Introduction
We are a fully independent wealth management consulting firm, established in France and dedicated to the production of stock market analysis using advanced mathematical procedures. Our statistical models based on AI (Artificial Intelligence) procedures have allowed us to record considerable success in recent years (see the chapter "performance").
We are experts in the research, development and implementation of financial asset management processes based on econometrics, i.e. mathematics applied to the fields of economics and finance. Various research papers in the field of investments and portfolio management have been included on this website. They are the principles that guide us.
Our models provide what can be described as the equilibrium price of an index (SP500, CAC) or a stock. We measure the difference between the price of the stock (or an index) on the market and the value given by our models. This difference reflects the level of the speculative component in the formation of the price of the index or share and gives valuable indications of the future evolution of the stock (rise or fall) as soon as a certain threshold is crossed (notion of statistical confidence interval). At a certain point, the increase in the value of a stock turns into a speculative bubble, the behavior of buyers ceases to rely on fundamentals and is characterized by the adoption of mimetic behaviors among the participants. You buy because the stock has been rising for some time (momentum concept) and you sell because the price is falling continuously.
We focus on medium- to long-term equities, our conviction is that the French public is underinvested in equities unlike the Anglo-Saxon public. Nevertheless, we are inclined to invest a significant portion in risk-free investments (low-duration bonds) if our econometric models suggest an overvalued stock market.
We invest in particular companies that are in the process of turning around in terms of profitability, i.e. any company that we identify as undervalued, likely to be acquired and which, in our opinion, is on the verge of regaining favour with operators (limitation of competitive pressures, arrival of a new management or a new product, an underlying on the rise: oil for oil companies or gold for gold mines).
Our way of operating is influenced by more than 20 years of reading and distilling the writings of great financial thinkers. As Benjamin Graham says :
"The investor must ignore the market, the current prices. An investor who allows himself to be pushed or unduly worried by the decline in his holdings in the market perversely transforms his fundamental advantage into a fundamental disadvantage... Price fluctuations have only one significant meaning for a true investor. They provide an opportunity for the investor to buy stocks cheaply when the indexes fall substantially and to sell when prices have risen too high. The best thing to do is not to pay too much attention to stock market fluctuations and to focus on the level of dividends and net and operating income (notion of EBITDA) of the companies he owns or plans to own."
It is not possible for us to promise fabulous future returns, but we can say that the investments we recommend will be based on the notion of intrinsic value and not on the popularity of the stock in question. Furthermore we believe that our models will continue to flash adequate signals.
Investing is a form of war. The stock market but also the bond markets are battlefields where it is very difficult for you to survive without the help of a professional. I invite you to take note of the performance of an average American investor (same observation for the French investor) see link. The only way an investor can win is if other investors lose. When you buy a stock, you want to buy a stock that will go up in price. You hope someone else is crazy enough to sell it to you for a low price. Similarly, when it's time for you to sell, you hope you can find someone stupid enough to get rid of your overvalued securities.
The analogy with war is relevant. To win the battle for profits, you need to know yourself and your enemy. Over long periods of time, the stock market outperforms all other financial assets. Still, many long-term investors are not reaping the benefits. What for? The majority of investments made by individuals are made when the market has peaked or is approaching its peak. Similarly, almost every time when a bear market ends, investors retreat to a liquid position waiting for the future to become clearer. This is understandable, but reckless.
If the great American general Patton were advising investors today, he might say: Your enemies are fear, greed, impatience, and procrastination when you know you have to do something. Your allies are patience, discipline, and good strategy.
SHARES SHOULD BE A SIGNIFICANT PART OF YOUR WEALTH
The following figures concern French financial and real estate markets but we reach the same conclusions with the US or UK markets.
Over the last 40 years (1981 to 2020), the annual rate of return of the stock market has reached 14.7% according to the IEIF but the volatility that has had to be accepted has been enormous at 24%. The stock market beats real estate in Paris, which nevertheless rose sharply by 10.6% per year between 1981 and 2021.Life insurance in euros has an annual performance of 5.7%, higher than inflation (2.5%), which is no longer the case in 2022.
gain moyen annuel volatilité
Actions 14.7% 24%
Logements Paris 10.6% 9%
SCPI 8 % 7%
Obligations 6.7% 9%
Assurance-vie en euros 5.7% 3%
Monétaire 4% 5%
Livret A 3.8% 2%
Or 3.7% 14%
Inflation 2.5% 2%
A volatility of 24% for equities means that their annual performance in the majority of cases has been between -9.3% (i.e. 14.7-24) and 38.7 (i.e. 14.7+24). Over the long term, equities are the most profitable investment but also the riskiest.
This superior performance is justified by risk-taking, which is also risk-taking and requires a sufficiently long investment horizon. The minimum investment period usually recommended is five years. Their valuation is volatile and you should avoid having to withdraw your money at a time when the markets are not favourable.
Below are the major bullish and bearish episodes in the US equity market (dominant worldwide)
As soon as you build up a portfolio of shares, you must prepare for the difficult episodes that will occur. Nevertheless our mathematical models aim to limit their negative impact on your wealth as much as possible. Investing regularly to smooth out entry points is advisable, and savers must be able to maintain their investment effort in turbulent times. This is crucial.
It is also important to think about diversifying your investments between several sectors and geographical areas.
Further arguments about the superiority of an investment in equities were developed by J Siegel in his book "stocks for the long run".
The following link allows you to measure the performance of the different forms of investment over a very long period of time. Click here Ici
