Since inception in 2022 my portfolio (primarily focused on US equities, without strong personal sector preferences) has been outperforming the US benchmark.

One key to successful investing is to buy quality when it is met by weakness (poor sentiment).

I bought AT&T and Verizon when everyone was afraid of the lead story in 2023, I bought Micron when no one wanted it for $100, likewise AMD around $100 when it was declared an AI loser to Nvidia, and right now it’s the beaten down software stocks (victims of the « SaaSpocalypse » such as Microsoft, ServiceNow and Atlassian) that are pushing my performance higher.

It’s a really tough market with a lot of manipulation, at a level I have never seen before in terms of volume and how blatant it is. Still, if you manage to zoom out, mute the short-term and hold on to your long-term convictions, you will do just fine.

Volatility will continue but I remain (cautiously) bullish for the rest of 2026 without any major plans for rebalancing.

I am still riding the software turnaround horse until they overheat (can be a few more months or quarters), then I will slowly reallocate as I spot new opportunities.

Thank you for reading me and subscribing to support my journey. 💚

Etcaetera

The House passed the crypto bill called CLARITY ACT in July 2025, and it’s been on the Senate’s court since.

But yesterday things changed: the Senate Banking Committee advanced the bill (a 15-9 vote, with some bipartisan support!).

That was predictable because some of the Committee members started accumulating $BTC in the past weeks and continue to do so!

The CLARITY ACT isn’t yet passed into Law, but it’s a major milestone to clear the full Senate (requiring 60 votes), then potentially a final reconciliation with the House, and in the end Trump’s signature.

I am very bullish on the crypto sphere for 2026 as I expect major regulatory tailwinds and investments to follow.

Thank you for following my Substack, feel free to subscribe to support my work. 💚

Etcaetera

PS: consider buying Bitcoin before it hits a new all-time high, because that’s when most people will and you’ll lose a big chunk of the returns. You can do so on eToro or by copying my portfolio there as well (my username: @Etcaetera).

Source: GuruFocus

Booking , the stock now trading at $164 at the time of writing, has recently fallen off a little cliff due to fears that people would use AI (or AI-powered softwares), replacing the platform. I recently booked a few hotel nights and I saw that the company already implemented AI travel agents (in beta testing). The business is already ahead of everyone, so that AI fear makes little sense to me.

Source: Seeking Alpha

So when should you buy the stock?

In all honesty, and that’s not because of my shareholder bias (by the way, my average entry price is $166.64), I do believe this is an amazing opportunity now at at a Price-to-Earnings (PE) ratio of 19x (2025 earnings) and 16.5x 2026 earnings. Relative to Earnings Per Share (EPS) growth of 15 to 17% annually, you are paying a Price-to-Earnings-Growth (PEG) of around 1x.

View my portfolio

So what happened for it to drop in the pre-market today?

For a growth stock, especially in the tech sector, paying a PEG of 1x is rare and amazing, especially for a greatly profitable business with a 20% net income margin. And its earnings report from last night only confirmed attractive growth rates, but the stock still dropped due to management trying to temper down high expectations. From a numbers perspective, it’s still a very healthy and high growth business. According to GuruFocus (the first chart in the article, above) the fair price is $219. That’s a 35% immediate upside potential. Add to that a potential 20% EPS growth next year. With improving sentiment, we could quickly witness a rally to $250+.

Under $200, that’s a BUY THE DIP opportunity and I am planning to buy with the money I will deposit on eToro in a few days.

Etcaetera

First of all I want to apologize to all the followers and regular readers for my abrupt pause in July 2024. My son was born July 15, 2024, and I have had very limited time until recently really.

Now he is old enough, goes to day care every day and I have once again much more time to reflect on the markets, but also to share these reflections with you.

In the past I was focused more on political and geopolitical news, with my analyses that I would share with you. But for this rebirth of Etcaetera I will focus much more on LIVE investment and trading decisions.

Meaning you will receive in real-time, in your inbox, my decisions to buy, sell and hold the assets that are in my portfolio. This will bring MORE VALUE TO YOU.

CHECK MY PORTFOLIO

These are the returns I have achieved so far with my portfolio which I recommend you to check here. You can also invest in it directly in eToro if you wish. 😉

And as a welcome back gift, here is one trade I opened just before yesterday’s market close. that I will share with you. With eToro you can trade this instrument 24/5 starting from next week by the way.

Trade: short United States Oil Fund (USO) with leverage x5 (no fees on eToro!)

Entry price: $134.5

Target price: minimum $120, I will set a trailing stop loss to go as soon as possible under the entry price and accompany the instrument ideally until sub $100 level.

Rationale: I expect oil price to drop as the world can’t sustain oil prices above $100 for a prolonged period of time. We have seen it in the last few weeks: every time the price heats too much, the US government calms the market with de-escalation measures. I expect oil price to drop once again in the next week or two, after it spiked this week due to stalemate in US-Iran talks.

Good luck and write you in a few days!

Etcaetera 💚

Disclaimer: these are my thoughts and my own trades, not a financial advice.

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Disclaimer: Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk. Past Performance is not an indication of future results

𝙍𝙚𝙘𝙚𝙣𝙩 𝙈𝙤𝙫𝙚𝙢𝙚𝙣𝙩𝙨

This month, we have fully exited cryptocurrencies that have contributed approximately 4% of the 21.94% this year (their collective portfolio weighting was in the 15-25% range).

I do not plan to open/reopen any cryptocurrency position except maybe for Bitcoin if it dips below $100k in September. I am also open to crypto stocks but I haven’t identified any great opportunities worth the risk given the time point in the cycle.

𝙈𝙖𝙘𝙧𝙤 𝙋𝙞𝙘𝙩𝙪𝙧𝙚

In my opinion, we will have a choppy couple of weeks that will allow for corporate earnings to catch up on the market valuation. I am however extremely bullish for the Christmas rally which I anticipate to be intense amidst monetary easing in the US.

𝙂𝙖𝙢𝙚𝙥𝙡𝙖𝙣

It doesn’t involve any trading and it’s absolutely fine if it doesn’t play out that way as we are 80% invested, and it’s all quality stocks for the long term.

It’s for us now only about deploying in a cautious, timely and opportunistic manner the 20% cash balance when attractive risk-reward situations present themselves. It’s most likely that the majority of the cash balance will be invested in assets already in the portfolio.

That’s the gameplan. We are in an excellent position for the rest of the year.

Thank you for your attention. 💚🙏

Etcaetera

Visit My Portfolio

Thank you for your patience as I was away during parental leave in December. I am resuming now my content on Substack. Thank you for having stayed with me! 💚

What a year 2024 has been!

… On The Markets

The S&P 500 went up by 24% boosted by the AI craze. The Etcaetera fund achieved 28.5%, outperforming by 4.5% without being over-concentrated into tech and with a fairly low volatility. Here is the path to my portfolio:

My investments outperformed the S&P 500 this year and my fund has been outperforming the broader markets since its inception in October 2022. This is something I am of course happy about and hope to resume in 2025.

2025 will be tricky. The S&P 500 had back-to-back years of over 20% growth in 2023 and 2024. A chunk of it is a recovery from the terrible 2022 bear market. Still it is reminiscent of the 1997-1998 craze before the dotcom bubble pop of 1999. I am not saying we are in a bubble. We aren’t yet but we’re close. By all means, the S&P 500 is expensive. It is almost impossible to find a tech stock trading at a reasonable price to earnings.

Markets started focusing more on forward earnings than on trailing earnings (because the multiple would be way too high to even pronounce). The reason I don’t see the index going much higher is that a lot is priced in: the AI productivity boom, monetary easing, peace in Ukraine, etc. There is very little room for new positive macro surprises. But there is room for downside: if one of those factors don’t play out as expected, the markets could easily drop. And that’s not bad. We haven’t had a 10%+ correction for too long. It will be a healthy reset and good ground for continued growth. The first days of January already indicate that 2025 will be the year of the market broadening, with investors seeking cheaper stocks over the tech mega cap that are trading now at unsustainable (crazy?) multiples.

All those factors are part of my reasoning that made me decide to change my portfolio and make it very different from the last two years. It’s now very concentrated in a handful of high conviction plays that are trading at attractive multiples. They have significant macro tailwinds as well.

We know the markets now. But how to ride them?… Let me share with you something more personal as an investor.

… On The Spirit of Investing

If I can give one piece of advice to new investors: know yourself. Be aware of your personal strengths and weaknesses. Do your own SWOT analysis.

In my case my strengths are that I lived in different countries and was bathed in different cultures and ways of seeing life. My formative years in the US, Europe, Africa and Russia help me understand what people are thriving for and what makes businesses grow.

Additionally, my political science and economics background is critical to my understanding of macro factors that move the world.

Quite logically I define myself as a macro investor with a top down approach: I try to visualise the big picture (my strength), and then zoom in to pick some winners (you don’t need to identify all winners. A handful of winners suffice to drive the whole portfolio performance).

I have weaknesses too. I can get impatient, sometimes even frustrated things are not moving fast enough or in the way I’d like. There’s a spiritual work site there of course… But strictly from an investment perspective my way to put this weakness on a leash is to have a system with goals, targets and timeframes written in stone (or on paper, also works). Essentially a set of self-imposed rules that are visual and can (must) be consulted anytime prior to an investment or a divestment decision.

This worked out since the inception of Etcaetera and worked again in 2024. Hope this helps and clarifies certain aspects of my investing approach.

The Winning Themes of 2025

1. Chips for AI

2. Crypto

3. US industrial complex

I significantly concentrated my portfolio to reflect my convictions with 40-50% of my portfolio invested in 3-4 assets.

ASML for the Chips, ETH for crypto and Boeing for the industrials (Boeing being a major defense contractor of the US government).

Several driving forces are at play here: lower interest rates, crypto cycle and regulatory support, tariffs, geopolitics and secular societal changes. These factors will boost the AI theme, provoke the crypto cycle peak and bring back the “made in USA”.

The assets I picked are all trading under fair value and have a conservatively plotted minimum upside of 20%. They are financially strong and growing/turning around, with solid business moats.

My Targets

🎯 S&P 500: 6,500

🎯 Bitcoin: $120,000 (after reaching $150,000 at the peak)

🎯 ETH: $5,000 (peak of $7,500)

🎯 Nvidia: $170 (peak of 200)

🎯 U.S. Crude Oil: $65

I am not changing my targets, unlike those Wall Street analysts! 😉

2025, here we come! Wish you all best of luck in investing and in life! 🍀

Etcaetera

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A pro-crypto US President-elect who controls both Houses and appointed a pro-crypto SEC chair (Paul Atkins). A Vice-President-elect who has a big chunk of his portfolio invested in Bitcoin. Elon Musk with his DOGE department. The list of good news goes on and on, and all of this pushed BTC above $100K for the first time ever.

All these good news are in principle already priced in and Bitcoin may not have much more to run - at least based on historical data. Sure, some argue that this bull run is nothing like the previous ones. But that was also said about the recent bear market marked by the collapse of FTX and SBF, currently rotting in jail.

I used historical data since 2013 to find a pattern that could help you this cycle. It’s the one I am following for my crypto holdings.

Bitcoin Likely Flat from Here

The best performance for $BTC in this cycle is likely already behind, as bullish as all the current news (already priced in) may sound.

Based on historical data since 2013, the best quarter for BTC is Q4 by far with a median return of +55% and an average return of 85%.

From a monthly perspective, the best month on a median basis is October with +21% and on average it’s November with +41%. Interestingly, in 2024 we had returns in line with historical ones (+11% and 38% in October and November 2024), possibly slightly delayed to account for the US elections. The bad news is that December is usually flat and January is negative for Bitcoin, when it starts losing steam.

Ether to Lead the Alts in January

For ETH (which usually leads the altseason), the most interesting is yet to come. The best quarter by far is Q1 with an average performance of +92% and a median of +29%. The best month by far on a median basis is January (+32%). From an average perspective January would have been the first as well, if it was for the May 2017 outlier.

February through May are good months for ETH (not as good as January though), and then things start turning sour in June to end of year.

Most other altcoins will follow the same pattern as ETH . A few rallied early like XRP because of the SEC leadership change or DOGE because of Musk and his “DOGE” (Department of Government Efficiency) government department.

Bottom Line

The historical data is saying: sell your Bitcoin for new year, invest the proceeds in ETH and other alts. Take profits by tranche between early February to end of May.

Disclaimer: note that this is not an investment advice. Always do your own research.

Hope this helps! That’s my roadmap in crypto for this cycle.

Thank you to the investors copying my portfolio on eToro, really appreciate it. 💚

Etcaetera

P.S. please note I am currently traveling and will return mid- December. There is a bit less content but will get back soon. Thank you for your support of my independent work. 🫶

My wife is Russian and so is my son, who celebrated his 4-month birthday two days ago (every milestone counts at this young age). She prefers the Western way of life. My mother-in-law still lives in Russia, closed to the Ukrainian border, spent most of her childhood in Soviet Ukraine and spent most of her holidays as a kid on the Ukrainian coast (Mariupol, etc.). Her family is from the area. Needless to say that the war between Ukrainians and Russians is not only a heartache, but long was complete unconceivable for that side of the family.

It all started when the Soviet Union collapsed. When it collapsed, well, people were not given a choice of where they would like to stay. So at the time of collapse, millions of Russians were in Ukraine, in Germany or in the Baltics, many Ukrainians in Russia or Poland, Kazakhs in Uzbekistan, even Koreans are numerous among Russians - you got the idea. The collapse caused immediate active borders, while entire populations were still displaced by Stalin and Soviet rulers after that who needed more people on one specific territory or infrastructure project.

The rest is history.

Imagine a World Peace Scenario

Let’s imagine Trump 2.0 will be a copy of Trump 1.0. Of course it’s not guaranteed, but we did get clear indications of isolationism from Trump, his VP pick JD Vance, RFK Jr., and several other high ranking people in Trump’s future administration.

It is likely that he will broker a deal between Ukraine and Russia (whether it will be a fair one or not is another topic…), but also between Israel and Iran, both Koreas… Actually those very same conflicts were also appeased during his first mandate, although now they have reached new levels of tensions (except perhaps for the Korean one).

Let’s imagine just for the sake of it that world leaders shake hands and everyone goes home. It’s hypothetical but not that big of a stretch.

The market analysts, commentators and pundits have all been telling us in the past years: prepare for continued geopolitical tensions, prepare for possible regional wars, invest in this, that and there.

Let’s suppose they are all wrong. Just like they often are. And that you over-hedged your portfolio, potentially sacrificing your potential future returns because you were too afraid of (geopolitical) risk.

Now where to invest?

To know which assets will outperform, think this way: which assets enjoy a globalized world where big nations talk to each other and trade (whether somewhat limited by tariffs or not)? Which ones on the opposite benefit from wars and spike on news of regional tensions?

Here is my shopping + get rid of list.

1) First and foremost: forget commodities. They will significantly underperform. I include in there gold, silver, oil and natural gas. Don’t get me wrong: they will always find buyers across the globe. But their supplies will get boosted (oil, gas) with Trump’s “drill baby drill”. Do you see the big red candles in the chart below?

Or demand growth will diminish (gold, silver).

Commodities perform better when uncertainties are high and/or supply chains are disrupted. Very specific commodities, like copper or lithium (needed in EVs), might perform better.

2) Contrarian idea: don’t sell your defense stocks. It’s not because there is peace that countries like USA or China will spend less on defense. In fact, it is possible that they invest even more in defense to safeguard peace. Europe will also be forced to significantly strengthen its defense as Trump is unwilling to do so (for free).

3) Technology, innovation, crypto. In times of peace, there is one thing that thrives above all else: innovation. Where can you find innovation? The logical answer is tech. National resources and markets focus will go into everything that is disruptive technologies and innovative advances. As nations talk again, they will also transact again. Payment solutions will boom. So will e-commerce. We have seen the Nasdaq rallying right after Trump’s election, even though it gave up some of its gains last week due to disappoint inflation data (Fed might have to stay high for longer) but I can see the tech-heavy Nasdaq continue rising over Trump’s mandate. The QQQ ETF is a good choice to track the tech index.

During the covid pandemic that hit Trump’s first presidency, when everyone was home and the army’s guns locked in their safes, the assets that performed the best were technology stocks and cryptocurrencies.

How can I end this without talking about Bitcoin?

Bitcoin has been rallying like insane and is just shy of knocking on the tremendous psychological ceiling of $100k. With Musk in the administration and a bunch of past and probably future announcements in favor of crypto, there is room to smash the $100k before Trump is sworn in, in January 2025.

Let’s keep an eye on that. I plan to write about Bitcoin and alt coins in my next post. So stay tuned!

I hope you enjoyed this reading and that it helped you to not over hedge your portfolio, that could cause you to sacrifice your returns. My eToro portfolio (you can check it by going on the pinned post on my Substack homepage) is much tech heavier than a few months ago. Have a look! 🤓

And thank you for subscribing and supporting my work. 💚 I publish content at least on a weekly basis. 🙏

Etcaetera

P.S. no investment advice, opinions may be stated as facts, do your own research.

Big news since my last post…

Donald J. Trump, the 45th President, is going to also be the 47th President - something that hasn’t happened since the 1800s, marking an exceptional political comeback.

I always promised to keep a neutral stance especially because I am not a US citizen nor a US resident, and whoever the American people choose I believe we should not judge: over 70 million people took the effort to go out and vote for Trump. That’s 10+ million more than in 2016. If so many people mobilized to vote for someone who already was President and has a track record, it’s because he is (perceived as) good for the US.

And the battle wasn’t even close.

Absolute landslide for Trump!

He won every single swing state. He even came close in deep Democrat states like New Jersey, New Hampshire, Minnesota or former swing state Virginia. It’s not me who will tell those people you are wrong or right.

(HUMOR ALERT)

He won the popular vote AND the electoral vote. Which means for the first time ever he will accept the outcome of the election!

(HUMOR ALERT OVER)

I believe I have been quite clear: as an investor, first accept the changes and the outcomes before starting to think what to do. Let the emotion settle first. Take a minute to do so.

Look at the picture. Now take an extra minute again.

Good. Let’s see what to invest in that will go to the moon under a Trump presidency!

Here is the list:

(Please subscribe first to see the best picks or log in if you already subscribed - this is to support my hard work and time spent on quality content that can make you earn big bucks. 💚)

Subscribe now

𝐍𝐨𝐰 𝐭𝐡𝐚𝐭 𝐓𝐫𝐮𝐦𝐩 𝐢𝐬 𝐭𝐡𝐞 𝐏𝐫𝐞𝐬𝐢𝐝𝐞𝐧𝐭-𝐞𝐥𝐞𝐜𝐭, 𝐰𝐡𝐞𝐫𝐞 𝐚𝐫𝐞 𝐭𝐡𝐞 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐨𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐭𝐢𝐞𝐬?

🟢 The obvious one: crypto. Trump promised to make the US “the capital of crypto”. That’s bitcoin but that’s also Ethereum, altcoins and in my opinion the top beneficiary will be the crypto companies that create jobs in the USA! Think Coinbase, think crypto miners like Riot Platforms or MARA.

🟢 Another obivous one is Tesla: Elon Musk’s endorsement was certainly not in vain. The new Trump administration will protect Tesla from Chinese competition and, who knows, maybe US officials will be using Teslas. That’s just one example of possible private-public partnership with Tesla.

🟢 GEO Group : demand for private prisons and immigration centers will boost the stock of this company in a similar logic to Tesla in terms of private-public partnerships.

🟢 Trump Media & Technology Group (DJT) : there will be a lot of short-term speculative trading with potential new highs but to my taste this is too much of a “meme stock” for serious long-term investors.

🟢 Industrials and materials, e.g. American steelmakers, that will be protected from Chinese competition. Think Nucor (NUE) or Cleveland-Cliffs (CLF) . Oddly enough solar stocks dropped today but they will benefit from tariffs protection as well. I have First Solar (FSLR) with that logic.

🟢 Defense stocks: US budget for defense will be increased but European ones even more so! Keep an eye on European defense stocks. I like Airbus (AIR) because they are in the commercial airlines business (to benefit from cheaper oil with Trump’s “drill baby drill”) and is also a European defense contractor.

That’s my shopping list. But I will let the market settle in the next weeks and see if I find good buying points. I want to rebalance in a peaceful and well-thought manner.

𝐃𝐢𝐝 𝐈 𝐦𝐢𝐬𝐬 𝐚𝐧𝐲𝐭𝐡𝐢𝐧𝐠 𝐭𝐡𝐚𝐭 𝐰𝐢𝐥𝐥 𝐫𝐢𝐬𝐞? 𝐋𝐞𝐭 𝐦𝐞 𝐤𝐧𝐨𝐰 𝐢𝐧 𝐭𝐡𝐞 𝐜𝐨𝐦𝐦𝐞𝐧𝐭𝐬! 🙏

And thank you so much for being subscribed to my content.

Etcaetera

My Earnings Traffic Light with Buy Rating. BUY, HOLD or SELL + Justification.

🟢 Advanced Micro Devices (AMD): solid earnings and high growth rates, but Nvidia continues shadowing it and Wall Street wants to see AMD smashing everything. BUY: fantastic company under a competent CEO and with macro tailwinds.

🟢 Alphabet (GOOG, GOOGL): excellent earnings report with tremendous cloud growth (+35% YoY) and a rosy outlook for the cloud business. BUY: despite regulatory risk, the growth and the attractive valuation make it a great buying opportunity.

🟢 Amazon (AMZN): impressive Q3 results and strong guidance for the holiday season. 9% increase in North American revenue to $95.5B, 12% rise in international revenue to $35.9B, and a 19% jump in AWS revenue to $27.5B. BUY: one of the “wows!” of the week. Nothing else to add.

🟢 Carvana (CVNA): the online car retailer smashed earnings and expectations. BUY: the company looks on an unstoppable growth path.

🟢 Reddit (RDDT): the stock made Wall Street speechless. Impressive beats and positive earnings after its recent IPO. BUY: Reddit’s user base is extremely engaged and supports advertising revenues of the platform.

🟢 SoFi Technologies (SOFI): beats expectations and improved outlook. BUY: a growth stock that reconfirmed its growth path.

🟢 Waste Management (WM): beats expectations and management upped the outlook. BUY: resilient business with growing demand.

—

🟠 Apple (AAPL): the “meh” of the week? Apple slightly beat estimates but without any “wow” nor any disappointment. HOLD: I want to see a tangible multi-year growth catalyst (or a cheaper valuation) before upgrading the stock.

🟠 First Solar (FSLR): missed earnings, headwinds in India and a lower outlook caused the stock to sell off. HOLD: despite all this, the high growth rate is preserved for this solar stock with real macro tailwinds in the long run.

🟠 Ford (F) beat estimates and generated a lot of cash, but its EV business keep dragging it down. HOLD: cheap but EV needs to improve.

🟠 Humana (HUM): the health insurer improved its outlook and beat estimates. HOLD: despite a positive earnings release, the company is still facing a number of headwinds and the turnaround will likely take longer than expected.

🟠 Intel (INTC): improvement across the board possibly hinting to a turnaround. HOLD: despite (finally) good news pointing to a turnaround, I would remain cautious at this point. There was almost no room to do worse than last time, which doesn’t mean the company is at a good place now.

🟠 Microsoft (MSFT): a good quarter but the expected slowdown in Azure’s (is Alphabet’s cloud a potential Azure-killer?) caused a slide for the stock. HOLD: great company but no immediate catalysts to justify a buy.

🟠 PayPal Holdings (PYPL): grows 5.4% YoY but below estimates. More users registered and Venmo now easily syncs with Apple and Google. HOLD: PayPal needs to prove it can return to double digit growth rates.

—

🔴 Eli Lilly (LLY): the flop of this earnings week. Despite an OK quarter, the business is showing weakness in its weight-loss segment and lowered the outlook. SELL: priced at 67 PE, the valuation might soon become hard to justify if the growth slows down as management announced.

🔴 Starbucks (SBUX): disappointing first earnings for the CEO and a global decline of the business. SELL: not anymore what it used to be. Costs of raw materials and tough competition (low barriers business) don’t persuade me to even consider the stock.

🔴 Uber (UBER): despite increased efficiency and growth, the slowdown in bookings growth, the M&A inactivity and the lower guidance disappointed Wall Street. SELL: it’s a great stock but in my opinion the valuation has to come back on track (around $55-60 per share from the current $70+).

—

Which earnings impressed you the most and which one disappointed you?

Let me know in the comments! 💚🙏

Etcaetera

Did I miss the peace announcement between Putin and Zelenskyy?

I owned a couple of Russian stocks in my private portfolio prior to the invasion of Ukraine, namely Evraz, Sberbank and Yandex. They were cheap stocks of great businesses. But then Putin decided the unthinkable and I made the mistake as an investor and amateur of geopolitics to not take the U.S.’ warnings seriously that a full-scale invasion was underway.

To be fair, it was hard to imagine the invasion was actually going to happen. I lived in Russia for two years and my wife’s family is Russian, not too far from the Ukrainian border and they were used to go Ukraine often. We also have access to Russian media. And despite all of these factors, we just couldn’t and still can’t wrap our heads around any possible benefit for anybody in this conflict.

But that’s a story for another time.

So what happened with Yandex?

The founder and CEO of Nebius Group, Arkady Volozh, Russian oligarch, has been vocal in opposing the invasion of Ukraine since the beginning. Following his convictions, he proceed to divest all the Russian assets (which was the core of the Yandex business), delist from the Moscow stock exchange and stay listed on the Nasdaq despite the trading halt.

It sold its Yandex business (often labelled “Russia’s Google”) at a valuation of $5.4 bn to a consortium of Russian buyers. Not much is left of the previous business as Russian revenue was the majority. Arkady Volozh which is great news from my perspective.

Now, Nebius is a promising AI-focused business in AI cloud computing and data center.

Key Points and Outlook

🟢 Nasdaq listed (access to capital), 850 tech specialists, CEO is a founder with a successful track record and the company has no Russian assets;

🟢 GPU-as-a-service and AI Cloud has a TAM1 of $260 bn by 2030 (+35% CAGR) according to Nebius;

🟢 The company now sits on $2.3 bn of cash and has virtually no debt;

🟢 Revenue grew 1.7x in 3Q24 with core Nebius business growing almost three-fold:

🟢 Plan to spend between $600m and $1.5bn on capex, primarily on the core Nebius business (GPUs) to increase capacity;

🟢 Revenue to grow by 3-4x to $500-700m based on assumed capacity expansion, primarily driven by Nebius core business which should achieve ARR of $500m to $1bn by the end of 2025;

🟢 Expectation of positive on adj. EBITDA during 2025;

🟢 The stock is trading at an attractive valuation: the company’s market cap stands at $3.89 bn and trades at $19.57 per share. With $2.3 bn in cash, the potential of the company is trading very cheap and the stock has potential for at least x10 within 5 years.

Bottom Line

With the TAM, recent business growth, the shareholder-friendly management and the business plan in mind, the stock is a (speculative) no-brainer to own as a small portion of a diversified or technology-oriented portfolio to benefit from potential AI growth in Europe and North America.

In my opinion, the stock is an opportunity to invest in a fast-growing tech company in the AI segment and you might well regret not having considered this investment opportunity.

What do you think? Let me know in the comments and I truly hope you found this useful! 💚🙏

Etcaetera

For example, I had gone all-in in infrastructure stocks in 2022 after Congress passed the Infrastructure Investment and Jobs Act in November 2021, significantly increasing the budget dedicated by the government to infrastructure projects. I had outperformed most investors with 14.9% return achieved in 2022, while the S&P was down by 18.1% in 2022 (33% outperformance).

Another once improbable big thing is now happening: Elon Musk, known for his sustainability stances in the automative sector with Tesla’s EVs, his (manufacturing) ties with China and his modern crypto views (do you remember the dogecoin craze fueled by him back in 2021?) make him an improbable ally of the conservative Republicans.

And yet the world just witnessed the impossible captured in this viral photo.

Elon Musk’s and Donald Trump’s respective crowds are cheering together for a victory on Tuesday, November 5th, against the liberal Democrat Kamal Harris.

But nothing is granted according to the polls, the same polls that handed the White House to Hillary Clinton in 2016 (who won the popular vote).

Harris appears to be winning the popular vote as well. But the popular vote has no importance in the US. What matters is to win 270 electoral votes, and the destiny of the US is in the hands of only a few states’ voters.

Things are looking extremely tight on that front too. So I decided to do a more visual map using 270towin.com. As of now things are looking better for Trump.

From the 5 states that are still tied or below 1% difference, Harris needs to win 4/5 to achieve 270 electoral votes. Trump only needs to take two, and North Carolina is looking good for Republicans and Pennsylvania is starting to hint red in the last hours.

The support of Elon Musk, a respected figure of the automotive sector, with Tesla plants in Michigan and Nevada (Gigafactory Nevada is Tesla’s 3rd largest in the US with 7,000 employees), could well make the difference in the Midwest and in the Southwest where every single vote will count and could make a difference.

These are the implications on the stock market in case of a Trump-Vance administration…

1. Automotive and U.S. manufacturing stocks to rise. This is probably the most predictable move we can see especially with Elon Musk joining the Trump-Vance administration.

2. Cryptos are going to soar. Trump promised it time and time again: he will support bitcoin and the crypto-sphere with supportive, positively worded regulations. Elon Musk is an icon in the crypto world.

3. Defense stocks will likely go up. Although it is likely that Trump will seek solutions to end the Ukraine war (which boosted revenue of the U.S. defense contracts like the ones in my portfolio that have been performing very well - I am thinking of RTX (sold recently), Lockheed Martin and L3Harris), it is foreseeable that the military budget will increase anyway during a Trump president term.

…And these are the implications on the stock market in case of a Harris-Walz victory

1. Renewables (e.g. solar energy stocks) AND fossil fuels will BOTH rise in case of victory by the Democrats. Renewables have been suffering this year, notably due to the U.S. election year but possible also to a decline in oil price, making the latter source of energy more competitive again. Oil prices tend to rise under Democrats and oil stocks, surprisingly and consequently, tend to fare quite well. And so do Renewables as more federal money pours into the sector.

2. Healthcare. Harris’ VP pick, Walz, is known for his determination to extend free healthcare coverage to as many Americans (and also non-Americans) as possible. The Democrats tend to increase healthcare budgets in their administrations. This spending should benefit stocks like UNH and Humana.

3. Infrastructure assets: current U.S. President Joe Biden and his administration have been heavily subsidizing the infrastructure sector over this presidential term. Harris is unlikely to reverse course and repeal the Infrastructure Investment and Jobs Act, signed into law in late 2021 by Joe Biden. That could support assets like Brookfield Infrastructure Partners and Crown Castle.

Brace yourself and keep your quality stocks. Focus on great businesses that will perform well regardless of political leadership. Take advantage of tailwinds once these are confirmed, for example regulations announcements that would be pro-crypto (Trump) or pro-renewables (Harris).

Hopefully you enjoyed the reading! Let me know in the comments who would be better for your portfolio and why!

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Ford Motor Company (ticker: F), the iconic American car manufacturer. We all know the company since our early years in life the car toys we played with. We all heard of its founder, Henry Ford as well. We all know the logo.

But the stock is in trouble. One of the biggest shareholders is descendants of the Ford family is there and always will. But the rest of the market is disliking the headwinds in the automotive sector, especially in the EVs.

After its Q2 earnings on July 23, Ford's stock plummeted by a third, wiping out $19 billion in market value. The company’s recent struggles comes from an $800 million spike in warranty costs due to quality issues and labor inflation, which lowered investor confidence.

Despite this, Ford remains a strong company with several potential tailwinds, including its cash-generating internal combustion engine (ICE) unit, its growing electric vehicle (EV) division, and high dividends. Ford sold 1.14 million vehicles in Q2, boosting revenue by 6%. EV sales surged by 63.9%, while hybrids grew by 49.2%.

Not bad.

The Turnaround Confirmed Soon?

Read more

Investment Objective: TLT tracks the investment results of an index composed of U.S. Treasury bonds with remaining maturities greater than twenty years. It is fully invested in U.S. Treasuries.

Attractive yields pay for the wait: with a low expense ratio of 0.15% and a relatively high yield at 3.85% on 12m trailing yield basis and a 4.40% average yield to maturity, TLT rewards for the wait.

TMF is TLT with 3x leverage, meaning its movements replicate TLT but multiplied by three, potentially multiplying returns on a clear uptrend.

Longer duration bonds are more sensitive to interest rates. When interest rates rise, bond prices fall (and vice-versa), with long-maturity bonds most sensitive to rate changes precisely because they have a greater duration than short-term bonds that are closer to maturity and have fewer coupon payments remaining.

And that’s where our Jay Powell, chairman of the Fed, comes into play.

This is What Will Happen in the Next 12 to 15 Months

Read more

I wanted to announce a couple of changes and updates that aim at improving a number of aspects of Etcaetera:

1. On eToro, I have rebalanced my portfolio and significantly increased its concentration. From 50 assets I went down to 26 assets (+ cash). I aim at holding for at least 12 months and removed all the assets that were short term trades to limit tax events. Click below to see my up to date portfolio focused on quality.

   (Copy Trading does not amount to investment advice. The value of your investments may go up or

   down. Your capital is at risk. Past performance is not an indication of future results.)

eToro Etcaetera Portfolio

2. On Substack, I have decided to reduce the number of sections to simplify things. I have now a “Best Picks” section with US and EU stocks and ETFs, and also crypto content.

   Best Picks

3. On Substack, “free” posts will become rarer and rarer as we go, and I will focus more on “paid” exclusive content as the paid subscribers base is growing. I want to thank all my paid subscribers for their unconditional support of my work. If you are a free subscriber, now is the time to upgrade to “paid” before potential pricing increases (the latter won’t affect existing paid subscribers).

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4. Based on the engagement and likes, I can see that you love my macro content (politics, central bank decisions, country analyses…). I have heard you and I will make sure to keep you happy on that front. 😉

Market Insights

Please note that I will be on vacation next week. I will be with my family in Switzerland (Bern-Kandersteg area) for a little road trip and hike. I will be a bit less reactive for a few days. 😊🙏

Thank you for your attention and for your loyalty. 💚

Etcaetera

Ryanair is one of the most iconic brands, beating by far any other airline. The Irish company, founded in 1984 by a group of Irish businessmen (including Tony Ryan), has managed to turn into an everyday conversation topic, both in real life and on social media. It branded itself as a cheap airline with a modern check-in process, and of course, its hyper-efficiency gives to its customers the image of a greedy corporation.

Still, its marketing is unbeatable and the company keeps gaining market shares versus competitors across Europe and North Africa.

I generally don’t like airlines because

1. they are capital intensive;

2. they have low margins;

3. they have very little innovative and technological breakthroughs;

4. and literally anything can affect their profitability: from fuel prices to weather patterns, from regulatory news to social troubles, from macroeconomic weakness to M&A activity in the sector - and the list goes on and on.

But Ryanair is different. And the recent performance, despite headwinds, shows resilience and opens up to optimistic perspectives.

Recent Performance - My Traffic Light Shows Resilience

Key takeaways in terms of performance in Q2 this year:

🔴 Q2 profit of €360m, compared to a prior-year Q2 profit of €663m. Strong drop in profits due to Easter timing relative to previous year and weaker than expected air fares.

🔴 PAX revenue1 fell 10% (average fare down 15%).

🟠 Total revenue almost flat (-1%, from €3.65 bn to 3.63 bn)

🟢 Strong traffic growth (+10%) to 55.5m customers in the quarter

🟢 Record Summer schedule launched (5 new bases, over 200 new summer-24 routes)

It’s a mixed picture when it comes to the number in the last quarter. There is no secret there. But I believe the toughest is behind us from a macroeconomic and energy point of view. All airlines have struggled. And Ryanair in fact outperformed its competitors.

Competition and Market Shares

Ryanair is more efficient than its competitors by a mile. Excluding fuel, the PAX cost of Ryanair is €33.7. Let’s pause here. Thirty three point seven euros to fly a passenger!

Wizzair, another low cost, is 39% more expensive and EasyJet, also a low cost spends more than double of Ryanair to fly a passenger (on average). I am not even going to comment the efficiency of Southwest Airlines, IAG, Lufthansa and Air France-KLM relative to Ryanair...

Let me show you something else.

That is growth right there. When in doubt, zoom out. The quarter was OK but not wow, despite new routes opening and a 94% load factor.2

Ryanair is establishing itself as a reference where it had no presence (Albania) or very little presence (Croatia, Austria, both highly touristic destinations) just 5 years ago. It is also successfully expanding beyond Europe (Morocco). There is potential for more growth ahead.

From a Shareholder Perspective

From an investor point of view, the picture is much rosier and the stock is in a long-term uptrend despite recent sharp sell-off (from $60 per share to $40 per share on the ADR3 stock).

🟢 A little over 50% of the currently authorized €700m share buyback that started in May is completed. When complete, Ryanair will have returned over €7.8bn to shareholders since 2008. Its market cap is around €17-18 bn, meaning the company already returned almost half of today’s MC to the shareholders.

🟢 Ryanair’s balance sheet is one of the strongest in the industry with a BBB+ credit rating (both S&P and Fitch) and €4.49bn gross cash at quarter end, despite €0.50bn capex and €0.25bn share buybacks. Net cash increased to €1.74bn on by end of Q2, up from €1.37bn at the end of Q1. Ryanair’s B737 fleet (566 aircraft) is fully unencumbered, impacting positively the cost advantage over competitor airlines (exposed to expensive lease and financing costs).

🟢 Traffic this year is expected to grow 8% subject to no worsening of Boeing delivery delays.

Valuation

The stock is trading dirt cheap.

🟢 Ryanair is trading at 14x forward earnings and 12x trailing earnings, at a significant discount from the airline sector which is trading at 22x and 24x earnings respectively (37% and 50% discount).

🟢 Ryanair is trading at around 1.2x sales (both forward and trailing) at a 35-40% discount from the sector and, perhaps even more interestingly, at a 64-65% discount relative to its own 5-year average.

That’s a screaming buy and with a slowly improving outlook I am betting my Euros that the market will reprice the stock accordingly in the next quarters.

Analysts expect a huge ramp-up in free cash flow with a significant improvement by the first quarter of 2026. I want to be in the train (or plane) when that happens.

Risks

As for every investment, there are risks. And for Ryanair in the next 12 months, there is one big risk and a smaller one.

🔴 Boeing delays: really the key risk is here. I call it a big risk because there is really nothing Ryanair can do to mitigate it in the short term and Boeing has been having its share of problems. Ryanair’s entire fleet pipeline is dependent on Boeing until at least 2034.

Ryanair has modeled as part of its growth the acquisition of 300 Boeing MAX-10. They are much larger and more efficient in terms of fuel. There is no MAX-10 to date in Ryanair’s fleet. Boeing will have to give gas… The change in CEO at Boeing a few weeks ago could turn out to be a welcome tailwind for Ryanair. Kelly Ortberg replaced David Calhoun on August 8, 2024.

🟠 Fuel prices. The higher the price of fuel, the more expensive it is to fly a plane. That is why oftentimes the airline sector performs in a reverse manner to the price of oil. The good thing is that Ryanair has fuel price hedges in place and has extended them at an interesting price: 75% FY25 at under $80bbl saves over €450m and c.45% FY26 is hedged at $78bbl. This strong hedge position helps insulate the Group from significant fuel price volatility. The hedge proportion is declining from 75% to 45% but in my opinion it’s a smart strategy of management as oil has been less volatile than at the outbreak of the Ukraine-Russia war.

Bottom Line

I don’t like airlines. That’s not a secret. But Ryanair is something else. It has the alpha in the sector that I needed to see to add it to my portfolio. I bought a large position in Ryanair this week. The business is much more efficient than its competitors. Sure, there is the Boeing risk - but that risk weighs on the others too. The management team has over the year demonstrated being extremely shareholder-friendly.

The stock is trading at a dirt cheap valuation, following recent sector turbulence (pardon the pun…). But it showed resilience and the outlook is much rosier than the past quarters that are now in the rear mirror. It’s a company that is always looking to innovate and become more efficient in a stagnant sector. Using the below rating matrix, I rate it a “BUY”.

I hope you enjoyed the read. 💚🙏 It was a little longer than usual, so let me know if you liked it or prefer a shorter format.

Consider upgrading your subscription to “paid” to support my independent work.

Thank you so much!

Etcaetera

China is an economy guided and decided by Chinese Communist Party (CCP). If the CCP decides the Chinese economy must grow by 5% this year, then that must happen by any means possible. Otherwise the central authority loses credibility.

And Xi Jinping does not mess with credibility.

In Q2 2024, China's GDP grew at 4.7 percent year-over-year. On quarterly basis, the country's Q2 economy expanded by 0.7 percent from the first quarter. On an annualized basis, that’s 2.8%.

That rung all the alarm bells and forced China to deliver a stimulus package long not seen, perhaps only rivaled by the early pandemic days. That’s a clear message for the people who felt the Chinese government was letting its economy go down (Xi Jinping has the worst growth rates average of all Chinese presidents from the past decades).

China is currently swamped in a real estate bubble pop, suffering from deflationary pressures, its youth faces widespread unemployment rates and local authorities’ debt levels are ballooning. Here is how the country is hoping to turn around the situation.

Key Measures

Here are the key measures of the enormous stimulus package (remember 10 yuan = USD 1.4):

• The People’s Bank of China (PBOC, the Chinese central bank) changed its interest rate from 1.7% to 1.5%. Usually it cuts in 10 bps, that’s a double cut at once which is unusual for the PBOC;

• Existing mortgage rates reduced by 50 bps on average;

• 50 bps cut to the RRR – the amount of cash that commercial banks must hold as reserves;

• Down-payment ratio on second-home reduced from 25% to 15%;

• The 300 billion yuan fund that was set up in May to encourage local governments to buy up unsold homes and convert them into subsidised housing was 60% funded by the central bank: now it’s 100%;

• Structural monetary policy facility of 500 billion yuan would be established to allow security houses, fund-management firms and insurance companies to tap liquidity when purchasing stocks via a swap line of pledging their assets for high-quality assets;

• Relending facility of 300 billion yuan, with an interest rate of 1.75%, established to guide banks to support listed companies’ stock buy-backs and purchases.

Wow. Let me catch my breath. Wait… we’ve got more. China announced later this week more measures, in particular the following new debt issuances:

• 1 trillion yuan ($140 bn) of special bonds mainly to stimulate consumption-sources

• Another 1 trillion yuan via special bonds to help local governments tackle debt problems-source

The Chinese government will do whatever it takes. “Whatever it takes” is usually music in investors’ ears.

This is What it Means for Chinese Stocks

Buy, buy, buy. Buy everything. Well, not everything. Buy quality Chinese stocks. Buy those companies that have been around a while and managed to grow through pandemic and economic slowdown. Consider those resilient companies like Alibabas and Pinduoduos and Xiaomis and BYDs of the world.

One of Warren Buffett's most famous quotes is: “Only when the tide goes out do you learn who has been swimming naked.”

That just happened. We saw who was swimming naked in China. The top companies that survived and strived, they will perform even better in a (much) easier environment.

Don’t go all-in China. Because probably without even knowing and without even owning Chinese stocks, you may already be heavily exposed to China’s economy.

A solid and lower risk way (in the long run) to gain exposure to China is to have following types of stocks in your portfolio:

• European car manufacturers: think MBG (Mercedes) and BMW which are very popular among Chinese consumers. They will use the cheaper debt to buy them.

• European luxury companies like LVMH and RMS.

• U.S. brands like Apple and Nike will enjoy increased liquidity of the Chinese consumer.

If you are a stock picker, this is your chance to outperform the market: increase your exposure to China. That’s what I did. You can check my portfolio for ideas:

Thank you for reading! I hope this was useful for you. 💚🙏

Etcaetera

P.S.: I am forced to say it for compliance reasons but none of this is investment advice. It’s just what I do and think. Do your own research guys.

In this article, I want to share my personal Traffic Light for all 11 sectors of the S&P 500 in case of a soft landing and lower interest rates (that’s the base case of the Fed). Don’t worry, I will write another article on how to hedge your portfolio in case there’s a global economic crash. I just don’t feel that gloomy today. 😉

So here we go…

🔴 Consumer Staples: consumer staples are essentials that the consumer will buy no matter what (think food, drinks incl. alcohol, personal care, tobacco). The demand is very inelastic to economic conditions and the consumer typically doesn’t take loans to buy these items. In case of a stable economy and lower interest rates, there is little reason for consumers to suddenly start buying more essentials.

🔴 Healthcare: similarly to consumer staples, people don’t tend to have more diseases and require more health coverage when the economy is stable and the debt is cheaper. With a key difference from consumer staples, many patients do have to take on debt to cover their medical bills (think cancer treatment) but they will do so regardless of the cost of debt as it’s usually for (unfortunately) critical reasons.

🟠 Financials: very mixed picture here. It depends on the type of activities the banks have. When interest rates are high, the lending margin tends to be higher as well, leading to less income when rates drop. However a large portion of banks also receive fees when participating in transactions (as an arranger, broker, lender…) - and there are more debt transactions when the debt is cheaper. A stock like JP Morgan would likely benefit from lower rates for examples.

🟠 Energy: mixed picture as well. Energy has become an essential part of the economy, and the demand is inelastic to interest rates. A stable economy may benefit energy stocks as energy demand is stable, but interest rates have little impact.

🟠 Telecommunications: telecom companies usually have large amounts of debt and lower interest rates will provide a relief, potentially lowering the cost of operations. Fixed income investors may also move away from Treasuries (as they start paying less interest) towards telecom stocks that typically have high dividend yields. But revenue is unlikely to be boosted by lower rates, as consumer demand for telecommunication tends to be rather stable over time.

🟠 Utilities: the consumer demand is very inelastic for items like electricity, waste management, water, internet… Lower interest rates may provide a relief to some companies but it’s unlikely for the sector to outperform the S&P 500.

🟢 Technology: probably one of the big winners. Technology has real macro tailwinds with further adoption across all sectors of the economy. Lower interest rates and a stable economy lead to corporations massively investing in technological upgrades. Investors are also willing to take on more risk and invest in more volatile sector of the S&P such as this one, as risk-free assets (e.g. Treasuries) reward less for their investments.

🟢 Consumer Discretionary: another likely big winner. Opposite logic to consumer staples, consumer discretionary goods fare well when consumers have access to cheap capital and the economy is solid. Demand tends to rise for non-essential e-Commerce goods, brands and cars (think Amazon, Nike, Tesla).

🟢 Industrials: backbone of any economy, the industrial sector produces and manufactures all the goods necessary for an economy to run. If the economy is stable or improving, the demand will be higher. These stocks usually have high leverage, and cheaper capital is a welcome gift.

🟢 Materials: same logic as for Industrials - just a bit higher in the supply chain, the materials sector provides the necessary raw materials for industrials to process. A stable economy favors Materials. Lower interest rates provide a relief to leveraged companies, which is typical for the sector.

🟢 Real Estate: another beneficiary of low interest rates and a stable labor market. As debt becomes cheaper, the demand for real estate rises (people being able to afford higher property prices). Low unemployment is an important factor as people need jobs to be able to apply for mortgages. But things can quickly turn ugly or volatile for the sector even as interest rates are low in case unemployment continues rising.

I hope you enjoyed my Traffic Light analysis. What are your favorite sectors to invest in for the next 12-24 months?

Thank you for subscribing and supporting my independent work! 💚🙏

Etcaetera

My first reaction was “nah, not going to happen. The medias are trying to make headlines again.” I kind of still stand with it. Because there is a big footnote. A very large one. Qualcomm will not acquire Intel. Qualcomm might buy business parts of Intel (probably only one business unit actually). The rest of the units would stay with Intel or be bought by other big tech companies.

I came up with a new concept a little bit by coincidence and it has received really great feedback. Therefore I plan to apply to all my stock analyses: it’s the Traffic Light Scorecard. There are green, orange and red bullet points, corresponding respectively to positive, mixed and negative aspects of a stock or of a transaction. Let me know what you think. 😉

Qualcomm is known for chips found in smartphones and counts Apple as a large customer. The company manufactures and designs semiconductor and wireless products. And its main interest in Intel resides in Intel’s PC design unit. So that’s quite specific. Much more specific than most headlines on Friday. But not as sexy.

As you remember, Intel reported a disastrous second quarter, including a 15% reduction in its staff and a pause on paying dividends. Its PC client business revenue dropped 8% to $29.3 billion last year, amid overall weakness in the PC market.

So, here is my Traffic Light with what I think about the acquisition of parts of Intel’s business by Qualcomm:

🟢 The acquisition of parts of Intel is good for Qualcomm. At first when I heard about the “acquisition of Intel”, I was like what the actual pancake is Qualcomm doing? Buying an entire business that is failing? For half its market cap (Qualcomm’s market is $193 bn while Intel’s $90 bn)? But after digging a bit, I understood that Qualcomm is only interested in the best business units of Intel (PC, design). Qualcomm (QCOM) was down 3% on Friday. That is usually the case because shareholders fear dilution in case of an acquisition paid in shares.

🔴 Terrible for Intel. I think this is the end of Intel, if the corporation starts selling its best business units to competitors. Perhaps management wants to sell all units and reinvest everything in the semiconductor chips foundry business (subsidized by the U.S. federal government). Still, I would not want to be a shareholder in Intel right now. The stock was up 3% on the news as shareholders are hoping to be paid in Qualcomm shares and/or to sell parts of the business at a premium versus current valuation.

🔴 It quite unlikely that the U.S. antitrust regulator (and the U.S. government) will remain silent on a potential merger (even of parts). Even if there is an agreement between both companies, it is likely going to be a long and tricky process, with a potential politicization of the matter. I like to trade M&A news and rumors. But I would not trade this one.

🟢 The U.S. regulator could however agree on a M&A where multiple participants buy out Intel’s parts, ensuring fair competition within this sector of critical national interest for the U.S. That’s in my opinion the only scenario where Intel could be sold without objection of public authorities.

🟠 The fact of the matter is that Qualcomm has not approached Intel about a potential acquisition. At least that is what an Intel spokesperson said. Intel is "deeply committed to our PC business," the spokesperson said. On the same token, Qualcomm declined to comment. So much for news headlines…

I hope you found this summary comprehensive and interesting.

Drop me a comment with your thoughts about my new Traffic Light concept and/or about this Qualcomm/Intel news.

Thank you for subscribing! 💚 It means the world to me. Feel free to upgrade to paid to support my independent work.

Cheers!

Etcaetera

The people who lived in Germany in the last couple of years or the ones that closely follow the German news know it: the public sentiment is at its lowest. The successor of German Chancellor Angela Merkel, Olaf Scholz, is at all-time lows in the public opinion, Germany’s far-right party AfD (Alternative für Deutschland) continues to rise, the real feel of inflation (price of goods and service increased while salaries stagnated) damaged many households’ savings and hit the German consumer right there where it hurts. All this combined with an absolutely horrific and short-sighted energy policy since a decade now forced the not-so-long-ago great manufacturing powerhouse of Europe to kneel.

It probably all started back in 2014 when Russia went into Ukraine to annex Crimea. While there were sanctions from the West against Putin and a number of measures taken for the security of the West, Germany never took the Russian threat seriously and continued making its entire industry dependent on Russian gas. I mean, I can understand it. Russian gas was cheap (making energy-intensive industries competitive), efficient for a relatively “green” energy production and politically convenient (households didn’t have to pay much for energy). Still, in hindsight, German could and should have started diversifying away from Russian gas.

But the political game in the West is too often short-sighted. What matters is the outcome before the next elections. Rare are the politicians and political parties that will take unpopular measures that will bring results 10, 20, 30 years from now.

Fast forward to today, German industries are not as competitive as before, the country is still trying to find new energy sources and Olaf Scholz seems clueless at the head of the “Sick Man of Europe” (allusion to Holger Schmieding, 1998, when Germany was struggling economically after the reunification).

Germany’s Pride is on Sales

German stocks are dirt cheap: some of them are trading for less than their book value1, meaning they are essentially free.

Large corporate groups that were once the price of Germany are trading on sales: Volkswagen (VW, automobile), Deutsche Bank (DB, financials), Bayer (BAYN, pharmaceuticals), to name just a few, are trading below book value. How could this even be possible?

We are talking large companies with resilient earnings and for the most part stable or growing revenue. While the German DAX (composed of 40 stocks) continues to hit new all-time highs thanks to a couple of vibrant outliers (think SAP, the German software company representing 15% of the DAX, up almost 50% YTD), other German Konzerns and large corporations keep hitting decade lows.

My answer is a quote of no other than John M. Keynes: “the market can stay irrational longer than you can stay solvent.”

German stocks are too cheap to be ignored and left aside: Germany has the 3rd largest nominal GDP after the US and China, and the largest in Europe. You cannot leave this country out of your portfolio (unless you are concentrated in one single country).

I personally like Volkswagen (read my article here) and Mercedes, but there are numerous great plays in the DAX (long-term speaking). I would not buy the index: this is heaven for a stock picker. Don’t focus on Book Value only. Look at the respective historical valuations relative to earnings and also at their earnings growth estimates. See if the companies managed to be resilient in the recent quarters despite an increase in energy and labor costs.

Don’t go all-in: remember Keynes quote. But don’t leave Germany aside.

What do you think about German stocks? What is your favorite one? Let me know in the comments!

Thank you for reading. 💚🙏

Etcaetera