Value over growth

Cherry-picking continues to offer investors opportunities: Reasonably valued companies that manufacture highly requested products and can also pass on the costs are currently in demand. Well-positioned companies from the telecommunications or the recently badly battered technology sector could also be interesting.

The authors

DJE's team of analysts monitors and evaluates the markets on an ongoing basis using the in-house FMM method according to fundamental, monetary and market criteria. They summarise their findings once a month.

From the analyst team of DJE Kapital AG

January 2022 was a difficult month. Some of the international stock markets fell sharply in January. The broad US index S&P 500 and the technology stocks index Nasdaq 100 experienced the largest price losses on a monthly basis since the Corona cut in March 2020. Relatively speaking, we did well and outperformed the MSCI World Index and major peers in January. From a monetary perspective, much of the future tighter US Federal Reserve policy appears to be priced in. Market technicals have clearly improved from the previous month. In terms of equity ratios, we will remain highly invested and continue to pay close attention to company valuations. In order not to jeopardise our outperformance from January, we will reduce larger underweights in the technology sector.


  • China remains difficult to assess and risky
  • Focus on attractively valued companies with good, high-demand products and high pricing power 1

In our opinion, Europe could continue to surprise positively in 2022. Europe should have more monetary tailwind than the USA due to the stronger stimulus from the European Central Bank (ECB). The situation in China remains difficult for the time being: the Olympic Games will most likely increase the number of covid cases in China. The government's current Corona policy is also leading to increasing discontent among the population. Economic data from China has been disappointing recently, such as the Caixin Purchasing Managers' Index, which, with an index value of 49.1, is below the threshold of 50, indicating a slight decline in economic activity. In general, we maintain that equity valuation will play a more important role in 2022 than in previous years. We focus on shares of companies that manufacture products in high demand or are currently even sold out and have high pricing power against the backdrop of rising global input costs. On the other hand, we are cautious about companies with above-average personnel costs.



  • Inflation will remain high in 2022
  • Central bank policy seems to be priced in

The inflation trend will remain one of the dominant topics on the capital markets. Although we continue to assume that there will be relief, especially from the second half of 2022, inflation will remain at a high level. However, its character is likely to change: from being driven by energy costs to being driven by rising wage costs and more expensive services. This will keep the pressure on central banks high. In the US, however, a more restrictive policy by the US Federal Reserve (Fed) is probably already largely priced in, as up to six interest rate hikes are currently expected this year and a reduction in the Fed's balance sheet of up to USD 1,000 billion by the end of 2023. Interest rates should continue to rise (we therefore continue to focus on short durations), but not to an extent that would be dangerous for the equity markets. In general, however, the (US) bond markets in 2022 are likely to be determined more by investors than by central banks. In Europe, on the other hand, a tapering discussion is even further away, so Europe appears more attractive from a monetary perspective.


Marktet Technique

  • Significantly improved compared to previous month
  • High pessimism on the bond market

The market technique has improved significantly compared to the previous month. The NAAIM2 indicator, which measures the investment rates of institutional investors, is currently back at around 53% (after just under 90% at the beginning of January) and the US put/call ratio3 is currently delivering one of the best buy signals since March 2020. Volatility indicators such as the ratio of long-term to short-term volatility in the S&P 500 also recently generated a buy signal. The cash ratio of global fund managers, which is in the buy zone at 5.0%, is also positive. The high pessimism for bonds also continues to be anti-cyclical.



  • Balanced portfolios continue to be advantageous
  • Reduce current high tech underweight
  • Add to telecom sector

We continue to focus on a balanced portfolio allocation. After the poor performance of the tech sector in January, much may already be priced in here. In our view, it is worth considering reducing too large underweights in this sector. In general, we continue to pay close attention to company valuations and avoid stocks that we perceive to be very expensive. Further moderate increases in interest rates should continue to be positive for the value category (e.g. banks, insurance companies, oil & gas, chemicals and other cyclical stocks). Within the value category, we pay close attention to high pricing power. A contra-indicator for us are too high personnel costs (measured against total costs). We consider oil/energy stocks to be promising in the long term, but somewhat overheated in the short term. The telecommunications sector could be interesting: On the one hand, investors are underweighted here, the valuation is not too high and private equity houses as well as activist investors have recently shown increased interest.



  • US dollar strength could continue due to tighter Fed policy
  • Emerging markets and precious metals remain under pressure
  • Gold remains largely neutral


The US dollar strength could continue in the medium to longer term, mainly due to the less expansive central bank policy compared to Europe. Emerging markets and precious metals generally suffer from a strengthening US dollar. We remain largely neutral on gold. ETF demand is still not really picking up here, and rising bond yields could be a burden here. The oil price has started 2022 with a gain of almost 20%. However, a possible easing of the Russia-Ukraine conflict could initially lead to falling prices here. The tight supply side (there is also little investment in production) for oil continues to argue in favour of high oil prices in the medium to longer term.


(1) Companies with high pricing power are those with strong brands, such as the iPhone giant Apple, or those that have occupied a strong market position, such as the software manufacturer Microsoft or the online retail giant Amazon.

(2) NAAIM (National Association of Active Investment Managers): The NAAIM exposure index tracks the average exposure of its members to the US equity markets. The NAAIM index is not forward-looking, but provides insight into the actual adjustments that active risk managers have made to client accounts over the past two weeks.

(3) Put/call ratio = ratio between call and put options. If put options predominate, the prevailing opinion is that this indicates negative market sentiment (stock market sentiment). If, on the other hand, call options predominate, this indicates a positive market sentiment from this point of view. In fact, a rise in prices can often be observed after high put-call ratios. The PCR is therefore considered a contra indicator. It should be noted that under normal conditions fewer put options are demanded than call options; a balanced PCR close to 1 is therefore already considered an indication of slightly negative market sentiment.


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