European Capital Partners

During my holidays in California, I had the chance not only to watch the Presidential debate firsthand but also to closely follow the commentary from various U.S. media outlets, each aligned with different political perspectives. While it was evident that Harris delivered a solid performance and Trump had his weaker moments—including the now-infamous "dog and cat eating" remark—I was struck by how differently the situation is perceived by American media and likely by American voters, compared to how many Europeans might view it.   Trump appears to resonate strongly with many U.S. voters, particularly on issues like the economy, taxes, and immigration. Harris, on the other hand, struggles to clearly define her position on these issues, is perceived as a tax hiker, and often finds herself tied to the Biden administration's policies. From a European standpoint, we may not be entirely comfortable with this reality, but the fact remains that this election is still very much in play, with many variables yet to unfold—such as the recent apparent assassination attempt on Trump, which occurred just this past Sunday. #ecplu #valueinvesting #equities #longterminvesting

Today at Apple Headquarter‘s for the 2024 Keynote! New Iphone 16 with AI capabilities, updated Airpods Pro Max and Apple Watch 10. I finally tested the world famous #AppleVisionPro with a full immersion into the Yosemite National Parc that I just visited before. Not sure Warren tested this disruptive device before selling half of his Apple shares. As value investor, I appreciate the earning power of Apple by generating 134 bn USD in Ebitda in 2024e with 53 bn USD in net cash on the balance sheet and a ROE of 156%. A multiple of 30 times earnings does not appear excessive for this business… ecp.lu #apple #iphone16 #applevisionpro #europeancapitalpartners #ecp #technology #sanfrancisco #valueinvesting

The future is now ! Self-driving experience in San Francisco with Waymo owned by Google. As value investors we need to experience this new technology to understand the changes ahead of us… #europeancapitalpartners #ecp #valueinvesting #waymo #selfdrivingcars #newtechnologies

Concentration risk is a growing concern, as over 70% of the major mutual funds monitored by Bank of America hold significant stakes in six of the "Magnificent 7" stocks, excluding Tesla. Notably, positions in Meta, Apple, NVIDIA, Google, and Amazon have even increased since the start of the year. The potential danger arises if portfolio managers, reacting to an "idiosyncratic" event affecting one of these stocks, decide to simultaneously liquidate their holdings. Such a mass exit could trigger a sharp sell-off, amplifying market volatility and impacting the broader market. #equities #longterminvesting #valueinvesting #ecplu

In the U.S. stock market, sectors most sensitive to falling interest rates are currently underrepresented by investors. This under-ownership is assessed by comparing each sector's market capitalization relative to the overall market cap of the S&P 500 and its average sector weight throughout the 20th century. As interest rates decline, under-owned sectors such as materials, utilities, and energy are likely to benefit, while over-owned sectors like technology, finance, and healthcare could face headwinds. #ecplu #equities #longterminvesting #valueinvesting

With the volatility seen in stock markets at the beginning of August, the publication of Q2 earnings has somewhat moved in the background for investors. With most of the result season now behind us, the good news is that US companies have shown very solid results in Q2. 56% of S&P 500 firms beat consensus EPS forecasts by more than a standard deviation of estimates, above the long-term average of 46%. Earnings per share increased by 11%, let by utilities and info tech. The magnificent 7 stocks were again the major driver of the results ( +36%) while the remaining 494 stocks of the S&P 500 grew by 6%. We are reassured by the result season as it is ultimately company fundamentals that are driving stock prices, not the short term moods of Mr Market.  #equities #longterminvesting #valueinvesting

As of the latest summer update, the S&P 500 is trading at 21.2 times forward 12-month earnings, which is 1.1 standard deviations above its 10-year median. Among the sectors, Information Technology stands out as the most expensive, with the sector trading at 9.3 times sales. On the other end of the spectrum, the Energy, Financials and Utilities sectors appear to be the most attractively valued in terms of their price-to-earnings (P/E) ratios. While valuation metrics like these are not precise indicators of short-term market movements, they are valuable tools for assessing long-term investment potential. Historically, higher valuations have been associated with lower future returns, while sectors with lower valuations may offer better opportunities for long-term gains. #equities #longterminvesting #valueinvesting #ecplu

Over the last 30 years, MSCI China did not show ANY return in USD terms. At the same time, Chinese stocks showed 6 intra-year corrections of more than 40% and average drawdowns of 30.4%. With the benefit of hindsight, it therefore made little sense to invest in Chinese stocks despite the strong narrative of the emerging dragons.  #equities #longterminvesting #valueinvesting

Donald Trump, during his US presidential campaign, argued that the President should have a significant role in influencing the decisions of the Federal Reserve. “I believe the President should have a say, absolutely. I feel very strongly about that,” he stated. This should raise serious concerns among financial investors, as the independence of central banks is a cornerstone of developed economies. Why is this independence so crucial? Because allowing the largest debtors—the government—to dictate terms to their creditors—financial markets—on interest rates would undermine economic stability. From the debtor's perspective, low interest rates might seem like an easy solution to financial difficulties, but this would likely lead to high inflation, with severe economic repercussions.   It's important to note that the interest expense on US public debt has surged to a record $1.11 trillion over the last 12 months, more than doubling in the past two years. This expense is on track to become the largest item in the US federal budget, even surpassing Social Security. Trump's desire to have a say in the Fed’s decisions seems driven by a wish to reduce this cost, but doing so risks igniting inflation and destabilizing the economy. #ecplu #longterminvesting #valueinvesting #equities

ECP will be participating in this prestigious summit, where the discussion will focus on the role and significance of life insurance contracts in wealth management. www.ecp.lu