Category: Daily Instagraph

The S&P 500 trades at 4.8 times book value, a free cash flow yield of 3.3% and 20.6 times 12 months forward earnings. This is far higher than the 10 year average and looks difficult to sustain longer term in the current interest rate environment. 2 comments however: 1/ High valuations alone are not a … Continued

The S&P 500’s top 10 companies, led by stalwarts such as Microsoft, Apple and Nvidia, command considerable attention from both media and investors, representing a substantial portion—approximately one-third—of the index’s weight. However, sustaining their positions at the summit proves to be a formidable challenge. Historical data illustrates a dynamic environment, with four of these industry … Continued

The age-old stock market axiom, “Sell in May and walk away,” reflects the historical trend of weaker stock performance from May to October compared to the rest of the year. While the precise reasons for this phenomenon are elusive, numerous academic studies have substantiated its validity over extended periods. Nonetheless, recent shifts in the landscape, … Continued

The “Magnificent 7” stocks have indeed dominated the S&P 500’s performance since the onset of the COVID pandemic, enjoying significant earnings growth while others fell behind. However, looking forward, it’s evident that this dynamic is poised for a change. In the coming quarters, we foresee a resurgence in earnings across diverse sectors and companies, potentially … Continued

At the end of Q1, the cash position of Berkshire Hathaway reached 189 bn USD. Warren Buffett does not appear to have a problem holding so much cash as he does not see many investment opportunities that move the needle for his holding. In his own words: “I don’t mind at all under current conditions … Continued

Recall the pivotal ‘whatever it takes’ moment of 2012, when Draghi fought to preserve the EURO amidst the Euro crisis. Fast forward 12 years, and Germany, once an economic powerhouse, is now trailing behind the PIGS countries in growth, resembling a lame duck. What led to this decline? It’s a mix of structural hurdles, innovation … Continued

Bull equity market’s performance comprises two primary factors: valuation multiple expansions and earnings growth. Although the broader S&P 500 has reaped benefits from the former, earnings growth has remained subdued, particularly outside the tech mega-caps commonly referred to as the Magnificent 7. Notably, for the Mag 7, the combined forecast and actual first-quarter 2024 earnings … Continued

There’s a prevailing belief among investors that U.S. stocks consistently outshine their international counterparts. Over the past half-century, MSCI USA has indeed enjoyed sustained periods of dominance over MSCI EAFE, spanning from 3.3 years to 14.2 years. However, it’s crucial to consider three key points: Firstly, international equities have also had prolonged periods of outperformance … Continued

The Japanese Yen has fallen to 34 years low against the USD last Friday. The so-called carry trade – borrow Yen and invest in higher yielding assets in foreign currencies– simply remains too attractive for many investors to be ignored. A currency intervention by Japanese authorities may be in the cards to stop the Yen … Continued

One of our key investment themes centres around anticipated rate cuts this year, though expectations are undergoing a shift. US bond markets are witnessing significant changes, with interest rates experiencing notable increases since the year began, both in the short and long terms. The 2-year Treasury yield has surged back to 5%, while the 10-year … Continued