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Thomas Braun on 20.10.2017

Thaler Nobel Prize 2017 – What investors can learn from the newly-minted holder of the Nobel Prize for Economics, Richard Thaler

Once again, a champion of behavioural economics has won the Nobel Prize for Economics. His most important contributions and teachings for us investors are examined below.

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Pascal Pruess on 02.06.2017

Pitney Bowes main market is shrinking: why we bought nevertheless

Pitney Bowes’s core business of franking machines is declining. Nevertheless, the Classic Funds recently took a position in the stock, attracted by the high cash flows and the growth prospects of new business, which the market seems to be overlooking.

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Thomas Braun on 14.03.2017

Why we sometimes use index puts to hedge ourselves against substantial price corrections

At our annual presentation we received many questions about our hedging policy using index puts. In this blog we explain how we endeavour to protect investors in our Classic Funds from major losses in particular situations.

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Markus Kaussen on 26.01.2017

Why are we sticking to the shares of LEONI AG?

The German specialist for cable and wiring systems LEONI AG has delivered mostly negative headlines over the past 18 months because of management mistakes. The tenure of the Chairman of the Supervisory Board is coming to an end this year, offering an opportunity for a fresh start.

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Georg von Wyss on 19.12.2016

Why are subordinated Monte dei Paschi bonds in the funds?

Shares in Monte dei Paschi caused the Classic Fund to suffer substantial losses this year. In the interim, however, they have been sold. In place of these, the fund now holds subordinated bonds issued by the bank. Georg von Wyss explains why.

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Georg von Wyss and Thomas Braun on 29.06.2016

Brexit and the Classic funds

Brexit has savaged the portfolios of the Classic funds, hitting the cyclical and banking stocks hard. But it won’t have a large medium-term impact on the intrinsic value of most of our companies, and even the ones with UK exposure will probably not be hit very hard.

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Georg von Wyss on 22.04.2016

Braun, von Wyss & Müller introduces ESG policy

We have written an ESG policy to formalize some of our investment principles. These are both ethical and good investment practice.

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Georg von Wyss and Thomas Braun on 17.02.2016

Analysis after a poor start to the year

The bad start to the year in the markets raises the question as to whether the fears fueled by media and some hedge fund managers are justified? The facts suggest differently. We view the correction as an entry opportunity.

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Daniel Jordan and Thomas Braun on 05.02.2016

Fund savings plan: ideal for long-term asset accumulation

Anyone who wants to accumulate wealth has to save. And savings have to be invested as well as possible. A good fund savings plan is the ideal solution for this. Since the start of this year, it has been possible to open such a fund savings plan at our long-standing partner, Liechtensteinische Landesbank, which offers the Classic Global Equity Fund and the Classic Value Equity Fund.

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Denise Christen on 26.11.2015

Video with Georg von Wyss describing our style of value investing

This article is actually a video. Georg von Wyss recently presented BWM’s style of value investing to the Swiss CFA Society. Also on the panel were Vitaliy Katsenelson and Guy Spier.

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Georg von Wyss on 26.10.2015

Country allocations in equity investing: hard to justify

It remains common to invest on a country by country basis on the theory that one can “play” the risks and opportunities in different national economies. A look at the composition of a few important indices shows this is not so easy to do, because these have little to do with the local economy. Other factors are often more important.

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Georg von Wyss on 22.09.2015

“Subscribe now? You have 20% cash!”

Recently we ran into yet another professional who did not want to subscribe to the fund at its current price. He seemed to be thinking the NAV was too high and may have interpreted our 20% cash levels negatively. In fact, neither is a good reason not to invest, as history shows.

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Thomas Braun and Georg von Wyss on 20.08.2015

Excessive fear of risk led to the undervaluation of two large bank stocks

Banks are considered especially risky even eight years after the outbreak of the financial and banking crisis. But sometimes the stock market becomes too pessimistic, as it has in the case of some bank stocks recently. That opened up the opportunity for us to buy two of them in the second quarter.

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Thomas Braun on 20.07.2015

Investment boutiques tend to achieve above-average returns

A new study shows that fund managers tend to outperform not just if they invest a good deal of their own money in their funds but also if they are organized as boutiques.

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Thomas Braun on 24.06.2015

Why you should invest with managers who eat their own cooking

An article was published recently on the “Morningstar” website. It asks whether investment funds in which the fund manager has invested a significant amount of his own money perform better than those without this exposure. In the case of Braun, von Wyss & Müller, not merely the three founding partners but also the team have invested practically all of their financial assets in the Classic funds. This analysis consequently attracted our keen attention.

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Georg von Wyss on 26.05.2015

Profit growth, job growth and stock prices: a case study in temporary employment

The four largest internationally active employment agencies, of which we own three, are an interesting case study in how everyone benefits when a company pursues the profit motive. Kelly Sevices, one of these, has not done so very well. But that doesn’t make it a bad investment today.

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Markus Kaussen on 20.04.2015

Long-term performance should be depicted with a logarithmic chart

Linear charts tend to exaggerate price movements over long periods of time. Only the logarithmic charts allow the intuitive interpretation of performance data.

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Georg von Wyss on 20.03.2015

The “best” fund is not best for everyone

Our funds did not appear in the recent „Bilanz“ story on the “best funds of the world” – for good reason. Not all investors define “best” as maximum performance over a given period of time but judge returns differently.

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Thomas Braun and Georg von Wyss on 27.02.2015

Passive investments such as index funds and ETFs are only the second-best solution

Passive investing with index funds and ETFs is experiencing a real boom. There are good reasons for this, but passive investing still remains the second best solution. We describe the best solution in this article – it will surprise no-one…

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Thomas Braun and Georg von Wyss on 16.01.2015

What does the Swiss National Bank’s decision to abandon the floor of 1.20 for the Euro mean for our funds?

The Swiss National Bank’s decision yesterday, January 15, to give up the lower bound of 1.20 against the euro led to a decline of this currency against the frank of 13% by market close. The US-dollar and other currencies important for Switzerland dropped by similar amounts.

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Thomas Braun on 22.12.2014

BWM‘s little secret

Braun, von Wyss & Müller deservedly is considered one of the pioneers of value investing in Switzerland. At the very beginning, however, not all of the founding partners were died in the wool value investors – but not for long. This article was published in the Finanz & Wirtschaft on 20.12.2014 in the rubric “Meine Anlagephilosophie” –  Denkanstösse für eine Dekade (page 27) in German only.

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Lars Selsas on 28.11.2014

Our oil services stocks are undervalued in spite of the drop in the oil price

Some of our worst performing stocks over the last few months have been Aker Solutions and Petrofac. These companies provide products and services to and do construction work for oil companies, which have become increasingly reluctant to pursue new development projects as the oil price has dropped to below USD 75 per barrel from USD 115 in July.

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Georg von Wyss on 30.10.2014

The agency problem, small firms and regulation

A great deal of current regulation is premised on the idea that all financial firms need to resolve “agency conflicts” – the divergence in goals of investors, the owners of the fund management companies and the often short-sighted managers they employ. But that is not the case in small firms such as ours, saddling them with an unnecessary and costly burden.

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Georg von Wyss on 22.09.2014

What really matters: the risk of long-term loss

Most investors often don’t realize it, but their investment horizons last a long time – at a minimum (!) until the day they die. Over such time periods stocks lose their risk of loss and offer by far the best real-world and inflation-adjusted returns. Bonds, by contrast, satisfy the need for reasonably constant, positive nominal returns but at the risk of inflation-adjusted losses of capital.

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Georg von Wyss on 27.08.2014

Volatility in the short term: not a worry for the value investor

Volatility has become the standard measure for the riskiness of securities. That is unfortunate, because it often has little to do with the risks of long-term loss investors face. We highlight volatility’s shortcomings and ultimately irrelevance for long-term investors.

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Georg von Wyss on 23.07.2014

Other risks for fund holders: macro, timing and organizational

In the second of a two-part article, we, Braun, von Wyss & Müller look at four more risks that a holder of fund units faces: the risk of macro-shocks, of us timing the market wrong and of us being incapacitated as a firm.

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Georg von Wyss on 24.06.2014

Risks and how we handle them

Investors who hold investment funds are exposed to a variety of risks. In this article, the first of two, Braun, von Wyss & Müller describes the firm-specific risks and the measures to mitigate them: analysis, the “margin of safety,” patience and diversification.

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Thomas Braun and Markus Kaussen on 28.05.2014

Don’t try to time the market with the Shiller P/E

The Shiller P/E indicates whether the stock market’s valuation is high or low, but it still shouldn’t be used to time the market. We tell you why in this article.

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Thomas Braun on 22.04.2014

Market Timing usually leads to lower returns

Many investors try to use market timing to increase their returns or to protect themselves against losses. But it requires both predicting how the market will develop and then choosing the right moments to exit and to reenter. Broadly based studies as well as more than thirty years of personal experience show that very few investors get all this right.

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Georg von Wyss on 24.03.2014

Fund performance in EUR and USD

The BWM Website now allows users to analyze returns in Euros and Dollars, too, a convenience for those who think in those currencies or who want to compare our funds to investments denominated in them. These figures are a good deal higher than in Francs, because of that currency’s strength. The difference, of course, is pretty much cosmetic. We explain why.

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Erich Müller and Thomas Braun on 17.02.2014

Purchase of fund units: secondary market is improved

The secondary market for fund units, in which one can buy and sell them at any time, has become more liquid and transparent. Of course subscriptions and redemptions directly with our custodian bank remain as easy as ever, and cheaper. In both cases, one must pay close attention to the commissions charged by one’s own bank.

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Georg von Wyss on 23.01.2014

How to deal with a large, unexpected outlay in the Base-Surplus-Method

The Base-Surplus-Method is a set of simple rules for investing and consuming one’s wealth while in retirement. But what if one faces the risk of a large, unplanned expense? Such a situation requires an adaption of one’s expectations and investment strategy.

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Thomas Braun on 20.12.2013

Cognitive biases and managing one’s career: why value investing works

Investors often behave irrationally, which can lead to suboptimal if not outright poor performance. Cognitive biases such as herding and overconfidence help to explain this phenomenon, but so does the fear of losing one’s job. Why Value Investing will continue to work for a long time.

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Thomas Braun on 30.11.2013

What does the 2013 Nobel Prize for Economics have to do with Value Investing ?

The studies of the Nobel Prize winners Fama and Shiller supply academic support for the fundamental principles of Value Investing. The prize-winning researchers show that stock prices vary around their intrinsic values in the long term and also confirm the existence of the value premium. The price of achieving it remains patience, however.

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Georg von Wyss on 21.10.2013

Growth in value investing

In commenting on its stock holdings, Braun, von Wyss & Müller most frequently mentions the firms’ growth rates. This is because they are one of the key determinants of company value. This article explains why growth rates are important to us as value investors and why we nevertheless differ from growth investors.

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Thomas Braun and Markus Kaussen on 25.09.2013

A fund’s long-term track record is an indicator of future outperformance

There are thousands of funds to choose from. Ranking services tell us which are the best over the recent years. However, this information is largely useless. What really counts is long-term performance coupled with qualitative factors.

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Markus Kaussen on 27.08.2013

Will the tablet kill off the PC?

Three large positions in the Classic Funds are under pressure, because they are exposed to the PC market, which is declining. The low valuations of stocks imply that it will continue to do so. We are convinced, however, that this is not true and see the low prices as an opportunity for the funds.

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Pascal Pruess on 22.07.2013

Why we are investing in the French television business

The Classic Funds hold a number of French firms that are active in the free-to-air television business with at least some of their activities – Vivendi, Lagardère and TFI. We think it may be of interest to our investors to know a bit more about why we have exposure to a sector that at first glance is facing a massive structural threat, given that the internet has recently become capable of transmitting masses of video of adequate quality. Is the industry not facing a fate similar to that of music and newspapers? Moreover, it is caught in a cyclical downdraught. Why invest now?

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Georg von Wyss on 25.06.2013

Does the Real Wealth Index (RWI) predict the stock market?

We developed the RWI in our study on the base-excess method. At first glance it looks as if this statistic could be an indicator of the market’s near-term development. It is not, in fact. But it is very useful for investors with a very long time horizon.

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Thomas Braun and Georg von Wyss on 24.05.2013

Should one sell stocks because the markets have risen a lot?

After the strong gains of the last months many investors are asking themselves, whether they should sell stocks because the markets are about to experience a big correction. Has the danger of this happening really become that large, or is not more dangerous to sell stocks now?

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Georg von Wyss on 19.04.2013

Chapter 11-style bankruptcy laws make equities riskier

The adaptation of European bankruptcy laws to emulate the American Chapter 11 process is dangerous for investors, if it obsoletes the rights issue as a means of recapitalization. Chapter 11 gives management an incentive to seek bankruptcy protection, in which shareholders are wiped out, rather than to raise additional equity.

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Georg von Wyss and Thomas Braun on 22.02.2013

How the Classic Funds vote at General Assemblies

The season of the shareholder assemblies has begun with a bang in Switzerland – the controversy over Daniel Vasella’s CHF 72 million “non-compete” package.

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Georg von Wyss on 24.01.2013

Presentation of the Base-Surplus Method

The base surplus method serves to help plan consumption of one’s wealth. If you are retired and have as a goal to consume as much of your portfolio as possible, while ensuring that it does not run out early, then it may be of use to you. The best results are achieved with stocks, even better ones with value stocks.

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Markus Kaussen on 21.11.2012

No long-term currency risk

Companies that do not incur lasting damage from short-term currency fluctuations are not exposed to long-term currency risks. In the long-term, exchange rates tend to move towards their relative purchasing power parity. This provides natural compensation for currency depreciation.

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Markus Kaussen on 23.10.2012

Over the long-term, continuous hedging of currency risks does not make financial sense

For the Swiss franc investor, the strength of the franc, resp. the depreciation of the foreign currencies leads to losses in a global portfolio. Unfortunately, these losses cannot be prevented in the long term using hedging transactions.

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Georg von Wyss on 21.09.2012

Kay Review describes best practice for asset managers

John Kay’s equity market review of July makes recommendations on how all participants in the equity market can improve returns to investors. Asset managers should concentrate holdings in a few companies they know well, engage with regularly and hold with the goal of achieving good returns in the long term – exactly what we do.

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Georg von Wyss on 13.07.2012

Stocks are 35% below their high, historically a buy signal

Whenever global stocks traded 35% below their most recent high, they were a buy for patient long-term investors. They are trading even lower at the moment, a historic opportunity.

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Thomas Braun and Georg von Wyss on 11.06.2012

Welcome

Welcome to our blog. We, the portfolio managers of the Classic funds and the analysts of Braun, von Wyss & Müller, will post our thoughts here on investing and our work as value investors. We will comment on the stocks we own in our funds only rarely. Nevertheless we hope that we will give the investors in the Classic funds and other readers enough material of interest to keep you coming back regularly.

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