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Input 29.11.2018

Good morning

Warren Buffett has regularly emphasized that «it‘s far better to buy a wonderful company at a fair price, then to buy a fair company at a wonderful price.»

Sounds easy, but since September we are facing headwinds with hourly and volatile pricings in the global financial markets. Many valuations are @ fair prices in those days.

Looking back to our October assessment on markets was too optimistic; but on the other side we must remember where we are coming from, and that we focus to invest with a mid- & long-term oriented horizon.

Short term, we should have been shifting the allocation into the Brazilian equity markets…

… but we did not, based on the fact, that we feel that we receive more transparency and information on the European market, and that politics in general is more stable – despite issues around Brexit and the «gilets jaunes» We remain convinced, that the market, and performances, will recover again.

Reported earnings for the past seasons have been outstanding…

… but as good as it has been, perhaps most impressive is the strong guidance corporate America has provided. As example shares of APPLE, year high was at USD 233/share, as we write the price is traded at USD 180/share, end of 2015 the price level was around USD 100/share. The company has been making good money during all years and will with high probability continue to perform. Unfortunately, markets are being disturbed by political elements, such as the Sino American trade war. The world’s two biggest trading nations announced dueling tariff plans, but there were signs that a full-scale trade war could

still be averted during the upcoming G20 summit

BITCOIN – XBT/USD end of 2015 traded @ 275, price peak in Dec 2017 was around 19’500 and today it does trade around 4’000. A currency, but it is traded as a commodity. Currently, there is a limited supply of this digital currency. As pioneer Bank Frick in Liechtenstein is offering trading of crypto currencies https://www.bankfrick.li/en/about-bank-frick/media/bank-frick-allows-direct-investments-in-leading- cryptocurrencies

Unlike an IPO (initial public offering), which gives investors stock ownership in a company, an ICO (initial coin offering) gives out tokens whose use case is based on a promise the platform will be useful in a digital network once it gets built. https://www.cnbc.com/2018/05/31/a-blockchain-start-up-just-raised-4-billion- without-a-live-product.html

The market forces are responsible for setting the share price of bitcoin just like gold but has not central authority regulating it. This allows users to avoid regular payment processes. It is attractive to lots of users because it means zero inflation. It also attracts cyber thieves who love stealing without leaving a digital footprint. Governments have refused to adopt the currency because financial institutions and banks are concerned about its ability to promote laundering or commit crimes. We did not touch it,

Since Summer 2018 we noticed a sales trend within banks and pension funds: PRIVATE EQUITY and

HEDGE FUND investments are promoted through various channels – they also invest long term. But many of them are non-liquid, looking up clients capital between 6-72 months, and valuations are available between monthly to yearly – so of course low volatility in a portfolio, but the surprise on price changes can be more significant.

Private equity fund performance has traditionally been measured by using the Internal Rate of Return (IRR). Some leading academics and other private equity practitioners are skeptical of IRR as a robust performance indicator. One of the most compelling reasons to choose IRR is that given the nature of private equity funds

and their lifecycle, their performance cannot be measured with annualized returns, but should rather be measured on a since-inception basis. Second, IRR considers the timing of the cash flows unlike the multiples which neglect the time dimension.

Josh Lerner, Jacob H. Schiff Professor of Investment Banking at Harvard Business School says: «When you look at how people report performance there’s often a lot of gaming taking place in terms of how they manipulate the IRR.»

Valuations in our mandates are focused on good Dividend Yields, attractive Price Earnings, solid Margins plus high ROE, in a nutshell: following a value investors-oriented approach. We feel comfortable with the portfolios established.

The EuroStoxx50 Stock Triangle shows that investing long-term has paid out in the past. Investors who invested into a portfolio of EuroStoxx50 equities for an investment period of e.g. 15 years benefited from an average annualized return of 6.7% p.a.

«Value investing» is an investment paradigm that involves buying securities that appear underpriced, deriving from the investment philosophy first taught by Benjamin Graham and David Dodd at Columbia Business School in 1928, and subsequently developed. The early value opportunities identified included stock in public companies trading at discounts to book value, those with high dividend yields, and those having low price-to-earnings multiples, or low price-to-book ratios, and the principle still apply in 2018.

We are going through of shifts in the industry – CeBIT was the largest and most internationally represen- tative computer expo. The trade fair was held each year on the Hannover fairground, the world‘s largest fairground. In its day, it was considered a barometer of current trends and a measure of the state of the art in information technology. But since the beginning of the millennium, CEBIT saw a steady decline of visitors and exhibitors, caused by the arrival of digital technologies in the consumer world and the massive expansion of the target group as well as the differentiation of topics:

www.napkinfinance.com is a fun page to read about various definitions and products. What the team of this company does achieve successfully, is to illustrate complex themes on 1 page, vide on the example of our favorized theme «dividends»:

We shall continue with a transparent investment process, using simple and liquid components through all strategies and are looking forward to learning your view and opinion on markets and global developments

Best wishes for a peaceful start into this year’s advent season Björn

Input 11.10.2018

Good morning

Despite sunny and colourful conditions outside the financial markets are most volatile & challenging, especially since we have to deal with daily market valuations.

After last nights correction «everybody» becomes an expert; it is true that the impact of China is substantial to everything that happens in the western world, but that all should happen and change within a day is just «too much», and I doubt, that Mr Trump has the capacity, nor the cristall ball to judge market moves.

Year to date it last market move destroyed what was created since JUNE 2018:

MIDTERM markets still follow the uptrend:

Outlook for corporate earnings in general is solid, and latest industrial production statistics shows an ongoing positive trend.

Global interest rates are low, dividend yields above bond yields. Inflation is an important topic.

 Interest Rates 6mBond YieldsDividend YieldsGDP GroethInflation
      
USA2.6%3.1%2.1%2.9%2.5%
Europe-0.3%0.5%3.7%2.1%1.7%
Switzerland-0.7%0.1%3.3%2.2%0.8%
Japan0.0%0.1%1.8%1.1%0.9%

Global GDP Growth is solid:

What we read in today’s market wrap is facta of course, but we suggest not to panic. Tom Essayes comment in the addendum below, marked in green is valid:

«Those of us who have been in the markets for a couple of decades now, you see the Dow down 1,000 points, you think ‘my God, the Dow’s down 1,000 points,’ but we saw this at the beginning of the year, and this is the new market that we have.

It’s algo-driven. There are very few real people involved in these types of moves. As such we just have to get used to more volatility on these types of days».

As longterm oriented investors It does not make any sense to SELL out on these market levels, especially considering the fact that we keep focus to invest into solid companies, mainly in Europe and USA . We were avoiding Latin America, but do keep a strong opinion on economies of India and Vietnam.

We shall follow the developments closely and keep you updated. Kind regards

Björn

Addendum

(BN) Stock Rout Rolls Through Asia; Dollar Slides: Markets Wrap Stock Rout Rolls Through Asia; Dollar Slides: Markets Wrap 2018-10-11 05:02:38.341 GMT

By Adam Haigh and Andreea Papuc (Bloomberg) – The biggest stock sell-off since February rolled from the

U.S. through Asia on Thursday, with benchmarks from Tokyo to Hong Kong seeing declines in excess of 3 percent. The dollar weakened against all major peers while the yen pushed higher and some emerging-mar- ket currencies came under pressure. Treasuries, which helped trigger the stock decline when 10 year yields hit the highest since 2011, extended gains posted Wednesday. China’s Shanghai Composite gauge tumbled more than 4 percent, set to close at a four-year low. Taiwan’s technology heavy TWSE Index plummeted 6 percent in the region’s worst performance.

U.S. futures extended losses from Wednesday when the Nasdaq 100 Index tumbled more than 4 percent for its worst day in seven years. Behind the rout: fresh news of damage to corporate earnings from the trade war, along with intensifying pressure from the global shift away from monetary stimulus. Industrial

and construction supplies distributor Fastenal Co. added to angst that the trade conflict with China is raising materials costs that will crimp profit margins, while French luxury goods maker LVMH confirmed China is enforcing customs rules more strictly.

Ten-year Treasury yields slipped to 3.16 percent, down from the seven-year high of 3.26 percent reached on Tuesday. Yields have been climbing under the influence of a shrinking Federal Reserve bond portfolio and expectations for further interestrate hikes. President Donald Trump, who has claimed credit for record U.S. stock levels, said after the U.S. market closed that the Fed is making a «mistake» and «has gone crazy.»

«The sharp rise in U.S. 10-year yields has caused investors to suddenly reprice the impact of moving from post-crisis low yields to a rising rate environment,» Eleanor Creagh, an Australian market strategist at Saxo Capital Markets in Sydney, said by email. «We have the global growth engines, price of energy rising, price of money rising and quantity of money falling combined with the ongoing trend of deglobalization which has started to impact markets and the cracks are showing.» Just a day before the start of America’s

third-quarter earnings season, signs are mounting that companies might not be able to deliver the runaway growth that’s bolstered equities so far in 2018. Investors have long fretted that the trade war would crimp profits, and now a group of companies is warning that is happening at the same time that rising bond yields lift the cost of borrowing.

Read more on the $900 billion rout in global technology stocks.

«Earnings are really important because that was part of the concern that sparked the sell-off,» Darrell Cronk, president and chief investment officer at Wells Fargo Investment Institute, told Bloomberg TV in New York. «The concern heading into the third quarter earnings season is about how much trade and tariffs will dent earnings.» Trump also said the stocks decline was «a correction that we’ve been waiting for for a long time,» after being briefed on the market turmoil. Treasury Secretary Steve Mnuchin said he’s not surprised the market is having «somewhat of a correction.» Gauges of equity volatility in Japan and Australia rose more than 40 percent after Wall Street’s «fear gauge,» as the Cboe Volatility Index, or VIX, is known, soared the most since February.

«This is the new paradigm for all of us to get used to,» Tom Essaye, founder of The Sevens Report, said on Bloomberg Radio. «Those of us who have been in the markets for a couple of decades now, you see the Dow down 1,000 points, you think ‘my God, the Dow’s down 1,000 points,’ but we saw this at the beginning of the year, and this is the new market that we have. It’s algo-driven. There are very few real people invol- ved in these types of moves. As such we just have to get used to more volatility on these types of days.» Elsewhere, American crude fell back below $73 a barrel as Hurricane Michael threatened to slash fuel demand across the U.S. Southeast. Terminal users can read more in our Markets Live blog.

Here are some key events coming up:

  • The U.S. Treasury is in the midst of $230 billion worth of debt auctions this week.
  • The IMF and World Bank will hold meetings in Bali from Friday, where finance chiefs from around the world will gather.
  • A closely watched gauge of U.S. consumer prices probably remained elevated in September and rose 2.3 percent from a year earlier, according to forecasts ahead of Thursday’s release.
  • JPMorgan Chase&Co., Citigroup Inc. and Wells Fargo&Co. kick off earnings season for U.S. banks on Friday.

These are the main moves in markets:

Stocks

  • Japan’s Topix index tumbled 3.5 percent as of 1:50 p.m. in Tokyo.
  • Hong Kong’s Hang Seng slid 3.8 percent.
  • The Shanghai Composite Index dropped 4.3 percent.
  • South Korea’s Kospi index slumped 3.5 percent.
  • Australia’s S&P/ASX 200 Index declined 2.6 percent.
  • S&P 500 futures dropped 0.9 percent. The S&P 500 Index declined 3.3 percent. The Nasdaq 100 lost

4.4 percent to the lowest since July 3.

  • The MSCI Asia Pacific Index tumbled 3.5 percent, on track for its lowest close since May last year. Currencies
  • The yen gained 0.1 percent to 112.20 per dollar after gaining 0.6 percent.
  • The offshore yuan fell 0.3 percent to 6.9417 per dollar.
  • The euro bought $1.1563, up 0.4 percent.
  • The Bloomberg Dollar Spot Index dropped 0.2 percent. Bonds
  • The yield on 10-year Treasuries fell one basis point to 3.15 percent
  • Australia’s 10-year bond yield dropped three basis points to 2.72 percent. Commodities
  • West Texas Intermediate crude slid 1.7 percent to $71.93 a barrel.
  • Gold fell 0.1 percent to $1.193.50 an ounce.
  • LME copper dropped 1.6 percent to $6.139 a metric ton.

Input 01.05.2018

Good afternoon

Since my last business trip to Japan felt different to my regular visits, I wish to share some of my expression and experiences made, especially a part insigh into the «new» world of DIGITALZATION.

As usual I reported the 2017 results towards the families. As you know we invest in our balanced strategies in liquid and listed securities only, and most of the underlying belong to the «old world». Once more became clear to me, what kind of powerposition FACEBOOK, GOOGLE, AMAZON and APPLE are having, respectively that they became the gate openeners to digitalize the society.

Digital transformation is generating a fierce debate among policy-makers, economists and industry leaders about its societal impact. As digitalization disrupts society ever more profoundly, concern is growing about how it is affecting issues such as jobs, wages, inequality, health, resource efficiency and security

Notes: 1Total societal value at stake includes on the customers, society and enviroment. Impact on industries has not been considered.

2Excludes Extending Connectivity digital initiative.

Then my friend Conny joined me, and I was given the opportunity for an educational excursion into the world of a talent, who did create his wealth as successful pioneer in digital world and Business Angel during the past 25years. Maybe you remember when I told you about his event http://www.unternehmertag.org/de/

In case you wish I will share the presentation held in Tokyo with you. Location we selected was the «ancient world», but neverless interesting asset allocation class with http://www.albionart.com/, where Kazumi ARIKAWA took us on a journey into historical jewellery, and showed his last acquisition into his collection, which he built during the past 38years;

A cross carved in rock crystal the incavo relief technique and signed at the suppedaneum at the base of the Cross, is the work of Valerio Belli of Vicenza, goldsmith and engraver of gems, among the most celebrated of his time. The item – perfectly aligned, in the figures, with the «modern» style of Michelangelo and Raphael – may be identified with the «divine crystal cross» that Vasari, in the Giunti edition of his «Lives» (1568), mentions as being made by Belli for Pope Clement VII.                                       

After this Conny took us into the world of Digital Revolution. A radical contrast with names as WEFOX, WHATSAPP, UBER, GAMBIO, AUTO1, TENCENT, WIRECARD, etc. in short, the new world around

E-commerce, household convenience, blockchains, datacollection and much more, started to sound like a new globalized language…

The meeting with a seasoned Executive of TOKIO MARINE INSURANCE and to learn how data is being actively used in the sector, but also how much our life as clients of an insurance can be simplified.

For those insurers ready to seize the initiative, digitalization presents an immense opportunity.

The companies that stand to benefit the most are those that use the impetus of digitalization to rethink all their operations, from underwriting to customer service to claims management. The impact on both revenues and costs can be enormous. An analysis by Bain and Google shows that a prototypical P&C insurer in Germany that implemented these technologies could increase its revenues by up to 28% within five years, reduce claims payouts by as much 19% and cut policy administration costs by as much as 72%

During our stay we went to visit the headquarter of RAKUTEN, a Japanese electronic commerce and Internet company based in Tokyo and founded in 1997 by Hiroshi Mikitani. Its B2B2C e-commerce platform Rakuten Ichiba is the largest e-commerce site in Japan and among the world’s largest by sales. The company operates Japan‘s biggest Internet bank and third-largest credit card company (by transaction value). It also offers e-commerce, fintech, digital content and communications services to over 1 billion members around the world, and operates in 29 countries and regions. It is often referred to as «the Amazon of Japan», take a look at their website https://bit.ly/2xdTRuK

Impressive was to meet Taro KODAMAN the first FACEBOOK employee Japan, He was a dropout of school and acts today as wealthy incubator within the Digital world. Facebook has a different positioning in Japan

– users allow companies to collect data for jobprofiles, and are willingly sharing it… just we Europeans and Americans believe that no data of our post is being collected. Many Japanese have adopted Facebook as a tool for business communications. Facebook’s interface and use of real names allows for a platform in which users can effectively develop real-life relationships. Bloomberg quotes one user as claiming, «the real-name policy makes the site a good place to cultivate relationships with would-be partners» before adding,

«it’s useful because they will remember me after I comment on their posts». Moreover, Japanese companies have increasingly turned to Facebook as a means of reaching possible consumers. Recognition

of Facebook’s potential for business and commercial purposes represents another factor behind its booming success. Perhaps more than anything else, the March 11, 2011 Tohoku earthquake and tsunami generated adequate momentum for sustained growth. Following the disaster, Google searches of Facebook more than quadrupled compared to a year earlier and membership increased exponentially as evidenced by the

2011 user data.

With some insight into what I was lucky to experience during the past days, I wish you a relaxing weekend Bjoern

Input 14.02.2018

Good morning

The past days were a challenge in various aspects. A whistle-blower told U.S. regulators that a scheme to manipulate the VIX, the volatility gauge thrust into the spotlight last week during a wild trading session, costs investors hundreds of millions of dollars a month. We were certainly impacted by this negative market correction, but my experience as investment manager through all the years brings me to the conclusion to remain focussed on a disciplined single stock selection, and to stay away from any speculation.

The Net Asset Value of our Lithium strategy is negative, presently @97, but we did succeed to preserve capital in comparison to LIT, the Global Lithium&Battery ETF. MLR LITHIUM is outperforming since inception by >6%, based on the fact that we are following a more diversified approach, by integrating single stocks with more attractive valuations, higher ROE and and average market cap of USD 5.2bio.

We consider to reduce the top holding back to 5% in JIANGXI GANGFENG, SQM, OROCOBRE and SOLAR EDGE, positions which we added at lower market prices during the last weeks.

Overall we believe that our longterm strategy is on track, and that we will be able to create value added within the promising Technology of LITHIUM. The attached Cormark report is always and interesting reading related to the theme.

As always we do appreciate all inputs which you a sharing by email, and we are constantly monitoring new ideas, or positions to be replaced.In case you wish to attend our investment discussion every Wednesday morning at 10AM, you are welcomed to dial in per skype, and hopefully there will be an upcoming chance to meet personally very soon again.

Thankful regards

Bjoern

Input 06.02.2018

Good morning

During the past two trading days we did experience a market correction. Political risk events on the horizon — including the Italian elections and the U.S. mid-terms, which could also bring about sudden bouts of turbulence.

The present correction (flash crash) is creating chances to re-invest positions sold in our US and European strategies, where we created cash positions during the past weeks. We do not bet on indices and are keeping our focus on single stock selection oriented investing.

Interest rates in Europe are still negative, and Equity dividend yields are above 3%.

Global GDP growth did not change overnight.

We are monitoring the markets closely, and shall follow up with our findings. Kind regards

Bjoern

Input 18.07.2017

Good evening

This summer I was impressed by reading the book and the story about Elon Musk, written by Ashlee Vance. Musk has stated that the goals of SolarCity, TESLA, and SpaceX revolve around his vision to change the world and humanity. His goals include reducing global warming through sustainable energy production and consumption, and reducing the «risk of human extinction» by «making life multiplanetary» by establishing a human colony on Mars. In addition to his primary business pursuits, he has also envisioned a high-speed transportation system known as the Hyperloop, and has proposed a VTOL supersonic jet aircraft with electric fan propulsion, known as the Musk electric jet.

In 1999, Bill Gates wrote a book titled «Business @ the Speed of Thought». In it, Gates made bold predictions that at the time might have sounded outrageous:

  • Automated price comparison services will be developed, allowing people to see prices across multiple websites, making it effortless to find the cheapest product for all industries.
  • People will carry around small devices that allow them to constantly stay in touch and do electronic business from wherever they are. They will be able to check the news, see flights they have booked, get information from financial markets, and do just about anything else on these devices.
  • Private websites for your friends and family will be common, allowing you to chat and plan for events.
  • Software that knows when you‘ve booked a trip and uses that information to suggest activities at the local destination. It suggests activities, discounts, offers, and cheaper prices for all the things that you want to take part in.
  • Residents of cities and countries will be able to have internet-based discussions concerning issues that affect them, such as local politics, city planning, or safety.

2017 you can easily search for a product on GOOGLE or AMAZON and get different prices, either on portable computers, smartphones, smartwatches. Two billion people already use FACEBOOK to see what their friends are doing and plan events. There‘s also Snapchat, Instagram, WhatsApp, and Facebook Messenger alongside an explosion of other smaller social networks that more than cover this prediction. Travel sites like Expedia and Kayak offer deals based on a user‘s past purchase data.

GOOGLE and FACEBOOK can offer promotional ads based on the user‘s location and interests. Airbnb, which lets people stay in homes rather than hotels, started to offer specialized trips at destinations so you can live like a local, too. Most news sites have comment sections where people can have live discussions, and many sites have forums where people can ask and respond to certain questions. Twitter and Facebook played roles in political revolutions in Libya, Egypt, and Tunisia, as well elections as seen in the US and France.

GOOGLE, APPLE, FACEBOOK and AMAZON. 22 years of growth, combined with the change brought about by the Internet to our businesses, our lives and our civilization. With over 300 billion EUR in

cumulative revenue, a productivity rate three times the average, and a customer base covering nearly 50% of the connected population, GAFA have become, in less than twenty years, the four

superpowers of the new economy. «Search engine», «e-commerce», «smartphone», «social network» are the common nouns they have added to the of the 21st century dictionary. But beyond this disruption in our daily habits, GAFA have fundamentally changed the established rules of business strategy: they ignore classic concepts of market, competition, positioning or plain goods. Instead, they have achieved

a Copernican revolution that truly places the customer at the center of their strategy. The 5 tech giants (Facebook, APPLE, ALPHABET [GOOGLE], AMAZON, MICROSOFT) spend as much on R&D than the whole american research budget on all scientific fields (but defense). In the field of artificial intelligence, public research isn’t anywhere near the investments of these companies. On the one hand, it’s great to see the GAFA’s progress in AI, that will likely lead to major improvements in our daily lives and for the products

we buy (voice assistants, augmented reality), but on the other hand, we are leaving the future of the world in the hands of privately held companies that are focused on commercial applications of their research.

If Google or Amazon are the first to develop powerful artificial intelligence, it is them who will decide how to deploy them, and whether it will benefit everyone in the society…

As machines become increasingly capable, mental facilities once thought to require intelligence are removed from the definition. For instance, optical character recognition is no longer perceived as an example of «Artificial Intelligence», having become a routine technology. Capabilities currently classified as Artificial Intelligence (AI) include successfully understanding human speech, competing at a high level in strategic game systems (such as chess and Go, autonomous cars, intelligent routing in content delivery networks, military simulations, and interpreting complex data.

For instance the young Chinese appear particularly keen on AI-powered services and relaxed about use

of their data. Xiaoice, an upbeat chatbot operated by MICROSOFT, now has more than 100m Chinese users. Most talk to it between 11pm and 3am, often about the problems they had during the day. It is learning from interactions and becoming cleverer. Xiaoice no longer just provides encouragement and tells jokes, but has created the first collection of poems written with AI, «Sunshine Lost Its Window», which caused

a heated debate in Chinese literary circles over whether there can be such a thing as artificial poetry.

Another important source of support for AI in China is the government. The technology figures prominently in the country’s current five-year plan. Technology firms are working closely with government agencies: Baidu, for example, has been asked to lead a national laboratory for deep learning. It is unlikely that the government will burden AI firms with over-strict regulation. The country has more than 40 laws containing rules about the protection of personal data, but these are rarely enforced.

When you think of high-tech cars, you probably think of Tesla or BMW. But there’s another automaker that is quietly becoming one of the industry’s most tech-centric brands: Volvo owned by the Chinese company GEELY 175HK. For years, the Swedish car company has been at the forefront of introducing the latest safety tech into its vehicles. But the car company’s tech savviness extends beyond just its safety systems. VOLVO, is also investing in technology and partnerships that will make its cars more convenient,

efficient, and autonomous. The company‘s latest move includes its pledge that all new Volvo cars will either be fully electric or hybrid by 2019. Volvo and UBER teamed up in August to develop base vehicles that

work compatibly with all of the latest autonomous-driving technology. Both companies pledged to invest

$300 million in the project.

We suggest to invest in equity oriented strategies. Our stock selection remains within GAFA, combined

with themes connected to cybercrime, but mainly global organic growth sectors, respectively of populations essential needs, such as water, nutrition, energy & healthcare.

Our expectation for the financial market 2017+ is, that global interest rates will remain on low levels, which results to the fact that fixed income risk return ratio through all credit ratings is still not attractive, especially in comparison to dividend yield of liquid shares.

We are looking forward if you are sharing your view with us. Meanwhile I am wishing you an ongoing pleasant summer break, and do look forward to meeting with you personally very soon again

Best Bjoern

Input 27.05.2017

Good afternoon

Last week I did took the chance to collect both educational and enriching impressions in Mumbai and Chennai, respectively learned on this investors factfinding trip, that India seems tob e ready to move forward faster than ever. Both airports do appear as spaceship in the landscape and the city skyline consists of elegant high rise building. Please let me just share some takeaways with you, and hopefully you will find the time to read the links indicated for deeper information, and additional facts.

Innovation and implementation of «industry 4.0» is the name of the game, combinded with the sharepower of population and focus on domestic growth. Rural areas contribute to 2/3 of the economy. The social gap is enormous but innovation will allow big steps. Annual growth rate is above 7%. The Gross Domestic Product per capita in India was last recorded at 1751.70 US dollars in 2015. The GDP per Capita in India is equivalent to 14 percent of the world´s average. http://www.gapminder.org/ remains one of the best links to illustrate this fact.

My general observations were, that

  • Despite high interest rates the outlook for inflation remains controlled, and it was most interesting to learn, that physical gold has lost its attraction among indian investors.
  • Consumers are online on their mobile devices, internet seems outdated versus various Apps,
  • Business Owners are called Promoters and are acting in the good old «patron style» with high social responsability.

Consider the sequence of events in its demonetization saga. In November the government made a

high-risk, high-stakes economic intervention in the world´s largest democracy, with an objective to reduce corruption. Overnight, 86% of cash in circulation was voided. In a country almost 90% cash reliant, chaos ensued. As I said at the time, it was a case study in poor policy and even poorer execution. Four months passed. The country emerged with few obvious scars. Although the impact on corruption remains to be seen, Prime Minister Narendra Modi´s government was rewarded with victory in midterm state-level elections, seen as a referendum on its unprecedented action. Two interesting links to this topic https:// en.wikipedia.org/wiki/2016_Indian_banknote_demonetisation, and http://moderndiplomacy.eu/index. php?option=com_k2&view=item&id=2253:demonetization-and-its-impact-on-indian-economy&Itemid=137

Banking did discover Microfinance and for instance http://www.capitalfirst.com and http://www.indusind. com are focussed towards women. Digital cash is leading, ATM will be historical soon and every citizen does share his/her data in a Biometric. System; India´s national ID program called Aadhaar is the largest biometric database in the world. It is a biometrics-based digital identity assigned for a person´s lifetime, verifiable online instantly in the public domain, at any time, from anywhere, in a paperless way.

It is designed to enable government agencies to deliver a retail public service, securely based on biometric data (fingerprint, iris scan and face photo), along with demographic data (name, age, gender, address, parent/spouse name, mobile phone number) of a person. The data is transmitted in encrypted form over the internet for authentication, aiming to free it from the limitations of physical presence of a person at a given place. About 550 million residents have been enrolled and assigned 480 million Aadhaar

national identification numbers as of 7 November 2013. It aims to cover the entire population of 1.2 billion in a few years.

A leading company for the dual needs of India´s infrastructure´C increase of effiency in networks and bulding new networks, such as e.g the Metro in Mumbai, will be http://www.texmaco.in/webfiles/. Consequently cement where we met with the CEO of http://www.ramcocements.in – he did introduce us to the firms outstanding selfdeveloped MIS system, which does enable the management to control processes realtime; they do not accept internal presentation with numbers on powerpoint. Try to their casestudy on download.microsoft.com/…/23580_madras_cements_casestudy_f…

My personal conviction for equity related investments has not decreased´C in opposite, stockpicking on global companies with solid balance sheet, sustainable business models and attractive dividend yields is a vital element to create value added in an liquid and long term oriented investment strategy.

Best wishes for a relaxing weekend Bjoern

Input 08.05.2017

Good morning

Finally there is news, respectively a progress within European politics. French election did result the way our expectations were; the independent centrist Emmanuel Macron, who was unknown three years ago ago, has become France’s youngest-ever president (39) after an estimated 65% to 35% victory in the second round run-off against Front National’s right-wing leader Marine Le Pen. The resounding win has been hailed by his supporters as holding back a tide of populism after the Brexit vote and Donald Trump’s victory in the US election. Italians voted overwhelmingly to elect Matteo Renzi as the new head of the ruling Democratic Party, returning him to frontline politics as the party faces a growing challenge from populist politicians.

We see augmenting geopolitical risks coming from Southern China Sea, Northern Korea and Syria. Fact that three nuclear powers USA, Russia & China stand out on the Korean peninsula, the North Korean arsenal, if it is to be deployed, could act as a trigger for a massive confrontation between the three powers. Washington DC, Moscow, and Beijing should not be affected by such a confrontation. The problem is not the size and scope of the North Korean arsenal, but thefact that the classical deterrents are ineffective here. The regime in Pyongyang apparently wants to blackmail the US to a peace treaty with ist nuclear arsenal and thus secure the rule of the Kim family for the future.

The current correction in oil prices is sowing the seeds of a powerful rebound and a potential supply crunch by the end of the decade, but the prize may go to the US shale industry rather Opec, the world‘s energy watchdog has predicted. America‘s shale oil producers and Canada‘s oil sands will come roaring back from late 2017 onwards, a cycle it described as the «rise, fall and rise again» of the fracking industry. Since global consumption per captia will not decreaseWe expect oil prices to return toward USD 60/barrel and companies such as TOTAL, BP, EXXON, STATOIL remain attractive investments with superior dividend yields.

Equities should continue to build on their recent gains as economic momentum remains robust worldwide, and monetary conditions are favourable. Moreover, with the new French president, stocks also look set to benefit from a more settled political climate. We therefore retain our overweight position in our single stock oriented strategies and do remain positive on keeping EUR as currency.

Please challenge us with your views and ideas at any times! Best wishes for the new week

Bjoern

Input 19.03.2017

Good afternoon

http://us-presidents.insidegov.com/compare/13-134/Ronald-Reagan-vs-Donald-Trump gives an interesting overview – and «food for thoughts». Trumponomics could result into to a positive delevopment of US growth. Tax cuts will be supportive to earnings, key is though, that the price for USD remains close to current levels versus global currencies.

Next focus in Europe after the dutch election, is on centrist candidate Emmanuel Macron, who has taken the lead for the first time in polling before the French presidential election, beating the far right’s Marine Le Pen in the initial round. As Prime Minister he would defend France’s middle classes and claims both the outgoing Socialist government under President Francois Hollande – in which he served – and their right- wing opponents had let down the middle classes, assailed by job cuts and an increasing tax burden. Italy just introduced a flat tax for wealthy foreigners in a bid to compete with similar incentives offered in Britain and Spain, which have successfully attracted a slew of rich footballers and entertainers.

Last week I did have the chance to attend the Geneva Car Show. Global car sales are hitting new records, and the trend continues towards fuel efficiency. VOLVO plans to roll out its first self-driving car in just four years. In other words, the company’s first self-driving car won’t require a human to supervise it at all while the car is in control. The driver will be able to do another activity while the car does all the driving: http:// www.volvocars.com/intl/about/our-innovation-brands/intellisafe/autonomous-driving/drive-me Influence of «industry 4.0» and the impact of companies as GOOGLE and INTEL is an inevitable fact. DAIMLER – social contrasts became visible, not only as illustrated on my favourite page http://www.gapminder.org/tools/#_ locale_id=en;&chart-type=bubbles. Take a look at https://www.mercedes-benz.com/de/mercedes-benz/ fahrzeuge/personenwagen/g-klasse/der-neue-mercedes-maybach-g-650-landaulet/ – a special Maybach edition, at a price tag of CHF 815’000, was sold out after 2 days at the fair.

Money supply M2 measures the total amount of money in circulation in a country or group of countries in a monetary union. It is scary to monitor the development of how the European Central Bank did expand the amount of EUR lately:

Taking a closer look at interest rate since 2008 – EUR LIBOR Months did cost 5% p.a. at the time, we find ourselves today with negative interest rates of -0,35% p.a Nevertheless we are facing an ongoing inflati- on. It’s a question of time until interest rates will start to increase again. Consequently risk reward ratios on fixed income investments are not attractive.

The European Central Bank, which has left rates unchanged, confirmed that its quantitative easing (QE) program will continue at a rate 60 billion from April to December, but the policy may change if the scenario worsens. It said QE will, no matter what, proceed until inflation starts getting close to a 2% target.

According to Mr Draghi, President of ECB:

  • Eurozone growth risks are oriented downwards because of global factors.
  • the conditions of loans for households and businesses continue to benefit from ECB measures.
  • inflation had risen recently due to energy prices and it is expected to rise again in the short term but underlying inflation pressures remain «modest» and a «convincing upwards trend» is not expected.
  • as the recovery consolidates, rates too will rise, we have to be patient.

As asset manager we continue to promote single stock oriented longterm investing, with focus on dividend yields and solid balance sheets. https://www.dai.de/en/what-we-offer/studies-and-statistics/return-tri- angles.html explains and illustrats clearly that longterm investing does pay out, despite all historical volatility on financial markets.

Hopefully there will be a chance to reflect and exchange your view on markets and global politics very soon personally.

Best wishes Bjoern

Input 15.01.2017

Good afteroon

Hopefully you did have a healthy start into 2017.

During the first days of the fresh year we took the opportunity to collect various personal impresssions and economic inputs.

Risks we filter for the coming months are themes such as:

The outgoing president, François Hollande, has decided not to run for re-election. Had he ran, he would have been the only potential candidate predicted to lose if he were to face the far right’s Marine Le Pen in the second round of the election. To the surprise of many, François Fillon has won a landslide victory to become the right-wing candidate for France’s 2017 presidential election. The polls failed to see Fillon coming and it is at least conceivable that Le Pen will do much better in the election than they predict.

We’ve seen that the rules of the game can change. Recent events in Britain and the US are proof that it is perfectly possible.

Angela Merkel could continue as Chancellor, but her power will be diminished. Her standing is odd. In regular times, she’d be seen as a fairly dull centre-right politician. But the leftwing achievements of the SPD, her coalition partner from 2005 to 2009 and again from 2013, mean that she is seen as cuddlier than she is, while her decision to allow a million refugees into Germany has made her a hate figure on the uglier parts of the right.

Thereas May will set out a 12-point plan for Brexit as she vows that the UK will not have «partial» membership of the EU «that leaves us half-in, half-out».March 31, 2017 is the deadline set for invoking Article 50 by notifying the European Council of Britain’s intention to leave the EU. In May 2019 Britain formally would exit the EU, following ratification of Brexit by all other member states

President-elect Donald Trump wants to lower taxes for corporations, from 35 percent to 15 percent. When companies pay lower taxes, the thinking goes, they have more money to spend on research and development, hiring, and producing things — all of which can lead to growth and supportive to corporate earnings. The question though is, if the US can keep up with their strong currency.

Forecast: GDP growth 2016 in % Yo Y

Forecast: GDP growth 2017 in % Yo Y

We fully share the expectation, that the big picture on global organic growth, vide CS graph above, remains sustainable also for 2017. Based on the present low interest rate environement and the risk for bond prices to collapse with upcoming rate increases our prefered asset class is focussed on dividend yielding equity for the time being. We implement through our single stock selection based approach.

On the currencies remain constructive for EUR, cautious on USD and negative for CHF.

We are interested to learning your view on 2017 – please share it with us! I do also look forward to meet with you personally very soon.

Best wishes Bjoern