In October’s Opinion, Pierre Cloux reflects on the raging bull market and how to adjust equity strategies to such extreme market behaviors.

Pierre Cloux reflects on the parallels between Mr. Market and Molière’s “Imaginary Invalid”. With patience & diligence, Mr. Market finds its own cure and delivers the correct valuation.

In this article, you will find Pierre Cloux’s thoughts regarding Emmi’s sugar reduction policy entwined with some refreshing Bazooka bubblegum analogies.

In a recent article, the Economist was mulling over the question why fund managers do not perform consistently. So, what has been the trend over the past years? Well, the big shift has been from active – company picking, like I’m doing – to passive – buying an ETF or passively tracking a benchmark by buying the shares that compose an index. Why? because it’s cheaper. But investors are happy to pay more if it translates into a better performance. Active fund management is a difficult exercise, as I can testify from my experience. The average fund fails to beat the index. Our Swiss equities strategy has beaten the index 5 out of the last 8 calendar years, including 3 years in a row: 2014, 2015 & 2016. Even though we are in positive territory, we are currently below our reference index year-to-date. You, the Investors, hope that the strategy will deliver superior returns over the long term, even if you can’t expect its fund manager to beat the index every single year.

As reported last month, according to my methodology, half of our corporates have reached or surpassed their intrinsic value. So has Mr. Market become Mad Max, the post-apocalyptic action hero stranded in the Australian desert at the hands of Aunty Entity, aka ruthless central bankers?

So, is Mr. Market dancing on the ceiling, like Lionel Richie? Not quite! Even though, according to my methodology, half of our corporates have reached and surpassed their intrinsic value, we still have 10 companies trading below, a few of which are much below that value.

Well, St-Exupéry is one of my favourite authors and Galenica is one of my favourite companies. Back in early 2008, Galenica was generating 80% of its sales through pharmacies, under the brands Amavita, Coop Vitality and Sunstore, but was already a leader in iron drug delivery and had just launched its intravenous iron drug, Ferinject, in Europe.