Portefeuilles : situation au 01.08.2025

After a first half marked by a volatility With persistent and unpredictable shocks in global markets, it is time to take stock of the performance of our portfolios.

This July has alternated between bad and good days, some starting in the dark green before ending in the red, or vice versa. Similarly, we've had days largely dominated by big caps while small caps plunged, or vice versa (but less often). We've also seen US indices climb sharply, particularly tech giants, while European and Swiss stocks went in the opposite direction. In short, we've gone through all the states, oscillating between the best and the worst, ending almost flat, as we've seen all of these past few months.

This raises a fair number of questions. The market is supposedly always right. However, right now, reason seems to have gone out the window. The PE Schiller ratio, which measures stock valuations, is at the same level as in 1999 and 2021, before the market crash. It's even higher than in 1929. Comparison isn't reason, and this ratio hasn't always been right in the past either. Still. This year 2025, whether we like it or not, is currently marked by uncertainty. And that's never good for business.

In this context, it's quite difficult to see clearly. Moreover, the latest Fed minutes state that inflation is still not under control and that the economy has lost momentum. This hasn't stopped Meta and Microsoft from publishing better-than-expected results. Nor has it stopped Trump to post that the data ARE BETTER THAN EXPECTED (the Caps Lock key on his keyboard is apparently stuck) and at the same time still ask Powell for a rate cut again. Logical. When things are bad, he asks for a rate cut, when things are good too. Frankly, we might as well set them permanently at zero and we won't talk about it anymore.

Among the other highlights, others are also linked to the policies implemented by the Trump administration:

• The dollar has recovered this month of July, but it has nevertheless accumulated a loss of 12 % in CHF since the beginning of the year.
• This decline in the greenback is weighing heavily on the performance of many US stocks in CHF. Yet, paradoxically, it has benefited some large US companies, which derive a significant portion of their revenue from abroad. Indeed, a weaker dollar automatically increases the value of revenue generated outside US borders once repatriated, while also strengthening the competitiveness of exports. This phenomenon was notably illustrated in July, with examples such as Pepsi, 3M, BlackRock, Levi Strauss, and Garmin, which benefited from the weak dollar. For more information, check out this article.
• In such a context, it becomes complex to realize capital gains on dollar-denominated securities, unless one favors large exporting companies, which already boast high market valuations. Paradoxically, while American investors are convinced they are reaching new heights, Europeans and Swiss investors invested in this market feel as if they are rowing against the tide on the Rhône aboard a simple pedal boat.
• Quality and value stocks appear to be increasingly being overlooked in favor of overvalued or lower-quality names. This trend reflects investors' growing appetite for risk, as they shift from attractive and solid investments to more expensive or fragile companies. However, this increased risk orientation presents significant long-term dangers, especially in the current context of high market valuations and uncertainty surrounding Trump's policy decisions. In this context, it remains essential to prioritize quality, well-valued companies, even if they are temporarily overlooked by the market.

Past month's performance (portfolios and benchmarks - in CHF)

All of these phenomena have significantly penalized our portfolios over the past month, compared to the S&P 500. Unsurprisingly, they have also underperformed compared to the VT and 60/40 benchmark indices, the latter having been driven by the rise of the flagship American index.

However, our portfolios are performing respectably against the Swiss index, which has clearly taken a hit. Given today's announcement of US tariffs set at 39% for Switzerland, the coming weeks are likely to be even more complicated for the MSCI Switzerland. This is a nice "gift" from Trump to the Swiss for their national holiday.

• Wallets :
  • Determinant portfolio : 0.1%
  • PP 2.x : 2.1%
• Benchmarks :
  • MSCI Switzerland: -1.53%
  • S&P 500: 5.32%
  • VT : 4.24%
  • 60/40 "Boglehead : 3.23%

We note that the PP 2.x achieved a significantly better monthly performance than the determining portfolio, with infinitely less work since it relies on completely passive management. It was obviously helped by its strong component in large American companies, particularly technology. Conversely, its big brother experienced a strong turnover of its assets for a zero or almost zero result. Its "value" and international small cap orientation did not help. Active management had actually helped the determining portfolio in the first half, allowing it to avoid market volatility. This month it clearly did it a disservice.

Key portfolio strategies (past month - in CHF)

The "flat" performance of the defining portfolio, however, masks a very disparate record among the underlying approaches. In fact, with the exception of one strategy, they all achieved good results, some of them very good.

Indeed, the strategies "Blue Chips, "Gold", "Swiss Bonds, "Real estate Swiss", "Swiss Stocks", "Bitcoin & Gold" and the Trading Auto Signal, all posted positive results. It should also be noted that some Swiss Blue Chips, Swiss Real Estate and Swiss Stocks posted quite incredible performances, even though the MSCI Switzerland was down.

On the other hand, the Long/Short strategy suffered a double setback. While the hedge offered by short positions is supposed to protect against declines in long positions, this time it worked against us. This phenomenon occurs when value and quality stocks (comprising long positions) experience a sharp decline, while expensive and lower-quality stocks (short positions) perform best, as discussed in our introduction.

In order to prevent the recurrence of these two phenomena in the future:

• For short positions, I will now opt, instead of resorting to short selling stocks, for hedging using a short ETF, which will be activated in conjunction with the bearish signals from the Trading Auto Signal.
• As for long positions, I will continue to diversify my portfolio internationally, provided that I identify quality and value stocks.
• I am taking this opportunity to rename this strategy "International Actions"

Determinant portfolio (year-to-date - in CHF)

Since the beginning of the year, the determining portfolio has recorded a performance of 0.12 % in CHF. This result remains lower than that of the MSCI Switzerland, which posted a gain of 4.62 %, mainly thanks to an exceptional rebound in January and February, compensating for a disappointing year in 2024. Nevertheless, the portfolio's performance remains higher than that of the S&P 500, which, despite a notable rebound last month, has posted a decline of -2.34 % in CHF since the beginning of the year.

Determinant portfolio (since launch - in CHF)

The key portfolio in in its new configuration since October 2024shows the following results (in Swiss francs):

• Annualized performance (%): 6.32 (MSCI Switzerland: -0.23)
• Max Drawdown (%): -6.62 (MSCI Switzerland: -15.16)
• Standard deviation (%): 6.91 (MSCI Switzerland: 13.32)
• Sharpe ratio: 0.81 (MSCI Switzerland: 0.3)
• Correlation with MSCI Switzerland: 0.32

The market environment remains unpredictable, to say the least, and uncertainty reigns supreme, making any projections both fragile and questionable. Our portfolios, although tested by the ups and downs of global indices, have nevertheless demonstrated a certain resilience thanks to the diversification of strategies. Geopolitical issues, American politics, and the overvaluation of the market suggest that the coming months will be just as volatile. More than ever, it is important to keep a cool head.