[{"data":1,"prerenderedAt":436},["ShallowReactive",2],{"en-themen-gedanken/cio-insight-2q2025":3,"news-articles//en/themen-gedanken/cio-insight-2q2025-v-0-0-0":153},{"data":4,"headers":130},{"story":5,"cv":123,"rels":124,"links":129},{"name":6,"created_at":7,"published_at":8,"updated_at":9,"id":10,"uuid":11,"content":12,"slug":116,"full_slug":117,"sort_by_date":39,"position":118,"tag_list":119,"is_startpage":26,"parent_id":120,"meta_data":39,"group_id":121,"first_published_at":8,"release_id":39,"lang":44,"path":39,"alternates":122,"default_full_slug":39,"translated_slugs":39},"CIO Insight 2Q2025","2026-09-08T13:55:13.275Z","2026-09-08T14:08:02.257Z","2026-09-08T14:08:02.271Z",217850320010719,"253f6f6c-7ab3-4567-b6a9-d3275282ddf7",{"seo":13,"_uid":19,"date":20,"image":21,"title":15,"category":27,"sections":47,"component":115,"description":23,"disablePrerender":26},{"_uid":14,"title":15,"plugin":16,"og_image":17,"og_title":15,"description":18,"twitter_image":17,"twitter_title":15,"og_description":18,"twitter_description":18},"7b23b9c8-9612-43a5-8317-b1aea1682082","Expected rates of return must undergo a reality check","seo_metatags","https://a.storyblok.com/f/294930226098899/1230x820/39d7a2e6fa/istock-2181295698_1230x820.jpg","Today, after the rebound in headline yields over the last three years, we continue to believe that the market’s implied discount rates hover at too optimistic levels. Fortunately, our deep value approach has built-in mechanisms to sidestep the implications.","41f57cca-69bd-4e38-a3f4-817987c7c41b","2025-07-14 00:00",{"id":22,"alt":23,"name":23,"focus":23,"title":23,"source":23,"filename":17,"copyright":23,"fieldtype":24,"meta_data":25,"is_external_url":26},217846562503534,"","asset",{},false,{"name":28,"created_at":29,"published_at":30,"updated_at":31,"id":32,"uuid":33,"content":34,"slug":37,"full_slug":38,"sort_by_date":39,"position":40,"tag_list":41,"is_startpage":26,"parent_id":42,"meta_data":39,"group_id":43,"first_published_at":30,"release_id":39,"lang":44,"path":39,"alternates":45,"default_full_slug":39,"translated_slugs":39,"_stopResolving":46},"CIO Insights","2026-09-08T07:01:26.554Z","2026-09-08T07:01:42.831Z","2026-09-08T07:01:42.842Z",217748629753556,"d3e352c9-a6e1-424c-9b3e-d8ec27414248",{"_uid":35,"name":28,"component":36},"b134b476-a70b-4fdf-b5b2-d8b0e90f845a","DatasourceNewsCategory","cio-insights","en/settings/datasources/news-categories/cio-insights",null,0,[],217748407901900,"4f7bd825-749e-4439-a76e-ff16cd15b63f","en",[],true,[48],{"_uid":49,"content":50,"component":113,"backgroundColor":114},"404bc55a-6333-4522-b078-94e7f5b8ea1a",[51],{"_uid":52,"html":53,"author":108,"fontSize":109,"component":110,"authorRole":111,"authorCompany":112,"showAuthorAlsoOnBottom":46},"a992dacc-4017-4d67-89e0-fe466002e9f5",{"type":54,"content":55},"doc",[56,67,76,83,90,97,104],{"type":57,"attrs":58,"content":60},"heading",{"level":59},5,[61],{"text":62,"type":63,"marks":64},"CIO Insights 2Q2025","text",[65],{"type":66},"bold",{"type":68,"content":69},"paragraph",[70],{"text":71,"type":63,"marks":72},"In our quarterly CIO letter exactly 20 years ago, we opined that interest rates—and by extension the discount rate to value assets such as equities—in hard currency countries were too low given future economic risks known at the time. Today, the 10-year US Treasury bond yield as the world’s leading long-term benchmark is indeed slightly higher than it was in the middle of 2005. What we didn’t know at the time was that monetary authorities around the globe were forced to engineer much lower rates over the course of those two decades in response to the massive dislocations caused by crises such as the US subprime collapse (2007/8), the European peripheral debt crisis (2011/12) and the Covid-19 pandemic (2020/21). But even today after the rebound in headline yields over the last three years, we continue to believe that the market’s implied discount rates hover at too optimistic levels.",[73],{"type":74,"attrs":75},"textStyle",{"color":23},{"type":68,"content":77},[78],{"text":79,"type":63,"marks":80}," The first reason has to do with the risk-free interest component in pricing equities. Risk-free rates are affected by expected inflation and real rates. The latter have recovered from their historic lows (in a healthy economy they should average in a range of 1 and 2%). However, one should bear in mind the current resurrection of tariffs as a foreign policy tool. It suggests to some that the “global dollar”—the use of the US dollar as the world’s reserve currency of choice—is no longer unquestioned. This may eventually lead to upward pressure on US real yields in case foreign demand for US treasury debt wanes. Now in terms of inflation, the market assumes that its re-emergence over the last four years has largely been tamed. We wouldn’t be so sure. First, the need for massive spending in areas such as renewable energy, health care, defense and infrastructure will prevent governments from being able to rein in their ever-rising indebtedness. Of course, the most convenient way for sovereign borrowers to manage their debt burden is to inflate it away. On top of that, ongoing supply chain rearrangements on the back of tariffs and reshoring, as well as labor shortages and rising commodity costs, are also not helping inflation to come down.",[81],{"type":74,"attrs":82},{"color":23},{"type":68,"content":84},[85],{"text":86,"type":63,"marks":87},"The second component of the expected return for equity owners is the price of residual risk above and beyond the “risk-free” bond yield. Here we must distinguish between systematic and idiosyncratic (diversifiable) equity risk. We believe that systematic risk has become underrated. There may the so-called “financial repression” effect at play here. That is, fixed-income instruments such as government bonds have lost some of their appeal as a natural diversifier due to the low yields available for much of the last one-and-a-half decades. Thus, many savers who don’t explicitly adhere to a balanced portfolio policy have gradually opted to increase their exposure to equities. Most of that money in turn has been plowed into the index-heavyweights, pushing their valuations ever higher. Theory and prudence would predict that after periods of higher-than-normal returns, investors will trim their expectations going forward. However, that’s not what most people are inclined to do. Instead, they are emboldened to extrapolate the recent time-series trend and thus run the danger of overestimating future returns.",[88],{"type":74,"attrs":89},{"color":23},{"type":68,"content":91},[92],{"text":93,"type":63,"marks":94},"Fortunately, our deep value approach has two built-in mechanisms to sidestep this behavioral trap. First, experience shows that the typical equity holding in our investment program exhibits a mean-reversion path. Consequently, our portfolio management process calls for selling shares that have risen because they presumably got closer to their intrinsic value. Conversely, we buy more of those that have fallen to reduce our average entry price. This rebalancing discipline should restore the expected long-range return profile for the aggregate portfolio. Second, expected returns of our stock selections tend to be challenged to begin with because of a poor earnings picture or other inhibiting factors. Hence, the market assigns them a relatively high hurdle rate in terms of the cost of equity capital to account for the perceived elevated idiosyncratic risk. In this respect, our approach is ahead of the curve because its valuation process already bakes in higher rates.",[95],{"type":74,"attrs":96},{"color":23},{"type":68,"content":98},[99],{"text":100,"type":63,"marks":101},"In hindsight, investing in the stock market for much of the four decades between 1982 and 2022 felt like “a walk in the park”—it was enough to simply buy an index fund and “forget about it.” A fair share of the unparalleled equity performance during that period should be credited to falling discount rates. This feat won’t be repeated anytime soon, but we believe that our portfolio management and valuation processes are properly attuned to handle the ramifications.",[102],{"type":74,"attrs":103},{"color":23},{"type":68,"content":105},[106],{"text":107,"type":63},"Sincerely,","Gregor Trachsel","lead","AtomTextRichtext","Chief Investment Officer","SG Value Partners AG","BlockLayoutSection","transparent","PageNews","cio-insight-2q2025","en/themen-gedanken/cio-insight-2q2025",-210,[],217756702998777,"a2e0895d-f424-4941-ab20-d4a537015785",[],1791208903,[125],{"name":28,"created_at":29,"published_at":30,"updated_at":31,"id":32,"uuid":33,"content":126,"slug":37,"full_slug":38,"sort_by_date":39,"position":40,"tag_list":127,"is_startpage":26,"parent_id":42,"meta_data":39,"group_id":43,"first_published_at":30,"release_id":39,"lang":44,"path":39,"alternates":128,"default_full_slug":39,"translated_slugs":39},{"_uid":35,"name":28,"component":36},[],[],[],{"age":131,"cache-control":132,"connection":133,"content-encoding":134,"content-type":135,"date":136,"etag":137,"referrer-policy":138,"sb-be-version":139,"server":140,"transfer-encoding":141,"vary":142,"via":143,"x-amz-cf-id":144,"x-amz-cf-pop":145,"x-cache":146,"x-content-type-options":147,"x-frame-options":148,"x-permitted-cross-domain-policies":149,"x-request-id":150,"x-runtime":151,"x-xss-protection":152},"2264","max-age=0, public, s-maxage=604800, stale-if-error=3600","keep-alive","gzip","application/json; charset=utf-8","Mon, 05 Oct 2026 14:21:18 GMT","W/\"02ddd25f08caa96200242bc914d360d3\"","strict-origin-when-cross-origin","5.980.1","nginx/1.29.1","chunked","Origin,Accept-Encoding","1.1 527c335ffbc06e862648fccafff3f25e.cloudfront.net (CloudFront)","ai7tNUK7X201KUjJCJTNuY0Jk49L5F7N7My6RcohB6aZl-8-5q8PzA==","IAD55-P6","Hit from cloudfront","nosniff","SAMEORIGIN","none","6e3e05b7-33b0-459e-8fb4-69a15e07fa8f","0.039844","0",{"data":154,"headers":425,"perPage":434,"total":435},{"stories":155,"cv":123,"rels":419,"links":424},[156,236,331],{"name":157,"created_at":158,"published_at":159,"updated_at":160,"id":161,"uuid":162,"content":163,"slug":229,"full_slug":230,"sort_by_date":39,"position":231,"tag_list":232,"is_startpage":26,"parent_id":120,"meta_data":39,"group_id":233,"first_published_at":234,"release_id":39,"lang":44,"path":39,"alternates":235,"default_full_slug":39,"translated_slugs":39},"CIO Insight 2Q2026","2026-09-08T13:55:13.998Z","2026-09-10T11:50:38.038Z","2026-09-10T11:50:38.054Z",217850322972131,"0d040913-18c4-4af6-a084-44855ddaa820",{"seo":164,"_uid":168,"date":169,"image":170,"title":165,"category":174,"sections":178,"component":115,"isFeatured":46,"description":23,"disablePrerender":26},{"_uid":14,"title":165,"plugin":16,"og_image":166,"og_title":165,"description":167,"twitter_image":166,"twitter_title":165,"og_description":167,"twitter_description":167},"Leaning against the investment for growth imperative","https://a.storyblok.com/f/294930226098899/600x400/da80bb5fc4/istock-871618316_600x400.jpg","By some yardsticks, the US-led secular bull market stretches well into its fifth decade by now. We thus live in an era where one feels pressure, if not a certain inevitability, to invest in equities. We believe that value investing the way we practice it presents a tangible approach for investors looking to balance the overwhelming growth bias in most opinions and recommendations.","c11a4786-8bea-49ba-991d-d902596d2497","2026-07-07 00:00",{"id":171,"alt":23,"name":23,"focus":23,"title":23,"source":23,"filename":172,"copyright":23,"fieldtype":24,"meta_data":173,"is_external_url":26},217846485547875,"https://a.storyblok.com/f/294930226098899/1230x820/2f1b3b5688/istock-871618316_1230x820.jpg",{},{"name":28,"created_at":29,"published_at":30,"updated_at":31,"id":32,"uuid":33,"content":175,"slug":37,"full_slug":38,"sort_by_date":39,"position":40,"tag_list":176,"is_startpage":26,"parent_id":42,"meta_data":39,"group_id":43,"first_published_at":30,"release_id":39,"lang":44,"path":39,"alternates":177,"default_full_slug":39,"translated_slugs":39,"_stopResolving":46},{"_uid":35,"name":28,"component":36},[],[],[179],{"_uid":180,"content":181,"component":113,"backgroundColor":114},"689167cf-c94f-425b-b34d-96985359092a",[182],{"_uid":183,"html":184,"author":108,"fontSize":109,"component":110,"authorRole":111,"authorCompany":112,"showAuthorAlsoOnBottom":46},"2475036e-f0b3-426c-b9b8-0267546acad7",{"type":54,"content":185},[186,193,201,209,217,225],{"type":57,"attrs":187,"content":188},{"level":59,"textAlign":39},[189],{"text":190,"type":63,"marks":191},"CIO Insights 2Q2026",[192],{"type":66},{"type":68,"attrs":194,"content":195},{"textAlign":39},[196],{"text":197,"type":63,"marks":198},"By some yardsticks, the US-led secular bull market stretches well into its fifth decade by now, tracing its origins to Fed chairman Paul Volcker’s decisive fight against inflation in the early 1980s. In retrospect, taking on ever more risk has turned out well during the relentless move higher, if one could withstand sporadic jolts such as the 87-crash, the TMT bubble of the late ‘90s, the subprime crisis in ‘07/’08 or Covid-19. We thus live in an era where one feels pressure, if not a certain inevitability, to invest in equities. Savers in all age brackets are being advised to increase their allocation to stocks to be able to adequately fund their retirement. Retail traders have become conditioned “to buy the dip” whenever there is the slightest pullback in price. The casual advice typically heard in all extended bull runs is that “the only risk is not being invested enough.” Fintechs facilitate implementation by providing low-cost, easy-to-use apps to trade whatever and whenever we feel like. In institutional money management, meanwhile, some investment vehicles’ widespread use can be attributed in good measure to the long-running stock market boom. Prominent examples include equity index funds and active equity funds with a relative performance target. More far-reaching still, the bulk of investment allocations by pension plans and other long-duration savings arrangements is commonly channeled towards such funds.",[199],{"type":74,"attrs":200},{"color":23},{"type":68,"attrs":202,"content":203},{"textAlign":39},[204],{"text":205,"type":63,"marks":206},"Given the vast sums of money at stake, it is understandable that the securities industry habitually sees bright skies ahead for the markets’ favorite stocks. Intuitively appealing growth stories dominate most investment views. As a current example, the narrative on artificial intelligence revolves, in a first phase, around the key players in the build-out of the digital and physical infrastructure necessary for its diffusion (the enablers). In the second stage, AI promises to unlock new growth opportunities and productivity gains for all those willing to embrace it (the enabled). By extension, those who don’t adapt swiftly and decisively enough will have a hard time remaining competitive (the disrupted). This oversimplified win-or-lose categorization, in turn, may even cause corporate decision-makers to rush into an undue investment-for-growth mode. It could tempt them to raise spending on discretionary capex or to make acquisitions they didn’t plan for, while perhaps tapping in the dark regarding the expected payoff. There is nothing inherently wrong with using growth as a value driver. However, investors and corporate managers alike should always rationally assess plausibility and think through the ramifications before progressing.",[207],{"type":74,"attrs":208},{"color":23},{"type":68,"attrs":210,"content":211},{"textAlign":39},[212],{"text":213,"type":63,"marks":214},"We believe that value investing the way we practice it presents a tangible approach for investors looking to balance the overwhelming growth bias in most opinions and recommendations. First, we don’t play the relative-return game. Our focus on long-term absolute return frees us from the shackles of implicitly being required to take a view on everything at all times. We can wait for the right investment opportunity to emerge, irrespective of what the stock market is doing. Second, we adhere to a margin-of-safety discipline. It prevents us from making the common mistake of overpaying for growth. Third, we look for levers where corporate value can be unlocked unrelated to growth. For instance, we seek out bargains around corporate consolidation or reorganization, cost and capital efficiency, capital structure optimizations, or the identification of higher-and-better-use of assets (e.g., land repurposing). Fourth, we do not hesitate to invest in what we understand to be low- or no-growth industries, provided that the company in question can pull off a successful harvesting strategy. And fifth, as contrarians we tend to be wary of industries or investment paradigms in which companies feel compelled to fund major new projects in unseasoned ventures and technologies, or explore M&A deals, just to keep up with what competitors are doing. We concentrate on situations where firms have the leeway to undertake capex on a voluntary and countercyclical basis.",[215],{"type":74,"attrs":216},{"color":23},{"type":68,"attrs":218,"content":219},{"textAlign":39},[220],{"text":221,"type":63,"marks":222},"While the seemingly irresistible secular growth story in equities continues, we opt to stay true to our philosophy of patient bargain hunting. We diligently look for stocks that have unjustifiably fallen by the wayside. The value drivers we identify in our investments may or may not involve growth. We refuse to become “reluctant bulls” who believe they have no choice but to play along, and we consider it a privilege to be discerning rather than accommodating investors.",[223],{"type":74,"attrs":224},{"color":23},{"type":68,"attrs":226,"content":227},{"textAlign":39},[228],{"text":107,"type":63},"cio-insight-2q2026","en/themen-gedanken/cio-insight-2q2026",-230,[],"bb54a418-1f25-4568-b7ac-f7eb886a2e48","2026-09-08T14:08:02.864Z",[],{"name":237,"created_at":238,"published_at":239,"updated_at":240,"id":241,"uuid":242,"content":243,"slug":324,"full_slug":325,"sort_by_date":39,"position":326,"tag_list":327,"is_startpage":26,"parent_id":120,"meta_data":39,"group_id":328,"first_published_at":329,"release_id":39,"lang":44,"path":39,"alternates":330,"default_full_slug":39,"translated_slugs":39},"CIO Insight 1Q2026","2026-09-08T13:44:31.774Z","2026-09-10T11:50:56.096Z","2026-09-10T11:50:56.114Z",217847692424555,"2a4179da-1c95-4400-b61a-f8cafdfc673d",{"seo":244,"_uid":248,"date":249,"image":250,"title":245,"category":253,"sections":257,"component":115,"isFeatured":46,"description":23,"disablePrerender":26},{"_uid":14,"title":245,"plugin":16,"og_image":246,"og_title":245,"description":247,"twitter_image":246,"twitter_title":245,"og_description":247,"twitter_description":247},"Artificial Intelligence (AI) and the contrarian investor","https://a.storyblok.com/f/294930226098899/1230x820/7ff34222c2/1q26_1230x820.jpg","Equities markets have become increasingly concerned about the disruptive effect of AI, especially in its agentic form. From our vantage point we are convinced that the broad commercialization of AI presents a net positive for our business, for two crucial reasons. The first is related to what AI can do for us and the second how it helps to further differentiate our contrarian approach versus other, more conventional strategies.","47bada0f-b57d-4452-9e54-cee2308d5003","2026-04-14 00:00",{"id":251,"alt":23,"name":23,"focus":23,"title":23,"source":23,"filename":246,"copyright":23,"fieldtype":24,"meta_data":252,"is_external_url":26},217846514494311,{},{"name":28,"created_at":29,"published_at":30,"updated_at":31,"id":32,"uuid":33,"content":254,"slug":37,"full_slug":38,"sort_by_date":39,"position":40,"tag_list":255,"is_startpage":26,"parent_id":42,"meta_data":39,"group_id":43,"first_published_at":30,"release_id":39,"lang":44,"path":39,"alternates":256,"default_full_slug":39,"translated_slugs":39,"_stopResolving":46},{"_uid":35,"name":28,"component":36},[],[],[258],{"_uid":259,"content":260,"component":113,"backgroundColor":114},"3648639f-10ae-446e-a9ad-92ee1cabc58c",[261],{"_uid":262,"html":263,"author":108,"fontSize":109,"component":110,"authorRole":111,"authorCompany":112,"showAuthorAlsoOnBottom":46},"85e10ee0-301a-4b17-81e0-b74caf57bb31",{"type":54,"content":264},[265,272,280,288,296,304,312,320],{"type":57,"attrs":266,"content":267},{"level":59,"textAlign":39},[268],{"text":269,"type":63,"marks":270},"CIO Insights 1Q2026",[271],{"type":66},{"type":68,"attrs":273,"content":274},{"textAlign":39},[275],{"text":276,"type":63,"marks":277},"Equities markets have become increasingly concerned about the disruptive effect that AI, especially in its agentic form, will have on companies in industries ranging from Software as a Service (SaaS) and miscellaneous professional services (e.g., accounting, consulting, marketing, education, customer relationship management or freight logistics) all the way to financials such as fintechs, rating agencies, credit card processors and traditional players in banking and asset management. There cannot be a broad-brushed assessment of the impact. Every firm and every analyst looking at them will have to evaluate in frank terms how sensitive a particular business model is and how it should be adapted accordingly. This uncertainty is of great interest to us. Especially among select professional services firms that enjoy entrenched competitive positions and high client loyalty, we can see the market potentially overreacting.",[278],{"type":74,"attrs":279},{"color":23},{"type":68,"attrs":281,"content":282},{"textAlign":39},[283],{"text":284,"type":63,"marks":285},"The first order of concern, however, is to evaluate our own cooking: will AI make us obsolete? Ultimately, of course, it is our clients who are the judges as to how relevant our offering is to them within the context of their overall asset allocation programs. From our vantage point we are convinced that the broad commercialization of AI presents a net positive for our business, for two crucial reasons. The first is related to what AI can do for us and the second how it helps to further differentiate our contrarian approach versus other, more conventional strategies.",[286],{"type":74,"attrs":287},{"color":23},{"type":68,"attrs":289,"content":290},{"textAlign":39},[291],{"text":292,"type":63,"marks":293},"First, let’s shed light on how we manage to productively deploy AI. On one level, it makes several aspects of our day-to-day business support operations more efficient. Many data processing tasks and analytics so far have been managed with separate tools on varied platforms. Agentic AI now facilitates and enhances their interoperability, which leads to better overall information outcomes while greatly reducing the need for manual input. On another level, our investment research process likewise becomes more efficient. Relevant but basic due diligence information on business metrics, competitive analysis, strengths and weaknesses, threats and opportunities and macroeconomic sensitivities are much more rapidly distilled out in an AI world than before. Both factors free up precious time and resources that can be reallocated to our very business reason: weighing the strategic merits and prospects of individual firms, putting a value on them, managing the portfolios and interacting with clients.",[294],{"type":74,"attrs":295},{"color":23},{"type":68,"attrs":297,"content":298},{"textAlign":39},[299],{"text":300,"type":63,"marks":301},"Now, let’s look at AI’s shortcomings and how they help us in unintended ways to further differentiate our product offering. In plain terms, AI cannot supplant the human judgment skills necessary to evaluate whether we want to buy and then own a stock over a long period of time. Specifically, AI lacks the ability to help us develop a sound investment thesis around a divergent perspective on a business and hence its financial trajectory going forward, versus that implied by the market. To recall, we are dedicated contrarian investors looking for the counterintuitive, the misunderstood, the quirky, the obscure. A big part in a contrarian investor’s playbook is to be on the lookout for unexpected improvements in business conditions and eventual recovery form previously observed negative earnings trends. Our experience so far has been that AI, at least in the form of so-called large language models (LLMs), is built on an extrapolative, linear “reasoning” process. It is prone to develop predictive conclusions that fall mostly in line with what a conventional, consensus-based investment analysis would indicate. It follows that AI has difficulty in dealing with nonlinear systems, where an economic pattern may start to deviate from recently observed norms (as would be the case, for instance, in corporate turnarounds or at the nadir of business cycles).",[302],{"type":74,"attrs":303},{"color":23},{"type":68,"attrs":305,"content":306},{"textAlign":39},[307],{"text":308,"type":63,"marks":309},"Concurrently, we surmise that the consequences of how AI works and its ubiquitous availability to the investment management industry renders future investment decisions even more uniform. If everybody uses the same assumptions and input feeding their AI-driven algorithms, even fewer off-consensus views will be left to impact prices. This in turn will likely lead to more instances where individual companies may be significantly mispriced by the market, presenting new opportunities for us.",[310],{"type":74,"attrs":311},{"color":23},{"type":68,"attrs":313,"content":314},{"textAlign":39},[315],{"text":316,"type":63,"marks":317},"Thus, AI should benefit our business, both purposely and inadvertently. Most importantly, we will view the future as being AI-enabled, as opposed to AI-dictated. This means that we are determined to use AI in our favor and exploit its pros and cons, without becoming enslaved by it.",[318],{"type":74,"attrs":319},{"color":23},{"type":68,"attrs":321,"content":322},{"textAlign":39},[323],{"text":107,"type":63},"cio-insight-1q2026","en/themen-gedanken/cio-insight-1q2026",-30,[],"e4c02aa5-b20d-4108-abf7-99635a99180d","2026-09-08T14:08:00.295Z",[],{"name":332,"created_at":333,"published_at":334,"updated_at":335,"id":336,"uuid":337,"content":338,"slug":412,"full_slug":413,"sort_by_date":39,"position":414,"tag_list":415,"is_startpage":26,"parent_id":120,"meta_data":39,"group_id":416,"first_published_at":417,"release_id":39,"lang":44,"path":39,"alternates":418,"default_full_slug":39,"translated_slugs":39},"CIO Insight 4Q2025","2026-09-08T13:55:20.441Z","2026-09-10T11:51:46.218Z","2026-09-10T11:51:46.236Z",217850349358579,"3e57f999-f032-4ab8-88d0-4340c2bf9f1d",{"seo":339,"_uid":343,"date":344,"image":345,"title":340,"category":349,"sections":353,"component":115,"isFeatured":46,"description":23,"disablePrerender":26},{"_uid":14,"title":340,"plugin":16,"og_image":341,"og_title":340,"description":342,"twitter_image":341,"twitter_title":340,"og_description":342,"twitter_description":342},"The unlikely charms of cyclical businesses","https://a.storyblok.com/f/294930226098899/600x400/6fa7ea3c23/istock-2222231533_600x400.jpg","While globally synchronized contractions have become rarer, we believe that the recent lack thereof is an aberration rather than the new norm. Cyclical swings remain at the heart of market-based economics. Our structural exposure to cyclicals ensures that we stay recession-alert and properly think through the key threats and opportunities involved.","6724371c-3ff1-4181-b0a1-855235d49617","2026-01-14 00:00",{"id":346,"alt":23,"name":23,"focus":23,"title":23,"source":23,"filename":347,"copyright":23,"fieldtype":24,"meta_data":348,"is_external_url":26},217846644685694,"https://a.storyblok.com/f/294930226098899/1230x821/8c0c6cccbc/istock-2222231533_1230x820.jpg",{},{"name":28,"created_at":29,"published_at":30,"updated_at":31,"id":32,"uuid":33,"content":350,"slug":37,"full_slug":38,"sort_by_date":39,"position":40,"tag_list":351,"is_startpage":26,"parent_id":42,"meta_data":39,"group_id":43,"first_published_at":30,"release_id":39,"lang":44,"path":39,"alternates":352,"default_full_slug":39,"translated_slugs":39,"_stopResolving":46},{"_uid":35,"name":28,"component":36},[],[],[354],{"_uid":355,"content":356,"component":113,"backgroundColor":114},"3dea6a0b-64ba-4764-bee7-f3460d54c87a",[357],{"_uid":358,"html":359,"author":108,"fontSize":109,"component":110,"authorRole":111,"authorCompany":112,"showAuthorAlsoOnBottom":46},"c1f49e18-9c63-43ed-9947-7ea712d1314e",{"type":54,"content":360},[361,368,376,384,392,400,408],{"type":57,"attrs":362,"content":363},{"level":59,"textAlign":39},[364],{"text":365,"type":63,"marks":366},"CIO Insights 4Q2025",[367],{"type":66},{"type":68,"attrs":369,"content":370},{"textAlign":39},[371],{"text":372,"type":63,"marks":373},"The Nov. 15th weekly edition of The Economist contained a thoughtful article entitled “The recession recession.” It notes that globally synchronized downturns have become a rare species in modern history, thanks to the maturation of capitalism and better policymaking. Skillfully dribbling around periodic macroeconomic pain may seem only desirable. However, the piece argues that a lack of economic contraction brings about its own set of dangers, something which we wholeheartedly agree with. Fortunately, at least when viewed from a bottom-up perspective, it has been our experience that business cycles are alive and well. Basic chemicals and automotive are examples of sectors currently in recession mode on a worldwide scale. On a regional basis, stagnation is evident in housing construction in North America and Northern Europe, as well as the broader consumer economy in China. Downturns like these inherently attract deep value investors like us. There are several reasons why this is the case.",[374],{"type":74,"attrs":375},{"color":23},{"type":68,"attrs":377,"content":378},{"textAlign":39},[379],{"text":380,"type":63,"marks":381},"The first reason has to do with behavioral finance: most investors act pro-cyclically; they are inclined to buy booming markets and sell actual or expected downturns. Also, stock price swings in either direction tend to get exaggerated. We surmise that structural arguments to buy or sell get mixed in with cyclical ones. That is, when things look bleak in a particular industry, analysts may “throw in the towel” and jump to the conclusion that it is in terminal decline. Conversely, in a prolonged upcycle, bullish calls may be based on the prediction that the industry has entered a “new era” of growth. These dynamics make cyclical stocks the ideal hunting grounds for true contrarians because they tend to be cheap when supply-demand dynamics are troughing and expensive when business activity signals continued tightness.",[382],{"type":74,"attrs":383},{"color":23},{"type":68,"attrs":385,"content":386},{"textAlign":39},[387],{"text":388,"type":63,"marks":389},"The second set of arguments relates to how we search for, evaluate and value investments. Today there are only a few fund managers left that take a fundamental/entrepreneurial view rather than a quantitative/ratio-driven approach to stock screening. In our quest to identify cheap cyclicals, we prefer to rely on industry- and company-specific analytical tools such as the Porter five-forces model instead of quantified search methods. The reason is that the latter generally do not yield useful results due to the notoriously erratic fluctuations in margins, earnings and cash flows. When evaluating the merits of cyclicals, we appreciate that we don’t have to go out on a limb to foretell the future. Steel, cement and paper/packaging are examples of industries that have long histories that exhibit both big cyclical swings in the short-term but reasonably stable and rational competitive behavior over time. Thus, it usually suffices to study whether a mean-reversion dynamic can adequately explain a company’s track record. If this is the case, then normalizing past growth-margin patterns can be appropriate when modelling the company’s trajectory going forward. In short, for many economically sensitive firms, historic comparison constitutes a simple but trustworthy statistical input to the valuation process.",[390],{"type":74,"attrs":391},{"color":23},{"type":68,"attrs":393,"content":394},{"textAlign":39},[395],{"text":396,"type":63,"marks":397},"Finally, our portfolio management discipline is exceptionally well suited to handle stakes in cyclical businesses. We customarily establish positions in such companies during a heavy downcycle, when their equities have already fallen a lot. But unfortunately, we are not blessed with the ability to call turning points in price, and stocks usually have further to fall. We therefore build positions bit by bit, anticipating continued weakness. Such spaced periodic purchases result in a low average entry price. By the time the cycle shows signs of recovery, stock prices usually react suddenly and violently to the upside. At some point, they will presumably approach our conservative estimate of intrinsic value, upon which we begin to trim a position. In short, we replace timing with the method of averaging-in and averaging-out, a practice which has yielded winning results over time.",[398],{"type":74,"attrs":399},{"color":23},{"type":68,"attrs":401,"content":402},{"textAlign":39},[403],{"text":404,"type":63,"marks":405},"While globally synchronized contractions have become rarer, we believe that the recent lack thereof is an aberration rather than the new norm. Cyclical swings remain at the heart of market-based economics. In fact, plausible arguments can be made that they may present an even bigger risk to the global financial system going forward. Our structural exposure to cyclicals ensures that we stay recession-alert and properly think through the key threats and opportunities involved.",[406],{"type":74,"attrs":407},{"color":23},{"type":68,"attrs":409,"content":410},{"textAlign":39},[411],{"text":107,"type":63},"cio-insight-4q2025","en/themen-gedanken/cio-insight-4q2025",-370,[],"990f8370-53dc-4267-8bd0-0c7b955e6367","2026-09-08T14:08:07.344Z",[],[420],{"name":28,"created_at":29,"published_at":30,"updated_at":31,"id":32,"uuid":33,"content":421,"slug":37,"full_slug":38,"sort_by_date":39,"position":40,"tag_list":422,"is_startpage":26,"parent_id":42,"meta_data":39,"group_id":43,"first_published_at":30,"release_id":39,"lang":44,"path":39,"alternates":423,"default_full_slug":39,"translated_slugs":39},{"_uid":35,"name":28,"component":36},[],[],[],{"age":426,"cache-control":132,"connection":133,"content-encoding":134,"content-type":135,"date":427,"etag":428,"per-page":429,"referrer-policy":138,"sb-be-version":139,"server":140,"total":430,"transfer-encoding":141,"vary":142,"via":143,"x-amz-cf-id":431,"x-amz-cf-pop":145,"x-cache":146,"x-content-type-options":147,"x-frame-options":148,"x-permitted-cross-domain-policies":149,"x-request-id":432,"x-runtime":433,"x-xss-protection":152},"2786","Mon, 05 Oct 2026 14:12:37 GMT","W/\"c41e43ebbe3757a68e9eab00eafbab08\"","3","27","IQtqbTiB-HzEHelPInKzdVmKZpx7Nwtbc53EYa9KgYGOEG8nlTreFA==","2607d518-0134-47c2-ab21-0c40b66d5ace","0.044418",3,27,1791212342810]