Within the first 9 months of 2025, the Worth & Alternative portfolio gained +6,6% (together with dividends, no taxes) towards a acquire of +16,7% for the Benchmark (Eurostoxx50 (25%), EuroStoxx small 200 (25%), DAX (30%), MDAX (20%), all TR indices).
Hyperlinks to earlier Efficiency opinions will be discovered on the Efficiency Web page of the weblog.
Efficiency overview:
After two comparatively good monhts in June and July, August and Septmeber as soon as once more have been underperforming months and I’m now 100% positive that this would be the third underperforming yr in a row.
Once more, some shares did actually badly (Fuchs, STEF, AOC Fund) whereas the winners weren’t successful sufficient to match benchmark efficiency.
As talked about earlier than, the nice factor is that I don’t should care about sad exterior buyers and/or paying subscribers. As I’ve indicated within the final overview, I’ve been adjusting my method and bettering my funding “infrastructure” however it might be silly to anticipate a brief time period rebound in relative efficiency within the present market surroundings. For subsequent yr, I’m at the moment considerung to change to 6M Efficiency reporting.
Transactions Q3:
The principle transaction was that I bought Fuchs (with an total revenue of 6%) and purchased and bought Novo Nordisk with a ~11% acquire. Fuchs stays on my watchlist however is clearly uncovered to sectors which are at the moment not doing so nicely.
Common holding interval is 3,5 years, Money is at ~13,7% (vs. 4% at yr finish 2024).
Remark: Maintain ready for that European Financial rebound
2025 is now the third yr in a row, when the a lot anticipated “second half financial rebound” in Germany & Europe will very probably not occur. One in all my greatest funding errors up to now 3 years was clearly that I had too many bets that have been kind of immediately relying on such a rebound and a few sort of imply reversion. I’ve trimmed most of those positions to a sure extent however not all. And I’ve to confess that I’m nonetheless tmepted to placed on these sort of trades however I’ve principally resisted to date.
The large query in fact is: Will the Rebound lastly are available 2026 and beneath what circumstances ?
After I would describe the present financial state of affairs in Germany & Europe one might do it with this image:
We’re at the moment principally left with the Dangerous and Ugly and little or no of the Good.
Particularly in German politics, individuals as at all times are on the lookout for “easy” options. Impressed by MAGA and Trump, a few of these straightforward options proposed are as an illustration to cease all Renewable Power efforts and return to “low cost” fossil fuels (and/or Nuclear). One other “straightforward repair” could be that cancelling the dedication to part out ICE engines which might magically clear up all issues of the all essential German Automobile trade.
Perhaps, however solely mabye such modifications might create a brief time period bump in confidence in some sectors however for my part the problems are deeper and rather more structural and Energey as usch isn’t the important thing driver.
Wanting a number of years again, 2019 was already a really tough yr and Germany/Europe have been heading right into a recession regardless of (or beacause of) extremely low rates of interest which have stored the evonomy in some way afloat. This was solely held up by COVID which result in a brief shock after which to a low rate of interest, excessive Authorities induced spending growth that lasted 1-2 years..
The pure choice means of bankrupting weak firms had been intentionally switched off with the intention to keep away from a complete soften down after which solely slowly reinstated.
Europe and particularly Germany’s enterprise mannequin regarded for a very long time as follows:
- import low cost fossil gas and uncooked materials principally from Russia
- Effectively manufacture power intensive Chemical/steel merchandise in huge clusters
- Export into the world specializing in automobiles and manufacturing unit gear
- Use the web proceeds to principally put them into financial institution accounts
- Principally Ignore no matter occurs in Software program and lots of new applied sciences
This enterprise mannequin has been now attacked from a number of sides. That is as an illustration the listing of the most important buying and selling companions in 2016, sorted by exports from Germany’s perspective in 2015:
Among the many giant 5 buying and selling companions, now we have the US, which has simply declared a tarif struggle towards Europe, France which has its personal issues, UK which has since then exited the EU and China, which now in lots of areas is no less than an equqal competitor and even worse, partially thanks on account of “us serving to them to construct essentially the most trendy prodcution services.
As well as, a budget power and uncooked materials imports from Russia aren’t any extra. One other instance: In 2018, greater than 50% of the Pure Fuel was imported from Russia and Russia was additionally a High 15 Export market.
I’m not positive what number of of my readers assume that it might be a good suggestion to reastablish the Fuel pipelines to Russia beneath the present Russian management, however I don’t assume it’s a good suggestion.
Lastly, the lengthy stretch of extremely low rates of interest which primarily supported the development and actual property trade for a very long time, are over. In 2018, building accounted for round 10% of GDP in Germany, in 2024 it fell to five%.
The European inventory market had reacted partially very positievely totally on the announcement of a lot elevated speanding from Germany on Protection and Infrastructure, however to date little or no tangibel stuff has occurred.
So what’s the upside ?
- Severe reforms
- Considerably decrease rates of interest
- German spending kicks in an creates a (brief time period) upswing
- Peace in Ukraine and big rebuilding effort
- Attracting extra gloabel tech expertise on account of US hostility towards immigrants
Brief time period, severe reforms are fairly unlikely wherever one seems to be. The probably tailwind for my part could possibly be that spending kicks in and along with decrease rates of interest ignites some sort of bounce again.
If politicians could be sensible, they might attempt to mobilise non-public capital with tax breaks to construct housing, as lack of housing is clearly a difficulty in most of Germany’s bigger cities however I’m not positive if this occurs.
However make no mistake: In my view, the standard, power intensive, metal primarily based export mannequin of Germany is completely damaged. We won’t be able to compete towards the Chinese language and the US is not going to permit imports to rise considerably.
Subsequently I feel it is extremely essential to keep away from long run investments into firms that depend on the outdated mannequin. The most important mistake one could make is to guess on mid- or long run imply reversion of companies which are totally uncovered to the “outdated German/European” enterprise mannequin.
The large query clearly is: What sort of enterprise fashions can create long run worth beneath a such a long run structural shift ? I’m not positive however we’ll discover out.
There may be the well-known saying that you’ve got reached the center of the tunnel when it’s the darkest. So perhaps we see a broader rebound of the economic system in Germany and Europe in 2026, however I can’t improve my bets on that proper now. If we don’t see that rebound as soon as once more, then 2026 may not be an excellent yr for inventory buyers.