December 2024
Dear Friends, Dear Investors,
Despite the persisting geopolitical instability, the month of November once again confirmed our conclusions on the solidity of a bull market, in place for two years. Although this trend could reverse at some point, it is still too early to predict when this might happen. As we mentioned in our last letter, it is crucial to stay invested in such a bullish environment.
The one question we had to answer the most after the US elections is: is it worth it to be invested anywhere else than in the US? True enough, and for the first time since we started managing money for you, there has been a wide divergence in performance between European and US assets (in the favor of the latter), and this has been true even before the US elections.
And, true also, Europe has seemed unable to allow market giants equivalent to the Mag 7. Whether this is a cultural, societal or legal thing is hard to say, and this is a philosophical question that we won’t address here. Nevertheless, this is true, and most of the European companies we invest in are much older than the US ones we invest in.
Having said that, we have always stated very clearly that we don’t invest in US or European companies because of their geographical location. We invest in these companies because we believe they are among the best at what they do, regardless of where they are based. Most companies we invest in realize a big portion of their revenues outside of their geographic location.
Our US companies will have a hard time growing profits in a world where Europe is doing badly (and Europe is not doing that bad, economically speaking, except Germany), so it would make no sense to us to bet it all on the US. Would some of our European companies be valued more highly if they were listed on a US stock exchange? Undoubtedly, and we are actually seeing European companies delist from Europe and relist in the US (mostly from London) for just that reason. But, at some point, value wants out, meaning that stock prices must follow financial performance.
Best regards,
Your CaridaB Group Team
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