May 2023 as well as May 2022 for an in-depth discussion of the problem and its long-run effects on financial markets!

Gain access to the reports in the link below.
https://www.amuletuminvest.com/reports

The AM Report of May 2022 has been a sample report and can be accessed from the link above or directly from the link below.
https://www.amuletuminvest.com/_files/ugd/3d075c_06d660e78a984210adc26f4b459590be.pdf

02/06/2023

The world reserve currency status of the US dollar has given the US the advantage of being able to run large twin deficits without major adverse effects on its economy. The big picture will change as the US government continues running consistent fiscal deficits and the process of de-dollarization carries on.

The AM Report of May 2023 discusses the long-run effects of this scenario on currencies and US Treasury rates.

Access the link below and learn more!
https://www.amuletuminvest.com/reports

05/05/2023

Albert Einstein referred to compound interest as the eighth wonder of the world. "He who understands it, earns it... he who doesn't, pays it." Don't underestimate the power of compound interest to grow your wealth.

Compounding interest is the addition of interest earned on the principal amount invested or deposited. It is the result of reinvesting the interest earned, and in the next period receive interest on the principal plus the accumulated interest. That means that the longer your money stays invested, the more it will grow.

How does this principle apply to investing in stocks? As stocks have typically higher returns than a simple savings account or bonds, this implies you can have higher gains from compounding stock returns than compounding a savings account or bond returns, even when adjusting for risk.

The average historical annual return on the S&P500 is +7% (adjusted to inflation). Investing a principal of $10 000 will grow to $10 700 after a year. Assuming the same rate of return, over two years your money will have grown to $11 449. That is, it grew by an additional $749, rather than $700 as in year 1. Over time you will see how the numbers grow with compounding. For instance, a principal amount of $10 000 that returns 7% annually for 30 years would grow to over $80 000 - and that is without adding any extra money.

Importantly, because compound returns are so powerful even small advantages over the typical market annual return of 7% can lead to substantial gains. For instance, since its inception, the portfolio “Amuletum Global Equities” has outperformed the market by an average of 4.5%, while the portfolio “Amuletum Global Equities” has outperformed the market by an average of 15.5%. Over 30 years, this means that $10 000 invested in “Amuletum Global Equities” would grow to over $315 000, while the $10 000 invested in “Amuletum Global Equities Sustainability” would grow to over $7 350 000.

No wonder Einstein is referred to have called the compounding interest one of the strongest forces in the universe!

02/05/2023

After a long weekend and a series of bids from larger banks, including JP Morgan, PNC Financial Services Group, and Citizens Financial Group, the First Republic Bank (FRC) was acquired. Today, FRC opens its doors under the JP Morgan Chase brand.

Amuletum Invest has the opinion that JP Morgan did a very good acquisition. FRC has been very profitable over the past decade with its Net income growing at a solid pace. Moreover, FRC has been financially health with various indicators of long-term solvency at solid levels.

The problem with FRC was really its large share of uninsured deposits by FDIC. The constant withdrawals that have happened over the past month has led regulators to put FRC for sale. A relatively large number of banks were interested in acquiring FRC. The strength of FRC’s balance sheet position is now an asset for JP Morgan.

LEARN MORE about it in the AM Report of March 2023 "On the stress of US regional banks" at Amuletum Invest.

https://amuletum-invest.systeme.io/f6af5e32-f4945ba5
https://www.amuletuminvest.com/reports

27/04/2023

Here is why economies are facing the risk of house price corrections over the upcoming years. And it has to do with… interest rates…

Investment company warns about dark years for housing markets...

The study presents results showing that sharp increases in the (interest rate sensitivity of the) cost of mortgage together with the rapid monetary contractions by central banks have raised the risk of strong house price corrections in several economies over the upcoming years.

Click on the link below to LEARN MORE

https://amuletum-invest.systeme.io/f6af5e32-a5cf7070

27/04/2023

Housing markets around the world are suffering with price corrections.

Sharp increases in the cost of mortgage and low housing affordability started to be factored in.

Know more about the future of housing markets by accessing the Amuletum Invest report “Cost of mortgage and house prices: what’s next?” in the link below

https://www.amuletuminvest.com/reports

17/04/2023

Based on state-of-the-art strategies, Amuletum's portfolios are designed to consistently score above market returns. And remember… only 10% of actively managed funds can consistently do it…

Check below the performances of Amuletum’s portfolios since their inception.

$) Amuletum Global Equities Sustainability: +17%
$) Amuletum Global Equities: +0.1%
$) MSCI World Index: -4.4%

Find more about it in the link below
https://www.amuletuminvest.com/portfolios

09/04/2023

The recent monetary contractions induced by central banks have been truly strong

Shadow rates are unique measures of the overall stance of monetary policy when policy rates are (un)constrained by lower bounds. Estimated for the US, Sweden, Euro area and the UK, they show the strength of the recent monetary contractions, and have passed their respective policy rates by far!

The full effects on the economies and financial markets are yet to be seen… and to worry about…

Access www.amuletuminvest.com to know more!