FPM-Comment Reducing the Noise Martin Wirth: 4/2025 dated October 9th 2025

The political environment should not dominate the investment strategy

• The new German government has not yet addressed the problems
• Today's politicians apparently do not understand how growth and prosperity are created
• The situation in the US appears even more dire
• The EU has also contributed little to growth in recent decades
• But: a correct assessment of valuations is crucial for good returns
• In absolute terms, many German stocks remain worth buying

As a warning: if you don't want to spoil your mood, please only start reading this report from the last third onwards.

The new German government has not yet addressed the problems

After the new federal government took office, there were hopes that the reform backlog in Germany could be broken and that politicians would once again focus their efforts on the productive majority of the population. Just a few months later, however, these hopes have been dashed. Our political elite continues to view only nurses and, of course, public sector employees as high achievers among the workforce. The rest are expected to stop complaining and pay for the rising social welfare costs of benefit recipients, including compensation for increased inflation rates and civil servants' incomes, without providing any evidence of increased productivity. At best, reforms will come sometime in the next few years, and the rest will be taken care of by the state, i.e., the taxpayer. Only the bureaucracy continues to grow, while industry continues to decline, with losses compared to the highs of a few years ago now often reaching double digits. The former enemy number one, the automotive industry, has drawn its conclusions and is now investing in countries where it is welcome, from the US to Mexico, Spain, and Hungary. The fact that VW will cut 50,000 jobs in Germany over the next few years was largely met with a shrug. This will also affect suppliers, the surrounding economy, and their families, negatively impacting the lives of up to 300,000 people. And the fact that, apart from VW, large corporations are now regularly prompted or forced to make waves of redundancies in the four to five-digit range does not seem to bother anyone in politics or the media close to it. People would rather spend weeks worrying about the election of a constitutional judge. Every now and then, elections are held, and the SPD in particular is surprised that its core voters seem to have shifted to the right, only to then continue the disastrous course of recent years with renewed vigor – for the past few months with the support of the CDU/CSU. Measures considered to promote growth, such as faster depreciation or lower energy costs, are financed by higher government debt or, in the social democrats' dreams, by tax increases. 

Today's politicians apparently do not understand how growth and prosperity are created

It seems that left-wing politicians in Germany and Europe in particular still do not understand where prosperity comes from. Hint: it does not come from increasing regulations, bureaucracy, and redistribution, from stimulus measures, or from desperately searching for ways to hinder and prevent ideas. Rather, it comes from letting people who are willing to risk their existence when in doubt do what they want, supporting them, and making things possible and easier for them. The exact opposite has been happening in Europe for decades. Only projects that have been approved in advance by politicians are supported and promoted. The automotive industry is a prime example of where this leads: VW, a company with strong government influence, has, to great applause from politicians and the media, focused entirely on battery-powered e-mobility and geared its factories solely to the production of battery-powered electric cars, while BMW has been heavily criticized for wanting to maintain its flexibility and designing its factories so that cars with all types of engines can be built. This lack of flexibility is now costing VW subsidiary Porsche more than €1 billion for the new Macan alone to develop a combustion engine, not to mention the lost sales and profits, as production will not start for several years. The significance of this misjudgement for the rest of the VW Group can be imagined, even if there are no clear figures on the costs of capacity underutilization or plant closures. BMW's strategy is called openness to technology, something that is considered misguided by the government and most of the media, apparently against the backdrop that politicians and journalists already know exactly what the future holds. The latter, in addition to their own political preferences, largely report on things that have already happened and are therefore always right. This is not limited to journalists: in hindsight, we always know exactly what happened, but not everyone writes about it.

When you look at the projects in which the government, represented by former economy minister Habeck, who studied all kinds of subjects except economics, wanted to invest, it can send a chill down your spine (or perhaps inspire admiration for their willingness to deliberately run the country into the ground): Intel in Saxony-Anhalt, a semiconductor manufacturer that has now largely fallen behind, Wolfspeed in Saarland, now insolvent, and Northvolt, also insolvent. This comes close to sabotage. The full glory of government -run economic activity becomes clear when you look at the success story of Deutsche Bahn, whose decline is still attributed by left-wing circles to the IPO that was cancelled about 15 years ago. This is simply ridiculous, if it weren't so sad. Meanwhile, infrastructure in Germany and Europe is rotting away, while China is equipping the global South with roads, bridges, and airports, having apparently run out of things to do at home. Not to mention artificial intelligence, a successful semiconductor industry, or the targeted and fully supported development of technologies such as nuclear power. That doesn't mean that this will always result in a breakthrough. But at least it's more likely than the umpteenth restructuring of Karstadt leading to success.

Rather equality for all than prosperity for most

This, too, seems to bother no one outside of occasional Sunday speeches. Especially in the left-wing camp, the motto seems to be: better everyone poor than differently wealthy, and if we cannot help people achieve prosperity thanks to our policies, then better everyone be poor.

On the distribution debate: 1% growth in Germany corresponds to an additional national income of €40 billion. 10% growth p.a., i.e. 1% (mathematically just under 1%) over 10 years, would mean €400 billion more that could be distributed. That is more than if you were to take €1 billion from each German billionaire. And that would be every year, which would quickly mean that most of them would no longer be billionaires. So supporting growth would be more helpful for everyone than politicians trying to cover up their own failures with this discussion. And making things 1% more efficient every year thanks to growing knowledge and capital stock does not seem to me to be an unattainable goal. After many years of lamenting “growth fetishism,” especially in green circles, we can now see what happens when there is no growth for several years in a row.

The statement that all tax loopholes must finally be closed is also driven solely by the vague hope that this will miraculously close the holes in the budget, while also achieving the desired aspects of redistribution. I would be grateful to my fellow citizens who claim this if they could explain the loopholes to me. I cannot discover any. Anyone who considers capital gains tax to be a loophole has not understood the tax system, which also takes 50% of income in this area. In my experience, this ignorance even extends to relevant positions at public television stations. Tax evasion is estimated at €100 billion, giving the impression that putting a stop to it would solve all problems. First, I don't believe this figure, and second, even if it were that high, it would be another sign of the blatant failure of government agencies.

The situation in the US appears even more dire

On to the next unpleasant topic: developments in the US

Leaving aside the government's actions, which are in breach of democratic procedures and the separation of powers, what is happening here in terms of economic policy is, in our view, not necessarily, but with a certain degree of probability, a very bad idea economically. In addition to the self-enrichment orgies of the circles around the president, the most striking feature of Trump's policies is US trade policy. To say something positive for once: given the geopolitical situation, it is understandable that the US no longer wants to be dependent on China and countries that are (or could be) close to China for core products and therefore wants to have its raw materials industries, shipyards, rare earth production, pharmaceutical production, etc. under its own control. That would also suit the EU well.

Take rare earths, for example: the world's dependence on China, which has a virtual monopoly on the production of most rare earths, has the potential to lead to disaster. The time required to build up the capacities that no longer exist is estimated at 15 to 20 years in some cases. Even though rare earths can be replaced by other products and processes in various applications, this situation is an unprecedented strategic problem, analogous to the EU's defense capabilities, which were practically non-existent until two years ago. But as we all know, politicians have placed importance on other things, such as colouring roads to make cyclists happy. And the extraction, processing and treatment of rare earths is harmful to the environment, which is something we do not want here. In addition, China supplies cheaper products, which also convinced the industry. Let's see how long that lasts.

Unfortunately, the US is overshooting the target. Extensive car production really is not strategic, and the US has sufficient capacity of its own, to name just one example that seems to be of particular concern to the administration. In the long term, this policy has the potential to emulate the path taken by China 500 years ago, when what was then by far the world's largest economy became an impoverished developing country thanks to centuries of isolationism. Trump wants foreigners to finance the US, which they are supposed to have cheated for some hallucinatory reason (instead of, as is actually the case, enabling the US to consume well beyond its means by financing a massive current account deficit). Skilled foreign workers are to pay $100,000 in visa fees, while skilled workers from companies from friendly nations are suddenly arrested on construction sites. According to Trump's logic, Americans will then have to work hard instead of being able to choose from among the smartest of the eight billion people on Earth, as they have done up to now. If there is no change of course, the result is likely to be that, as always with isolationism, inefficient structures will remain in place and this will permanently reduce prosperity. Let's see how long this mindset persists. And 500 years is certainly a long time.

The EU has also contributed little to growth in recent decades

From a European perspective, it would be better to remain silent here too: we are wasting our resources on rampant bureaucracy and welfare states that punish rather than reward performance, as described above. The dismantling of the welfare state in Germany means that it is believed that the redistribution of €1.3 trillion is sufficient to finance a reasonably decent life, often without any corresponding return. The most popular solution among many politicians is to once again raise taxes significantly in a country with high taxes and levies such as Germany, whose economy has not grown for more than half a decade despite population growth due to misguided tax and economic policies – instead of focusing on growth; see above. However, since the leader of the Green Party in the Bundestag, as recently demonstrated on German television, has no idea about the size of the federal budget or the level of social spending, but knows full well that any cuts would be devastating, it is hardly surprising and we should not delude ourselves into thinking that her like-minded colleagues have much more factual knowledge.

Instead, we hear nonsensical discussions about roofers who can no longer work at the age of 65. There are approximately 60,000 roofers in Germany, most of whom take up other jobs well before their 60th birthday. Even if there are other stressful professions, the myth that Germans can no longer work when they reach retirement age is easily refuted by taking a look at cruises or sightseeing trips to cities. 70% of citizens who take advantage of early retirement, known as “retirement at 63”, have worked in professions that are not particularly stressful. And that means they weren’t roofers.

And because it is important in terms of perception: there is occasionally good news too. For example, the share of European GDP spent on energy purchases has fallen back to the level of 2015-2020, even though the share of gas coming to Europe as liquified natural gas has doubled to almost 40%. Thus, the price increases that everyone is talking about are primarily due to political decisions, such as CO2 taxation, grid fees, and infrastructure costs for renewable energies. In any case, energy prices should no longer be cited as the main reason for a deterioration in the economic environment.

But: a correct assessment of valuations is crucial for good returns

The coming months will show whether the government is prepared to implement significant reforms. Anything is possible, and as equity investors, we tend to be optimistic. Ultimately, it is possible to earn money from equity investments even if the environment is not perfect, provided the valuation is right. Let us now consider what this means for investing, with the aim of striking a more positive note.

The above is not pleasant, but it should be mentioned now that the narrative has spread: the debt brake has been smoothed out, and now everything will be great. That is only part of the truth. The crucial question is whether the good and bad aspects are priced into stock prices. And since both the structural problems and the effects of the debt brake adjustment are quite obvious, it is hardly surprising that this is reflected in the prices to a significant extent, in the form of an increased risk premium or a growth premium, depending on the case. Companies that will benefit directly from growing government activity have achieved impressive performance in some cases. This is in contrast to the broader market. This is evident in the valuation discounts compared to the US, but also in relation to the valuations achieved for comparable assets in the private equity markets. Depending on the calculation, the discounts to these two comparable markets are at record levels. This does not mean that things cannot get worse. However, there is a valuation buffer for this scenario, or a price opportunity if things in the political environment develop better than one might think.

Indices don't tell the whole story: one-third of DAX and MDAX stocks are in the red in 2025

Contrary to what the indices suggest, it's not all sunshine and roses on the markets. Alongside the big winners such as financial services providers, the defense industry, and large technology companies, there are a number of stocks that have suffered significant price losses.

As we have repeatedly emphasized here, the quality of a company alone is not a reason to buy. We are certainly in a position to determine whether a company is above or below average in terms of quality. However, this is only one aspect of evaluating an investment. Ultimately, you are buying the stock, and what you pay and what you get in return is crucial. And quality is only one aspect.

Formerly expensive quality stocks are now affordable again...

Why am I emphasizing this? 2025 turned out to be a year in which even companies with well above-average quality had a tough time. A weak economy, competition from China, tariff discussions, excessive inventories at various stages of the value chain, the effects of rising inflation, and, above all, the impact of interest rate hikes, which are now considered to be sustainable, have all left their mark. As a result, disappointments led to substantial double-digit percentage losses in share prices.

...while defense and banking stocks benefited from the environment...

On the other hand, at least two formerly pariah industries benefited from the changed environment: banks and the defense industry, both of which saw significant increases in profits. As a result, portfolios had to be restructured on a massive scale. When the growth rates and margins of formerly indispensable quality stocks, which had previously recorded steady but not particularly high growth, proved disappointing even within a manageable range due to weak growth, some of them suffered massive price losses.

...and valuations across all sectors have leveled off

Many of these companies, some of which we have avoided for more than a decade due to their valuations, are now trading at reasonable, and in some cases low, valuation levels. However, we have learned (hopefully correctly) that capital flows only change in the longer term. Capital is withdrawn from underperforming strategies and invested in those that have been successful recently. The reasons for the better performance are not examined in detail, which is sometimes a pity, but sometimes perhaps better for the issuer.

In absolute terms, many German stocks remain worth buying

In summary, we see the environment as follows: We do not expect much from the economy, especially as long as global economic policy remains on a path that hinders growth. Not everything is rosy in China either, given the huge misinvestments in infrastructure, real estate, and, in recent years, industrial capacity. We accept interest rates as a given, now that the structure has largely returned to normal. In this respect, the significant distributional effects of recent years have largely been reflected in share prices and priced in, both positively and negatively. In short: banks up, real estate down. With the exception of companies that are expected to achieve significant growth in the coming years, primarily in defense and, to some extent, technology, most stocks are still not too expensive, and in many cases are even undervalued. Based on the assumptions made, this also applies to banks. Equally important, this is increasingly true for quality companies, especially those that have recently disappointed their quality- and safety-focused investors for one reason or another. If these disappointments are temporary, the outlook will be positive again.

Sincerely yours,

Martin Wirth

FPM-Comment Reducing the Noise Martin Wirth: 1/2026 dated January 23rd 2026

Valuation and macroeconomic conditions offer opportunities in 2026, but greater potential depends on political decisions

• Despite difficult conditions, 2025 was a very positive year
• Performance of individual stocks was mixed
• Portfolios broadened due to new opportunities
• Political environment remains difficult – the EU is under massive pressure
• Companies have been responding to the changes for years...
• ...the political landscape is currently in the process of changing course
• The outcome is uncertain: politics must be judged by its actions
• Stock valuations at the index level are no longer low, but this is far from being the case across the board
• Outlook and reasons for optimism

To anticipate the passages that follow: Even at the peak of the German stock market, there are still plenty of investment opportunities, as always, and many of these have only emerged in recent months and quarters. The fact that, unlike last April, the markets have not taken a bigger hit due to the latest and even more vehement US threats could prove that investors are gradually becoming numb to these announcements. This could become relevant in light of the lower valuation of many European stocks compared to the US.

If one is able to avoid being distracted by Trump's antics, a turnaround in the German economy can be observed, which has been taking place since last fall's low point: coming from a low level and now clearly driven by expectations of announced government investment, but perhaps also by the hope that bureaucratic costs in Germany and Europe may have peaked.

Despite the difficult conditions, 2025 was a very positive year

The year 2025 brought more than just satisfactory results on the international stock markets, and the German stock market was no exception. Given the political and geopolitical upheavals, this is surprising at first glance. In Germany and ultimately also in Europe, there was more than one topic that sparked waves of enthusiasm: on the one hand, there was the adjustment of the debt brake. On the other hand, anticipation of the unlimited possibilities of artificial intelligence sent markets into euphoria in the US and the rest of the world. The first topic was more prominent in the first half of the year, the second in the second half. 

FPM Funds outperformed the overall markets and benchmark indices, benefiting from a gradual convergence in the valuations of stocks from different sectors. In particular, stocks that had been undervalued for many years gained significantly as earnings improved. 

Performance of individual stocks was mixed

But if you look deeper, things aren't all sunshine and rainbows: once again, there were huge swings in stock prices, and that's where geopolitical tensions and another weak economic cycle come into play. 

In addition to those involved in defense, the winners also included all those active in the field of power generation and distribution, thanks to the expected explosion in power demand from data centers. The winners also included those who benefited from rising interest rates, led by banks, which have now outperformed the European indices for the fifth year in a row. It is clear to see what wonderful things can happen when low valuations meet operational improvements. In addition, many cyclical stocks also significantly outperformed, particularly in the capital goods sector, which is surprising at first glance given the weak economy but can be explained by the resilience of corporate earnings and the prospects offered by Germany's new debt strategy.

At the other end of the performance list are mainly companies whose reputation as quality stocks has suffered due to the weak economy or - often even worse - company-specific developments, after they achieved stable growth even in times of low interest rates, which was then perceived as a guaranteed return and appeared attractive compared to the non-existent interest income. Often, the damage was twofold: rising interest rates meant that these attractive stocks were no longer worth what investors had been willing to pay for them in recent years, and when disappointments then arose, for whatever reason, some investors had to accept massive price losses. Here, then, we see the opposite of the positive aspects mentioned above: when high valuations are met with operational setbacks, a large portion of the investment can be lost permanently. Because the overall market has been so favorable, and highly capitalized stocks in particular have performed well on average, this development is not visible at the index level. However, almost half of the DAX stocks ended 2025 with a loss, mostly in the solid double-digit percentage range.

And once again, I must quote one of my favorite rules: There are only two types of companies - those that have problems and those that will have problems. One should always consider what might happen to the shares of companies that are considered to be permanently problem-free as soon as this view of things changes.

Portfolios broadened due to new opportunities

After all, consistent with our valuation-oriented investment style, this development has finally given us the opportunity to once again build up the exposure of the funds we manage in the area of more stable business models, now that valuations should once again enable adequate returns and are no longer merely serving to calm the nerves of fund managers (which, as we can see, is only a temporary measure). 

The sectors that suffered particularly from aggressive Chinese competition did not fare too badly compared to companies whose share prices suffered from rising interest rates, although they did not perform as well as the market as a whole. Chemical stocks suffered the most, automotive stocks did not fare too badly, and shares in Thyssenkrupp, still perceived as a steel company, took the crown with a threefold increase in price. This also shows that valuation is not a sufficient but a necessary condition for exceptional performance, which becomes effective under the right conditions, such as the changed perception of Thyssenkrupp as an arms manufacturer.

Political environment remains difficult – the EU is under massive pressure

The general conditions for investment are well known: China is aggressive, Russia's behavior is beyond reasonable discussion, the war in Ukraine is unclear but stable for now, and the US administration is erratic, disruptive, and unfortunately in no way what one would consider a reliable partner. This is compounded by the recent approach of threatening another NATO country in case of necessity, which threatens to make NATO more or less a thing of the past. All of this together makes the EU appear to be a bunch of wimps around the world, constantly talking about rule-based politics, but with fewer and fewer countries willing to listen due to fundamental deficits.

This has led to the EU (partially) awakening from its lethargy and slowly coming to realize that the policies of recent years and decades have largely been a waste of time under the changed conditions. This is now further reinforced by the US president's flashes of inspiration regarding Greenland. Massive economic underperformance compared to the US, not to mention China and other countries, a preoccupation with petty regulation of all kinds of issues, right down to the fastening of caps on plastic bottles, but little to nothing in the areas of artificial intelligence, military capabilities, innovation and innovation promotion, garnished with a constant willingness to weaken the competitiveness of European companies through more regulation and bureaucratization. Perhaps we have overlooked something that can be viewed positively, but nothing comes to mind off the top of my head. And all of this comes at a price, which the EU and Germany are currently paying. The EU is at a crucial crossroads: adapt to the new rules and play along or become obsolete.

Companies have been responding to the changes for years...

Now, politicians are also taking note of what is happening in the world, not just companies: companies have been confronted with reality for years and have already drawn their conclusions from the deteriorating conditions in recent years and taken action. In this respect, it is no wonder that, despite the weak economy in the EU and especially in Germany, corporate results are anything but depressing, as long as companies have taken timely action. The fact that industrial production in Germany is so weak has apparently only now been noticed by the public. However, only a minority has concluded that the economic conditions were the cause of this. Production is now taking place in Eastern Europe, America, and across Asia. This is not a bad thing, and may even be positive for shareholders, but it is more than unpleasant for the state and social security systems. 

In order to keep up with the rest of the world, what is needed now is not attempts at education, additional regulation, and more bureaucracy, but a turning point, and not only on the military level. If this does not happen, it may not be European companies, but it will certainly be the states and their citizens who will be in for a rude awakening.

...the political landscape is currently in the process of changing course

In Germany, the modification of the debt brake (which is far from being abolished) caused widespread euphoria in the first quarter of the year, albeit starting from a level that could hardly be undercut. This euphoria gradually dissipated until it had almost disappeared by the fall of last year. This went hand in hand with the political processes involved in implementing the agreed measures. And unlike in dictatorships and, more recently, in the US, where everything is set in motion at the whim of the potentate, this takes time – too long for many investors, who have given up and moved on.   

But perhaps the outlook is better than it seems: the media only ever discusses what is controversial, not what has been decided fairly quietly. And the federal government has achieved a great deal in this regard, albeit in small steps, but that is exactly how bureaucratic overgrowth came about in the first place.

In our view, reducing bureaucracy is much more important than government spending programs. Even EUR 100 billion per annum only corresponds to 2% of German GDP over the next few years, and it is also likely to crowd out other investments. And it should not be forgotten that some of the core budget will obviously be transferred to the special fund, which would otherwise have had to be financed differently, so that the actual volume will be lower than the official announcement suggests.

On the other hand, less bureaucracy makes things easier, and not just in terms of planning and operating costs. Often, projects can only be tackled once impending obstacles have been removed. After all, every entrepreneur can spend their time on something other than making requests to authorities.

The outcome is uncertain: politics must be judged by its actions

We should approach the upcoming developments with an open mind. The impetus has come from outside, and the humiliation of the EU could hardly be greater. First of all, it is positive that Germany can finance the special programs internally and is not dependent on capital inflows. The other EU countries are also net capital exporters, in contrast to the US. If the framework conditions in Europe improve, there will be more than enough capital for financing. 

Detour: The question arises as to what still motivates investors to export capital to a country where central bank independence is being undermined for clear reasons, where respect for the property of other territories no longer exists, not to mention creditor status (see the Mar El Lago Accord, which was probably only not implemented because it would have led directly to a disaster on the bond market), and where the government defends civil servants who shoot citizens in the head multiple times. End of detour.

The bureaucratic burden has the potential to shrink, but that remains to be seen. After all, simply halting further increases in banking regulation has contributed to the outstanding performance of these institutions. Once processes are established, they are handled more efficiently, regardless of how sensible they are, and if nothing new is added, then the bureaucratic costs decrease in absolute terms. Such a halt requires political will, especially against lobbyists from the left-wing political camp, who believe that the state or the “rich” should always pay for everything and that even the smallest relief is always an attack on the welfare state or the environment. 

External pressure should sharpen the focus on the essentials, and what parts of the administration have been driving in recent years and decades, and what was thought to be easily co-financed, should now be examined more closely for its relevance. Even the biggest advocates of the EU and its work will have to admit that the threat to freedom posed by Russia and other autocratic states, as well as the loss of prestige in the world, which has led to a threat to humanistic values, are a greater danger than the absence of comprehensive working time recording, even in small businesses.

And one thing is gradually becoming a unique selling point: the rule of law in European institutions, which is not reflected in the valuation at all when compared to the US.

Stock valuations at the index level are no longer low, but this is far from being the case across the board 

Looking at the stock market, valuations at the overall market level are above average despite the considerable political uncertainty, weak economic development, and the return of interest rates to normal levels. In this respect, the return prospects have been better in the past. However, as already mentioned, there are some attractive valuations below the index level. In our view, these now include more stable companies, some growth companies, companies in the consumer goods industry and retail sector, and still telecommunications, financial and many service companies. Here, valuations are still or sometimes back at a level that promises solid returns, even without the economy picking up or European countries switching to a mode of reducing bureaucracy. In addition, there are some former darlings whose share prices now appear to have fallen completely out of favor. One cannot help but get the impression that investors believe they can punish companies for failing to meet forecasts with their indiscriminate selling. This often leads to very attractive valuations. However, with confidence severely impaired, a trend reversal on the stock market takes time. Therefore, a limited positioning in these investments is the means of choice for us for the time being.

Outlook and reasons for optimism

We therefore remain confident about 2026. The foundations for what may be possible beyond that are likely to be laid in European politics in the coming months. 

What does an investment in the German stock market offer? First and foremost, a framework of legal certainty, which experience has shown to be the most important prerequisite for investment success in the long term. What we are seeing in a growing number of countries outside the EU regularly leads to the same result, and even if one does not agree with everything in the EU, the rule of law continues to apply here. Everyone can judge for themselves where this does not apply in the world. Many investors have paid dearly in the past for having the courage to invest under such conditions: they simply weren't quick enough to get out when the music stopped.

There is also no need to be overinvested in companies whose success depends on exports to the US. This is difficult to avoid in a broadly diversified portfolio, but at the very least, the resulting risks should be taken into account in the valuation. From today's perspective, companies that operate in the US without being dependent on major imports will not suffer excessively under the current policy, apart from temporary isolated cases. However, this presence should probably be viewed more critically than in the past, when more was still considered better. 

In addition, there are a number of companies that have little to do with the US or competition from China: service companies that are market and quality leaders, trading at single-digit P/E ratios based on cyclically low earnings; growing healthcare companies trading at around ten times earnings; financial services providers that are also valued in this range, combined with solid growth; and real estate companies that can now expect double-digit returns thanks to higher interest rates. There are enough companies of sufficient quality to generate solid returns even under difficult conditions.

And if people are concerned about disruption in the financial system, which is clearly the case for many crypto and precious metal enthusiasts, then stocks offer significantly better asset protection than bonds or cash, combined with a substantially better current earnings yield.

Sincerely yours,

Martin Wirth