Input 22.07.2020

“Study the past if you would define the future.”


Good afternoon

Looking back to the beginning of 2020, it started relatively smooth in the environment of low interest rates, tensions between China and the US, but ongoing global demand for food, energy,  consumer products etc,  but got heavily  interrupted by COVID lock downs around the globe. Home office, remote learning, online shopping, and 2m distancing created new patterns.

Financial markets collapsed in February ,  various margin calls needed to be executed. We learned that strategies with solid Swiss Private Banks included leverage, which became disastrous in the sell-off. They were days we oil futures prices traded negative and It became impossible to read the volatile markets, but definitely wrong to realize losses. Based on our cooperation with the ETH spin-off we monitor and assed markets daily, which is creating an additional level of confidence in combination with many years experience on market corrections

The graph below illustrates in a impressive way, what longterm oriented investing means, and that a crisis also can create opportunities

The orientation of the mandate is a clear focus on liquid equity-based investments, where we believe in long-term recovery and success. Dividends are creating additional income, which is not possible to generate in bonds markets and/or cash any longer.

By establishing the cooperation of the ETH spinoff Openmetrics we created a way to measure the conditions of the markets,

As mentioned before we notice and expect a radical shift of consumer behaviour; this forms part of our outlook 2020+:

Among other, German industrial production in May turned out worse than expected. Although the Federal Ministry of Economics is confident that the low point in the industry has been overcome, capacities are still clearly underutilized. The OECD is forecasting record unemployment averaging 9.4% in the industrialized countries by the end of the year. This would be the highest figure since the global economic crisis in the 1930s. The European economy is likely to suffer more than expected from the consequences of the corona crisis. The European Commission is forecasting an economic slump of -8.7% for the currency area in the current year.

Corporate debt continues to rise in the wake of the global pandemic. Many companies are currently taking various measures to reduce operating costs, for example by reducing staff. Only the massive money market policy of the central banks is currently able to prevent a major stock market correction or rising interest rates.

Sectors such as IT (e.g. MICROSOFT, INTEL) will face future demand on cloud solutions and remote communication, e-commerce (e.g. ZALANDO, AMAZON) will trigger challenges within logistics (e.g. DEUTSCHE POST, UPS) , automotive producers (e.g. BMW,PEUGEOT) can expect a boom for smaller cars, local manufacturing of various goods (machinery, fashion, etc.) will set a new trend, sustainable tourism instead of “discount travelling” will most likely prevail, and last but least – solid balance sheets are key for all companies. Our view is constructive.

Liquidity injected by the Governements, being immediate loans as almost everyone could apply for here in Switzerland, or actions by Central Banks will  keep interest rates at low levels for a long while to come, despite inflation for goods as food, energy etc. Asset class of Equity is expected to benefit of this scenario, where a risk/return for bonds and cash remains in disfavour.

We avoid private equity and other non liquid asset classes, even though some of them claim to have protective elements. Risks with yearly valuations are not assessable for us. Instead, we continue to believe in liquid equity-based investing with annualized returns rather than non-transparent IRR, although we might face almost hourly changes on prices and economic outlooks in various reports sent/shared in media and other channels.

We look forward to being challenged with your views



Input 28.02.2020

„Panic is the sudden realization that everything around you is alive.“ – William S. Burroughs

Good morning

The news that the virus did reach and impact Italy and other parts of Europe last weekend, is causing global panic since.

On the financial markets we did reach a point, where valuations on dividend yielding equity are attractive, despite adjusted outlooks on earnings, but especially reflecting dividends and balance sheets versus negative yielding fixed income and cash. We suggest not to sell out, especially since we are not trading, but investing longterm. As example In our long only strategies “Stablized European Dividend Income” and “US Selection Cristalina” we did hedge part of the portfolio already in 2019 and are keeping a cash quota which we can place back at risk once the situation is getting more clear.

More people died from regular fluor natural disasters than has been the case to date with Covid-19, without this having had any significant economic consequences in the past. However, there is a possibility that the economic impact of the virus could be greater than previously expected. One of the reasons for this is that China‘s share of the global economy has grown continuously in recent years. However, at the moment it is difficult to quantify how much the growth slump in the Chinese economy will be. A possible scenario is, that China will only achieve a GDP growth rate of 3% this year – only half as much as originally planned, could result that the global economy is likely to grow by 2.8% in 2020.

1981: did Dean Koontz’ thriller predict the coronavirus outbreak? Readers share extracts from novel which chillingly refers to deadly viral infection named after Wuhan. The book also describes a virus that has an incubation period of just four hours, whereas coronavirus incubates for several days to two weeks. To the disappointment of conspiracy theorists, it turns out that in the first edition of The Eyes Of Darkness, the virus was originally called ‚Gorki-400‘, after the Russian city where Koontz originally wrote the bioweapons lab.

An Israeli expert in infectious disease recommends the authorities dial back a hard-hitting and economically damaging policy and ease public concerns about an illness whose risks seem similar to those of ‚regular‘ flu. The article “Time to Quit Fearing Coronavirus” is interesting reading: https://www.haaretz.com/opinion/.premium-time-to-quit-fearing-coronvi- rus-1.8593923

The Canadian epidemiologist Bruce Aylward, who heads the WHO mission team to China, said that he has seen a steep decline in newly-reported cases compared to the number when he first arrived in China two weeks ago. “I know the challenges with the statistics that come out of China sometimes with changing numbers and what we had to do is look very carefully different sources of information to say confidently this is actually declining“, he commented in this the article https://economictimes.indiatimes.com/news/international/world-news/steep-decline-in-coronavirus-cases-in-china-who- expert/articleshow/74289629.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst Slowdown of global activities is a fact, but at the same time we must reflect on our personal sustainable behavior; as example what kind of food we buy, where & how we travel, specific use of technology, hygiene in public and private, and many more common sense related processes.

Thankful regards


Input 10.09.2019

„Although we are currently not in an inflationary period, we are likely heading towards one“ – Dan Moskowitz

Good afternoon

Where you aware of this link, including the tabs on global energy consumption, US autosales and housing: https:// www.usdebtclock.org?

Sometimes it feels, that understanding economics in 2019 is fighting again windmills, where as this headwind consists of political tweets and the perception of endless increase of money supply. Please take a look on https://fred.stlouisfed.org/ series/M2SL

Looking at Consumer Price statistics, vide https://data.oecd.org/price/inflation-cpi.htm inflation hardly exists.. and central banks relaease, especially ECB under Mario Draghi’s period, „helicopter money“ and are issuing longterm bonds in order to finance their expenses. For most of american history, the longest bond maturity the US government offered was 30 years. But historically low rates have revived a long-simmering discussion about whether the US should issue bonds with even longer maturities, like 50 or 100 years. Austria sold a so-called century bond earlier this year with a mere 1.2% yield. Even serial defaulter Argentina sold a 100-year bond in 2017, though those buyers may regret it now.

Much of „public distribution“, despite negative interest rates in Europe & Japan, has not been visible, eventhough various statistics show expansion. Private household’s access to leverage is (luckily) limited, since banks have become much more restricted in issuing e.g consumer loans, based on „the Third Basel Accord or Basel Standards“, which is a global, voluntary regulatory framework on bank capital adequacy, stress testing, and market liquidity risk……………………………………………………………………………….. It is intended to strengthen bank

capital requirements by increasing bank liquidity and decreasing bank leverage. The original Basel III rule from 2010 requi- red banks to fund themselves with 4.5% of common equity (up from 2% in Basel II) of risk-weighted assets. Since 2015, a minimum Common Equity Tier 1 ratio of 4.5% must be maintained at all times by the bank.

Although it seems that we are not close to that point, wider acceptance of cryptocurrencies in commerce could lead to a surge in inflation.

Several asset classes can perform in inflationary environments. A good summary can be found on https://www.inves- topedia.com/articles/investing/081315/9-top-assets-protection-against-inflation.asp, where as we at present scenario clearly favours the asset class of long-only liquid equity, so traded shares, preferably with a good market capitalization and solid, plus growing, dividend yields. Stabilized European Dividend Income Strategy as an investable example:

Our latest efforts, together with our strategic partner https://www.openmetrics.ch/aboutus do result that we are able to offer tailormade strategic AMC’s, based on investors Return/Risk expectations. OpenMetrics technology is based on latest research developed throughout almost a decade at ETH Zurich.All presented models and applications are based on this research and thus fully transparent to the users.

See latest publication:

T. Setz, STABLE PORTFOLIO DESIGN USING BAYESIAN CHANGE POINT MODELS AND GEOMETRIC SHAPE FACTORS, Dissertation ETH Zurich No.: 24754, (2018). https://doi.org/10.3929/ethz-b-000244960

In contrast to other common approaches, the BCP (Bayesian Change Point) model can be used without any adaptations (methodology or parameters) on all stochastic data.

STOXX Europe 600 (19 Industry Sectors) & Dynamic Base Portfolio (Euro- pean Bonds, Precious Metals) annRet 10%, annVol 9.6%

Please do not hesitate to getting in touch with us in case you wish us to explain our new idea more in detail, in additi- on to our traditional strategies with individual stocks or funds, based on our preference towards single stock selection.

Your feedback is, as always, highly appreciated! Best wishes


Input 21.07.2019

Good afternoon

„When everything seems to be going against you, remember that the airplane takes off against the wind, not with it“ Henry Ford

This quote applies in respect to what occurred on global equity markets during the past months; in December 2018 global equity markets collapsed based on low volumes, mounting negativism related to the US-Sino trade conflict and most probably some manipulations. We tried to hold on to our conviction of longterm investing as good as possible and the mandates did recover in line with markets. Year to date markets look fine with two digit recoveries. Nevertheless, one must be aware of the fact, that it has been an equalization of the negative Q4/2018.

The average annual return since adopting 500 stocks into the index in 1957 through 2018 is roughly 8% (7.96%)A good illustration can be reviewed on https://www.macrotrends.net/2526/sp-500-historical-annual-returns. Another good illustration on long term investing can be downloaded on https://www.dai.de/files/dai_usercontent/dokumente/ renditedreieck/181231%20EuroStoxx-Rendite-Dreieck%20Web.pdf. Short term acting mostly resulted into challenging results.

A momentous milestone lies just ahead: If the S&P 500 climbs another 4%, it will have doubled the peak reached in the previous bull market. Only three prior bull cycles have logged such a 100% gain from the prior bull peak: The great bull markets of the 1950s. the ’80s and the ’90s.

Jurrien Timmer, director of global macro at Fidelity Investments, has been tracking the current market path against those of three “mini-bear” episodes from recent decades. Each of these involved a serious market correction not associated with a U.S. recession which led to easier central-bank policies and a growth revival. The present instance is hewing fairly close to the average trajectory of those of 1994-95, 1998-99 and 2011-12.

No guarantees, of course, but if those patterns are a guide, this bull market would indeed reach twice the height of the last one.

A recent AQR paper argued that the lower risk of investing in private equity was largely an “illusion” and warned that the ravenous demand had destroyed any illiquidity premium that might have existed. Throw in high fees, and the paper reckons that private equity returns will average 3.9 per cent net of costs and inflation in the coming years — only a sliver above the expected US stock market returns. Given that their mounting pile of private investments will be immensely difficult to liquidate.

The Economist issue July 13th-19th 2019 „Riding High“, download or buy a version in print https://www.economist. com/leaders/2019/07/11/americas-expansion-is-now-the-longest-on-recordcontains, is valuable summer reading with various points which might impact today’s market and sentiment. Justified concerns of aging workforce, hoarded corporate profits, slowdown of productivity and the remarks that e.g. bitcoins are „no substitute for breakthroughs such as jet enginges or internet“ But also comments good news, refering that the economy may be less volatile (not the markets though..), based on solid bank balance-sheets in comparison to 2008 and a more globalised economy

which may reduce risk of inflation (and higher interest rates).

  • Digitalisation – the impact on supply chains are being compared to what steam and electricity had on manu- facturing. Just seen on e-commerce and blockchain related business models…
  • Italian politics – the personality cult, driven by daily tweets and Facebook posts around „il Capitano“ the nick- name of the new interior minister Matteo Salvini. In less than a month, Salvini, who admires Trump and Putin, has blocked refugee rescue boats and demanded a Roma census..
  • China’s fading role as workshop, describing the fact that cheap labour work is being transfered to Vietnam, but also Ethiopia, where H&M and Calvin Klein are taking benefits with labour cost of USD 26/month…

In summary we suggest to to focus on to liquid „long-only“-equity oriented strategies and to avoid fixed income in the present low interest environement.

Best wishes for a good summer


Input 26.02.2019

Good morning

2019 is the Year of the Pig, the 12th of the 12-year cycle of animals that name the years. According to Chinese myth, the pig is the last zodiac sign on the calendar because he overslept and arrived late to the party in which the order of the zodiac was determined. To be sure, there are many reasons to be cautious with respect to China. It is easy to ima- gine trade tensions reigniting or the economic data disappointing. But the outlook for China is still promising and the performance this year reflects that. After all, it is important to remember the symbolism of the Lunar New Year: With their chubby faces and big ears, pigs are often viewed as a symbol of wealth in Chinese culture.

Stock markets recovered well since December 2018; both China and the US have incentives not to escalate the con- flict and December’s market volatility in the US stock market has led to wider recognition that trade tensions could hurt domestic business confidence and employment.

Weather forecasts are made by collecting as much data as possible about the current state of the atmosphere and using understanding of atmospheric processes (through meteorology) to determine how the atmosphere evolves in the future. However, the chaotic nature of the atmosphere and incomplete understanding of the processes mean that

forecasts become less accurate as the range of the forecast increases. Financial market outlooks became similar, rea- ding many articles between September 2018 and January 2019. The accuracy of all “apocalyptic” economic scena- rios made it challenging to hold on to mid- & longterm horizon oriented positions.

As the dust settles, there is a silver lining. Even before the fourth quarter downturn, markets had been cheapening in valuation terms. Relative to consensus earnings forecasts for the next 12 months, US, UK, European and emerging market equities are valued at close to their cheapest levels for four to six years. There is a similar story when prices are compared to the previous 12 months’ earnings. Japanese equities have not been cheaper on either basis since the depths of the financial crisis. In the present environment of low interest rates we suggest to hold on to equity oriented strategies, and to focus on dividend yields versus fixed income. Markets remain unpredictable for sure – interesting reflections can be found within this link: https://www.forbes.com/sites/greatspeculations/2019/01/16/u-s-stock-mar- ket-cycles-point-higher-in-2019/#1580de2e1ad2

The future of trade in Asia could depend heavily on what becomes of China’s expansive One Belt, One Road initiative, which calls for massive investment in and development of trade routes in the region. As Xi’s trillion-dollar development strategy has snaked away from the Eurasian heartland and into the South Pacific, western Africa, and Latin America, concern has grown. Many Americans fear that the Belt and Road Initiative is an extension of efforts by the Chinese Communist Party (CCP) to undermine the security and economic architecture of the international order. China’s gro- wing largesse, they worry, comes largely at the expense of international institutions and American influence.

The Chinese government has provided concessional loans for Pakistan government’s major transportation infra- structure projects, with a composite interest rate of around 2% in repayment period of 20-25 years. Projects under the CPEC, completed or under construction, amount a total investment of $18.9 billion. These projects should solve two major bottlenecks hindering economic development of Pakistan: lack of transportation infrastructure and energy

shortage. The Pakistani government has provided sovereign guarantee which hopefully will not backfire. “It is import- ant that the design of the projects be solid and excessive debts which cannot be repaid are avoided,” the IMF chief economist said. US Secretary of State Mike Pompeo said there was “no rationale” for an IMF bailout of Pakistan that pays off Chinese loans to Pakistan. Chinese officials have rejected criticism that the so-called China-Pakistan Econo- mic Corridor projects have burdened Pakistan with unsustainable debts. The article on http://www.cadtm.org/Is-Pakis- tan-falling-into-China-s is more critical than the Chinese officials version.

Your view on present developments is highly appreciated, and I would look forward to exchange ideas at our next personal meeting or chat

Best wishes,


Input 08.02.2019

«Just remember, once you‘re over the hill you begin to pick up speed.»

Arthur Schopenhauer

Good evening

Schopenhauer’s qoute seems to apply for financial markets at present stage. But we get not euphoric, since the technical correction of the last quarter must be equalized prior to heading towards new horizon. Call it a year end bonus to start with, and let us hope that we catch up speed again.

Most good news goes unreported or gets couched as bad – a phenomenon I call the pessimism of disbelief. When it strikes, better times are ahead.

Sentiment seeks negatives, ignoring positives:

Global lending and money supply are growing around 6 percent year-over-year.

Global purchasing managers’ index is higher now than during most of 2016, a fine year for stocks? World trade is growing nearly 4 percent year-over-year despite this supposed trade war.

Assuming December 24 remains the bottom, this correction ended later in a calendar year than any correction or bear market ever. An average aftermath now would make 2019 simply stellar, and surprise almost everyone. That’s bullish; good years follow bad years unless you have global recession or world war. We’ve never had two straight negative stock market years – except with the Great Depression, the two World Wars, the early 1970s debacle and the tech bubble.

Tightening financial conditions in the U.S. are a continuing concern for markets, and President Trump, who called on the Fed to stop raising interest rates after four rate rises in 2018. Fed has indicated more patience in the normalization process. We like the summary on this link https://jamesaltucher.com/blog/no-recessi- on-2019/ and shall hold on to our conviction towards single stock oriented investing and keep you updated during the coming weeks.

Best wishes Bjoern

Input 28.12.2018

«I think we‘re going to the moon because it‘s in the nature of the human being to face challenges. It‘s by the nature of his deep inner soul… we‘re required to do these things just as salmon swim upstream.» Neil Armstrong

Good afternoon
28.12.2018 – final day @ work (not on the moon yet), reflecting on 2018 as one of the most challenging years, facing major headwinds and extreme volatility on global financial markets. Main reason for the pressured market is the yet unsolved Sino American trade conflict, and President Trump is at the center of investor’s crisis of confidence. Markets can recover quickly. Less volality as a silent wish. Some easing of market pressure we have just experienced during the latest +4% day «Santa move» on the US stock exchanges. Considering the present low interest rate environment in Europe and Japan the «TINA principle» (There is no alternative) still applies. The sell-off did not relate to what companies produced in earnings and we sense that a potential global slowdown is priced-in by now.

Since coming to power in 2012, President Xi Jinping has repeatedly urged Communist Party members not to forget China’s socialist roots while pursuing the «great rejuvenation of the Chinese nation». At an event in May held to commemorate the 200th anniversary, he said that for Communist cadres reading Marxist works and understanding Marxist theories should be a «way of life» and a «spiritual pursuit», adding that the philosopher’s theories were still «totally correct». The Karl Marx cartoon series, co-produced by central government’s Marxism office, will be shown by video streaming website Bilibili.com. This statements are scary, especially considering the following economic hard facts:
Digital Leaders China is a global leader in frontier industries such as e-commerce. (internet users in millions of persons)

Digital Leaders China is a global leader in frontier industries such as e-commerce. (internet users in millions of persons)

Quality as well as quantity Chinas GDP could overtake the United States by 2030. (Nominal GDP in USD trillions, assurring market exchange rate of 2017)

Forseeing growth Faster reforme progress could pave the way for higher, more sustainable growth. (GDP in percent, year-on-year growth)

Please read more in detail on https://www.weforum.org/agenda/2018/08/china-s-economicoutlook-in-six-charts.

Economic outlook have almost become a «guessing» of leading economist, journalists and researchers. In Europe we faced the last recession 7 years ago, in the US in 2008. There is no rule that economic growth will die of old age. Hardly anyone does mention, that Australia‘s economy completed silently 27 years of uninterrupted economic expansion in the second quarter, with solid growth lifted by consumer spending and government-led infrastructure. Impressive.

Themes for 2019 are digitalization (vide our report http://www.jacotinvestmentmanagement.ch/ documents/_JIM_UpDates_V01_01.05.18.2S.pdf), renewable energy – triggering fundamental changes in automotive – global trade, communication and more. Despite sharp temporary corrections powerful names as MICROSOFT, GOOGLE and APPLE are ranking top with more than 2 trillion market cap, larger than the entire EUROSTOXX 50, Europe‘s leading blue-chip index. Remember life before apps? Sure, it was liveable. But it was also a time when we owned paper maps, knew phone numbers, etc. How can today’s world operate without cloud computing, mobile devices, functional apps? This won’t stop, and the world’s most valuable resource in no longer oil, but data.

Driving restrictions in cities, CO2 emission guidelines, etc. will trigger that the major car producers are forced to invest more in e-mobility. http://www.ev-volumes.com/country/total-world-plug-in-vehiclevolumes/ Is it too late for VW, BMW, NISSAN and others? We do not think so. In comparison to TESLA, VOLKSWAGEN is not a pioneer of a new development in the EV, but if the Wolfsburg take a new path, they will spend more than EUR 30 billion for enforcing the EV, in order to offer models below EUR 30’000. https://www.energysage.com/electric-vehicles/buyers-guide/top-ev-companies/.
Despite «swimming upstream» (= temporary negative year to date results) we do follow a LITHIUM oriented investment mandate. The new «White Gold»; during the 1790s, it was a Brazilian naturalist who discovered the mineral called petalite on an island in Sweden. Then in 1817, a chemist in Sweden discovered that petalite contained a previously unknown element. He was able to isolate one of the salts, but he could not isolate the mineral itself. Nevertheless, he gave it its name – lithium, which meant «stone» in Greek. Finally, 1855 a British and a German chemist were able to separate the metal from the salts. Once this was accomplished, commercial production of the lithium metal began in Germany in 1923. Because it is so light, it is known for its wide use in batteries. As a result of our above-consensus electric vehicle outlook, forecasts predict 19% annual demand growth for lithium over the next decade. This will ultimately require higher-cost lithium supply to come on line to meet demand. With this strong attraction to alternative energy, grows the demand for lithium, which is predominantly mined and imported from countries like Bolivia, Chile, China and Argentina.
As long-term oriented investment managers we are positive towards EUR, JPY vs USD and global equity allocations, but hesitant on a stronger CHF and low, respectively negative yielding fixed income. We prefer to keep our focus on our single stock selection based approach, and remain confident that the performances in our mandates will recover.

On behalf of the JIMAG team I wish you a good weekend, and «en guete Rutsch» into a healthy and successful 2019



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

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



(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:


  • 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://global.rakuten.com/corp/about/company/

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