Strategies to Outperform the Market

Les actions sont-elles bon marché ? Une tentative d'utilisation de la méthode DCF pour résoudre cette question.

Published on 2011-09-11 11:25:00

Les marchés mondiaux se négocient à des PE à 1 chiffre. Même avec une nouvelle récession potentiellement à venir, les coupes des EPS pousseront ce multiple vers environ 13x, ce qui est autour de la moyenne de long terme pour l'Europe. Sur cette base, les actions sont bon marché. C’est la thèse du consensus. Le problème est que ce n'est pas nécessairement exact. Le prix d’un actif est l’actualisation des futurs flux de trésorerie à un taux d’actualisation donné à l’instan

Are equities cheap? An attempt to use DCFs to solve this question.

Published on 2011-09-11 10:59:00

Global markets are trading at single forward PEs. Even with a new recession potentially coming, the EPS downgrades will put the markets on say 13x, which is around the LT average for Europe. On that basis, one should buy Equities and close one’s eyes. Or so goes the argument. The problem is that this is not necessarily accurate.Asset prices are a discounting machine. They discount expected future cash flows at today’s cost of capital. Therefore, it is all about the future cash flows and al

Quick thought on Emerging Markets post Egypt

Published on 2011-01-28 14:49:00

While only a few weeks ago, pundits highlighted how less risky EM countries were, the last few hours have demonstrated that one should not apply yet the same equity risk premium to those countries.I would then expect EMs to start trading at their historical discount in the next few days. More asap.

Curreny: euro to weaken versus the dollar? Some thoughts

Published on 2011-01-20 03:45:00

A key consensus call is that the dollar will weaken due to quantitative easing.I agree. The value of the dollar will go down. But maybe the Euro can beat it in this race.Looking at some technicals, I can see the Euro in the long term downtrend, making lower lows and lower highs since its peak at 1.6000 in 2008.Catalysts for underperformance can be found in the following:- euro sovereign debt crisis, with Spain or even France as a culprit- global double dip if monetary stimuli are removed- a new

Idea for 2011 #1: continue to play Germany / Continuer à privilégier l'Allemagne

Published on 2010-12-22 05:22:00

Year-to-date, German markets have massively outperformed the peripheral Europe’s, but also heavyweights such as France. For instance, the IBEX investor is more than 30% worse off than the DAX investor. However, it is interesting to note that the IBEX is still up against the DAX since the onset of the financial crisis, which I put arbitrarily at July 2007. Therefore, it led me to investigate new reasons justifying to play a continued reversion to the mean, i.e. buy Germany, sell Spain/Italy/ et

Calling a top - bull/bear ratio extended

Published on 2010-10-29 12:09:00

The bull/bear ratio is standing at its highest level since February 2007, when the market corrected sharply.Most sell-side houses are very bullish indeed and I think we should get a pullback in the next few trading sessions.

German retail sales since 1994

Published on 2010-10-11 14:25:00

A fascinating graph showing how growth did not come consumer spending.It explains why there is no proper general retail sector listed in Germany, despite a population of more than 80m inhabitants. There has been virtually no growth in retail sales since 1994.Can it indicate that the next 10 years would be those of consumer spending? It is hard to imagine at the moment given the wage restraints of companies in Germany.The listed stocks' valuations imply no growth in Germany. A marginal inflexion

Australian Dollar

Published on 2010-10-11 14:20:00

The AUD has just made a 2 year high against the dollar and is back at the same level as 1983.Essentially, the AUD just caught up with the lost ground since the crisis.It witnesses the huge commodity flows out of Australia.

Market outlook: disconnect bonds / equities reopened

Published on 2010-09-29 13:21:00

Here is a chart of the year on year change of the US 10 Year interest rate and the S&P. The correlation is pretty decent but what we can notice now is that there is this gap. If the bond market is right, we will get a sharp sell-off pretty soon. If equities are right, bonds will underperform but would that benefit equities? This chart suggests it would only marginally.To sum up, downside risk appears higher than upside risk. The asymmetry makes me want to increase the defensive allocation. A

Sign of deleveraging: UBS's balance sheet

Published on 2010-08-19 14:13:00

I was checking some numbers on UBS the other day and I was amazed by the speed and the size of the deleveraging. Now, UBS is an investment bank so they can get rid of assets much faster.A positive sign for the economy is that the process seems to be bottoming.