The CPI/LIK for Switzerland came out on Monday and now I can do calculations according to the procedure that I have outlined.
But first another milestone of note. My benchmark, “MSCI ACWI IMI Net Total Return” in (nominal) USD have started to make new All-Times Highs since few days, the latest being, you have guessed it, on 12.02.2024.
Does it mean that we are out of the dip? Not in my playbook.
The latest 2024 maximum of my usual benchmark “MSCI ACWI IMI Net Total Return in CHF” was 1855.57 CHF, also on 12.02.2024. In nominal terms, this is a level not seen from February 2022, i.e. we have reached a 2 years maximum. It is only -4.7% from the previous ATH (1947.97 CHF, on 16.11.2021), +21.9% from the 30.09.2022 bottom, +16% (!!!) from the 26.10.2023 bottom and +6.7% YTD.
However on inflation-adjusted basis it looks as follows: -9% from the previous ATH, +20.1% from the 30.09.2022 bottom, +15.9%from the 26.10.2023 bottom and +6.5% YTD.
Nevertheless, the drawdown of less than 10% from ATH, a level last seen in May 2022, means that we are now in a “normal” market state, although the last ATH was more than 2 years ago.
This means, for example, if I were a retiree living from my portfolio, I would go from “soft economy mode” (“correction” phase in the market) to the “normal” portfolio withdrawal mode.
Interesting summary, thanks! Where do you pull the data for the inflation-adjusted “MSCI ACWI IMI Net Total Return in CHF”? Or do you have a own spreadsheet for that?
The rally that have started from the 26.10.2023 bottom had a strong move yesterday, after running for four months. My benchmark was stalling for a week and I was starting to have an impression that hot air liquidity that had inflated it have moved to crypto. But it still looks like there is enough of it for both.
My benchmark, "MSCI ACWI IMI Net Total Return in CHF” as calculated by MSCI, had marked 1923.15 CHF in nominal terms, a level not seen since the end of 2021. It is only -1.3% from the previous ATH (1947.97 CHF, on 16.11.2021), +26.3% from the 30.09.2022 bottom, +20.3% from the 26.10.2023 bottom and +10.6% YTD.
Assuming the same CPI/LIK for Switzerland as in January (the new month has started, so, according to my methodology I would have to use the level for February), on inflation-adjusted basis it is -5.7% from the previous ATH, +24.5% from the 30.09.2022 bottom, and 10.4% YTD.
Will the latest stocks rally last for another month? Will we fall from the “normal” market state to the “correction” without reaching a new ATH this time? Stay tuned for an update in a few weeks!
Swiss CPI/LIK had notched 0.65% higher in February and is now at all times high. You can reduce my inflation-adjusted results accordingly.
It is also interesting, well, concerning, actually, how the same results were presented either by BFS or by media. I have only seen headlines reporting that “inflation”, meaning the increase of prices over the last 12 months, went down. Yeah, the second derivative is negative, great!
Turned out that there is another important milestone has been just reached. But let me tell it in due time.
Buy and hold long term is boring, so there are couple of things that I follow to satisfy my need for action. One is the benchmark of the global stocks market, "MSCI ACWI IMI Net Total Return in CHF” as calculated by MSCI. This year I have started to work with “Landesindex der Konsumentenpreise (LIK)” or “Swiss CPI” and adjust the benchmark for the inflation by dividing its value in CHF by LIK value for the previous month. The goal is to (well, try to) track the change in “purchasing power” of the benchmark rather than its nominal value.
The previous wave’s maximum and a new ATH was reached on 27.03.2024, 2011.59 CHF, +15.7% YTD. Inflation-adjusted, it was still -2% from the previous ATH on 16.11.2021 and 14.8% YTD. All in all, the rally from the 26.10.2023 bottom have brought +25.8% in nominal CHF and +24.9% inflation-adjusted.
LIK for March 2024 came unchanged from the February value, which means that there were no additional pressure on the inflation-adjusted benchmark going into April. It didn’t really matter: there was a substantial decline, first time since 5 months. The bottom on 19.04.2024 was at 1918.69 CHF nominal, -4.6% from the previous top (= ATH). The inflation-adjusted pull-back was the same, and the value at the bottom was -6.5% from the ATH. Still in the “normal market state”.
LIK for April 2024 was 0.37% higher than for March. The carrot has moved farther away from the donkey’s snout.
Now, the important milestone: on 22.05.2024, the benchmark has reached a new ATH at 2062.698 CHF nominal (+18.7% YTD, +7.5% from the previous bottom), and the inflation-adjusted benchmark has also finally marked a new ATH with +17.2% YTD gain, +7.1% from the previous bottom! It took 2 years, 6 month and 4 days, but we are finally there! And we are still riding this wave.
Great stuff to put it into perspective. I was hanging by the phone yesterday like a degenerate waiting for “muh gainz” which never came. Staying the course, being paid on Monday and pulling the usual trigger.
Yeah! It does change the prospective when you get one data point per day.
Completely agree. In the accumulation stage you can just contribute and don’t care about anything else. But I want to explore options and be ready for the consumption phase.
I would say yes. Check the previous “dip” thread, I was posting my notes there.
It is quite good for some quick estimations of nominal changes. Gives now +19.3% YTD. But there is TER, and that one used to have TER of 0.4%.
And please don’t think that I claim to be very precise in “measuring investment performance”. The index or 2 indices, actually, that I use are well defined and calculated by trusted parties, but what relationship it has to the performance of yours and mine portfolio, is anyone’s guess.
EZB has not enough influence and europe not enough market cap. € will also lose value with a rate cut (only a little though as the probability of the prediction is high, so somewhat priced in already) and markets might end up ±0 in USD/CHF.
You are talking about fundamentals, but who cares about fundamentals nowadays . There are two other important things: options dynamics and sentiment.
Markets don’t like uncertainty. Traders are hedging their positions e.g. by buying puts and selling futures. Once the result is there and it is positive, these hedges will be closed, moving prices up.
Another thing is that a third, big central bank decreasing rates can change the sentiment to very optimistic in a blink of an eye.
Or maybe you are indeed right and nobody cares about ECB. S&P 500 just made a new ATH.
the options market is expecting the S&P 500 to move by around 1.3–1.4% “in either direction” by Friday, based on the price of at-the-money straddles that expire that day.
My benchmark of the global stocks market is "MSCI ACWI IMI Net Total Return in CHF” as calculated by MSCI. To adjust it for the inflation, I divide its value in CHF by the value of “Landesindex der Konsumentenpreise (LIK)” (“Swiss CPI”) for the previous month.
After, finally, a new ATH was reached on 22.05.2024, with the nominal value 2062.698 CHF nominal, the market turned around. The lowest point of the wave was reached on 4.06.2024 with the value of 1993.37 CHF, nominal -3.4% from ATH, but still +14.7% YTD. LIK for May ticked up by 0.28%. The inflation-adjusted minimum was at -3.6% from ATH, +13% YTD.
Surely, then it went up again. On 20.06, SNB decreased their short-term rate, the CHF got cheaper with respect to other currencies, and the international stocks market benchmark become more expensive in CHF terms. I thought that it will lead to increasing customers prices, but LIK for June actually came unchanged.
As per yesterday, 03.07.2024 my benchmark have reached a new ATH both in nominal terms at 2078.149 CHF and on the inflation-adjusted basis.
It moved +4.3% (both nominal and inflation-adjusted) from the previous lowest point. The YTD gain is +19.6% in nominal CHF, +17.8% in inflation-adjusted CHF.
My benchmark of the global stocks market is "MSCI ACWI IMI Net Total Return in CHF” as calculated by MSCI. To adjust it for the inflation, I divide its value in CHF by the value of “Landesindex der Konsumentenpreise (LIK)” (“Swiss CPI”) for the previous month.
The latest ATH of 2121.76 CHF nominal was reached on 16.07.2024. It moved +6.4% (both nominal and inflation-adjusted) from the previous lowest point on 4.06.2024. The YTD gain was +22.1% in nominal CHF, +20.3% in inflation-adjusted CHF.
As per yesterday, 25.07.2024 my benchmark have declined to 2001.52 CHF nominal, -5.7% from ATH (both nominal and inflation-adjusted). We have therefore entered the “Mild Correction” regime.
Nevertheless, the YTD gain is currently +15.1% in nominal CHF, +13.4% in inflation-adjusted CHF.
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. There are two other important things: options dynamics and sentiment.
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