Vanguard’s Kommer urges shift from accumulation to asset protection

Gerd Kommer of Vanguard argues that the global stock market has moved in only one direction, upward, for 17 years since the financial crisis, resulting in very high valuations in certain segments. He distinguishes between the asset accumulation phase, which relies on concentration, and the asset protection phase, which requires diversification to mitigate single-name, counterparty, and human capital risks. Kommer identifies three pillars for wealth protection: asset preservation through cost management, asset protection against political and tax risks, and financial risk management. He notes that inflation has been out of control since 2022, with the consumer price index exceeding the 2% target. Kommer advises against open-end real estate funds, describing them as a liquidity illusion where daily tradability masks illiquid assets, a problem that resurfaced after the 2008 crisis. He also highlights compliance risks, noting that many German banks refuse to accept funds from Bitcoin sales without expensive legal opinions, and that foreign bank accounts for tax-resident Germans offer no tax advantage while incurring higher costs. Kommer argues that passive investors must shift from aggressive accumulation to defensive protection, utilizing diversification and legal structures to mitigate political, tax, and market risks.