The stock market does surprise investors again and again.

This is also the case these days.

The Dax share index easily crosses the 16,000 point mark, for the first time in its history, but there is so much that shareholders could worry about.

Patrick Bernau

Responsible editor for economics and "Money & More" of the Frankfurter Allgemeine Sonntagszeitung.

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Danger number one: the pandemic. Germany is far from being fully vaccinated, a fourth wave is starting in this country, and how it will be stopped is still largely unclear. Worldwide the situation is even worse, in many countries only small parts of the population are vaccinated. That leads to illness anyway, but also to unpredictable lockdowns. New Zealand has just passed into a tough lockdown due to ten corona cases, Australia has been in it for weeks. Large parts of the Chinese port of Ningbo are closed because a corona-infected worker was noticed there. Now the already scarce supplies continue to stall.

Risk number two: the end of the pandemic.

Wherever the world gets going again, the demand for goods and services grows - and the supply cannot always keep up.

Supply chains around the world are strained.

Discounters in Germany have to do without promotional goods because they can't get enough of them.

Every few days another company announces price increases.

Volkswagen and Daimler talked about short-time working again last week because they did not get enough chips for their cars, and Toyota is joining in internationally.

In any case, the gross domestic product has not yet reached pre-crisis levels - but share prices are still reaching new heights.

Crises have not been that important to the stock markets for years

Risk number three is a more psychological one: the private investor. For months now, Germans have been investing more and more of their money in stocks, often via exchange-traded index funds, the so-called ETFs. In the past price cycles it often turned out afterwards that the trend reversal was almost reached. But so far the trend is still pointing upwards.

Obviously, it is not the present that is traded on the stock markets, but the future. Even so, it is remarkable how it has been going for a number of years. Most of the time, when a crisis hits the horizon, stock prices don't really care. Only 2015 and 2018 were really bad for shareholders. Brexit and Trump? Forget quickly. Growing protectionism? The share prices got along with that too. Even the corona price crash last year was over in a short time. This has a lot to do with the low interest rates - twice.

First, it is about what the alternatives to stocks are. And they are just bad. Investors are looking for alternatives as long as they are somehow worthwhile. If stocks are worthwhile, it's because of the company's profits. Shares are shares in these companies, and whoever has a share participates in the future profits of the company. In principle, it does not matter whether it is paid out as a dividend or whether the money stays in the company and continues to work there. This is why investors can calculate what is known as a “profit return”: What is the return on the company's profits when it is related to current share prices?

More experienced investors may know the dividend yield; this is a similar figure, but it is slightly lower because only the distributed profits are taken into account, not the retained profits. More experienced investors may also know the price / earnings ratio of stocks; The return on earnings is the opposite of this, formulated mathematically the other way round, so that the real economic return on stocks can be more easily compared with the return on other financial investments.

That profit yield is currently over five percent. That is not a little. Even more important: A look into the past shows that the profit margin has decreased in the past few years, but was practically always at least five percent - with the exception of the Corona crisis, which, in view of rising corporate profits, was already measured by profit margin is over again. The return on interest-linked investments, for example ten-year government bonds, on the other hand, in principle only knew one direction, namely downwards. So it's no wonder that investing in stocks is still considered lucrative, even though the return on earnings is no longer where it used to be.