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Januar 1, 2024
The time lapse is filling up with key events of the past 11 months, and the frightening phenomenon „100 years apart, but the crises are similar“ is a fact.
The year 1923 went down in history as a traumatic year of crisis. The French and Belgians occupied the Ruhr region, money became worthless, and in November Hitler staged a coup in Munich. Hate speech towards political opponents, social hardship, and irrational attempts at explanation: Anyone who takes a closer look at the Weimar Republic will come across similarities with present days.
On 4 April, exactly 74 years after NATO was founded, Finland became the 31st member state to join the defence alliance following the Russian invasion of Ukraine. This more than doubles NATO’s external border with Russia.
The British King Charles III and his wife Camilla are crowned in Westminster Abbey on 6 May. The coronation was the 40th since the accession of William the Conqueror in 1066 and probably also the most expensive. According to Statista, the coronation ceremony cost between 50 and 100 million pounds.
According to the EU and the World Weather Organisation, 2023 will be the hottest summer since 1940, and the era of nuclear energy in Germany will end with the shutdown of the last reactors. 25 years after the green light was given for the liberalisation of the German electricity market, the state has largely taken control again. The government is skimming off profits that appear too high and subsidising losses. The promotion of solar and wind energy is intended to secure the electricity supply. However, gas-fired power plants are also needed when wind and solar are not supplying sufficient electricity. But no company seems willing to invest. The question of where all the electricity will actually come from, for example to power vehicles, seems to have been completely ignored. If security of supply is not achieved, Germany will also miss its climate policy targets. The climate protection plan envisages that Germany will be largely CO2-neutral by 2050.
The list of corporate failures and scandals also had to be extended in 2023. In Switzerland, Credit Suisse was merged with UBS to prevent a collapse. In our neighbouring country, the collapse of a privately built real estate empire is looming. The financial situation of Tyrolean investor René Benko’s Signa Group has come to a head. For us, the question arises as to how suspected fraudsters repeatedly succeed in using their ingenuity and sophistication to deceive banks and wealthy investors and inflict losses on credit institutes from open, uncovered loans.
The harvest is celebrated in autumn and investors in the financial sector can be satisfied with the equity market year 2023 so far. The results were better than expected, despite ongoing uncertainties such as geopolitical events, a slowdown in economic momentum in China and question marks over global interest rates and inflation trends.
If we compare the average 10-year returns of, for example, US equities 11.9%, European equities 5.3%, high-yield bonds 3% or commodities 0% in more detail, as can be seen in the exciting presentation on https://www.visualcapitalist.com/fastest-rising-asset-classes-in-2023/, we will very probably be able to end this year with above-average results.
We believe that participation in financial markets is more important, or to put it another way: „time in the market matters more than timing the market“. We pursue a disciplined and structured approach. Diversification is probably the only „free lunch“ offered in financial markets. A balanced investment approach is therefore of the utmost importance. In addition to equity and bond allocations, alternative sources of income are also an interesting addition, particularly in the current environment.
We regularly update all data on our portfolio valuation platform so that different strategies can be modelled and compared: https://jacotpartners.shinyapps.io/jp_portfolio_assessment/. Please do not hesitate to contact us for further information.
Every period in the financial markets has its winners: the 1980s certainly belonged to Japan with an exceptional performance of the economy and the stock market, followed by Europe in the 1990s, the rise of China and the emerging markets. The last era now clearly belongs to America. US companies have successfully positioned themselves in the technology sector, particularly in the field of artificial intelligence, and are being euphorically celebrated by investors. We are talking about the “Magnificent Seven”: Nvidia, Tesla, Meta, Apple, Amazon, Microsoft and Google. These seven companies now account for almost 30% of all investor money in the US market and are therefore among the world’s „most valuable“ companies. Not least thanks to new technological possibilities and the potential for the economy, the pessimism of the previous year gave way to a more optimistic mood. This has once again shown how difficult it is to predict developments in financial markets.
We would like to thank you for your trust in another challenging year and look forward to discussing market developments and the global situation with you in person in the coming weeks and months. Until then, we wish you a harmonious Advent season and a good start to 2024.
Your JACOT Partners Financial Services Ltd
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