Il 2019 un anno per investitori pazienti: la view di Lapis Am
A cura di Andreas Wueger, Ceo Lapis Am
The entire equity market in Q1-2019 was one of the best performing quarters in recent history. As mentioned in our last investors letter a lot of forced equity selling was due to the significant Hedge Fund liquidation which occurred in December 2018. Our investors have lost much less in the 4th quarter 2018 and have participated well during the market recovery in Q1-2019. This confirms once again the importance of investing into top quality companies for the medium to long term time horizon. Asset allocators and market timers found it very difficult to anticipate this market moves in advance.
The market has overcome the fear of fast-rising interest rates. The opposite has been discussed in the context of an emerging global economy slowdown. The ISM Manufacturing Index came in at 44.7 for the German economy in March 2019. A value below 50 usually indicates a deceleration of the industrial production. In France the same index showed a value of 48.7. On the other hand, the service industry in the European Union which makes up to 75% of the total GDP seems to stay in a healthy state with respect to the index value of 52.7.
We believe that 2019 will be an important year for patient equity investors. The equity market is still attractively valued. The following chart shows that 1/3 of the S&P 500 pays to their investors a higher dividend than the yields of 10-Year US Treasury bonds. Moreover, it emphasizes that the percentage of stocks with a yield outperformance is historically quite high.
The following chart underpins the attractive valuation of dividend paying companies in comparison to non-dividend payers. In addition, it also confirms that value stocks like dividend paying companies are attractively valued against the main market.
The outlook for 2019 remains still positive for the equity market. We could eventually enter again into more volatile periods which is the nature of the market. As mentioned many times, our investors are only invested in high quality companies which have proved over several years to be able to uninterruptedly pay out continuously increasing dividends to their shareholders. It’s not that important to time the market correctly, but it’s much more important to come out of a volatile period with a stable portfolio value and without permanent losses.