Most recent
Gavekal-IS
Risk Profile
Didier Darcet
27 Feb 2025
Managing private accounts starts with the crucial first step of defining an investor’s risk profile. For decades, a simple rule of thumb sufficed: allocate “100 minus your age” to stocks and “your age” to bonds. But with US treasury bonds no longer behaving like risk-free assets, those days are over, says Didier.
Gavekal-IS
Sweden Vs. Switzerland
Didier Darcet
20 Feb 2025
While investing in stocks during a bullish cycle can be highly profitable, leaning on defensive stocks in downturns is far riskier. In a market crash, nearly all stocks sink together, says Didier. For this reason, he suggests comparing equity returns in Sweden and Switzerland, two similarly sized European countries whose stock markets have a very different composition and move to different market impulses.
More research
The Harmonics Of Kondratiev
In 1926, Nikolai Kondratiev pinpointed waves that seemed to last around 50 years and include alternating phases of expansion and depression. Within this broader “Kondratiev wave”, two key harmonic variations were identified by other economists: the Juglar cycle and the Kitchin cycle. Ironically, while such classical economic cycles have faded from mainstream discourse, the same patterns continue to manifest themselves, says Didier. In this report, he draws some direct investment conclusions.
The Industry Of Industries
Investors generally don’t give a disproportionate amount of thought to the machine tools sector. But as Didier points out, if anything disrupts the supply of machine tools, the whole manufacturing sector could be in jeopardy. Given the structural shifts in the global machine tools market over recent decades, this could soon become a “live” issue, especially for the US.
Good Start, Good Finish
Some 43% of Formula One Grand Prix winners begin from pole position. Why? Because in high-stakes competitions, a strong start often paves the way for victory. And what is true in racing seems to apply in stock markets. Didier notes that getting a good start to the investing year tends to augur a strong overall 12-month stretch.
Oil As A Currency
A core argument for Charles is that economic activity can simply be thought of as energy transformed. By extension, primary energy production is the foundational activity in any modern economy. In an era of currency debasement, he extends this argument to portfolio theory and looks at economic values where oil is the base currency.
How To Deal With Hybrid Assets
For years, Gavekal-IS’s portfolio construction research has focused on “pure” assets like equities, government bonds and gold. But what about “hybrid” assets? What happens when we shift from gold to silver, from government bonds to high-yield bonds, or from fixed-rate bonds to inflation-linked bonds? In this report, Didier explores the dynamics.
If You Must Hold Bonds
Interest rates cannot play nice with both gold and long-dated government bonds at the same time—it is a one-or-the-other deal. Some investors reluctantly find themselves tied to bonds, whether for asset-liability management reasons, or regulatory requirements. Are they doomed? Not necessarily, explains Didier in this report.