Transcription
He who has no tech today, it's very complicated for him. When I see, in fact, all the big investors, how much they are underperforming currently, I tell myself either they have all become stupid, or it's that at some point the market is entering a phase that is not 100% rational. I think the worst thing to do is to change strategy. You're not okay with that, what are you going to do? You invest in states. Never in my life. States are spending like never before. They are led by people more or less incompetent, but often more incompetent. If you want to have maximum performance while taking the least risk possible, you are forced to underperform. And the reality is that you can underperform for 4 years and one year get 500%. When tech goes down, I don't think the money will disappear. Okay? The money will surely go elsewhere. What is certain is that you have to accept being silly, even being dumb. Come on, I'll take the terms out for a year or two. It can happen and it's not a big deal. Hello Xavier, hello Loris. Today, we are meeting for a new episode of Bourse Comote and we are going to talk a bit about the current markets. Uh, well, we talked about it a bit quickly with Julien in the episode on semiconductors, but for some time now, and especially since the beginning of the year, the market has been strongly driven by a single theme, that of AI. And broadly speaking, a large part of it is semiconductors, and that's precisely the subject we're going to cover today and discuss. Loris, sorry, can you tell us quickly about the market, especially the fact that it's driven by a small handful of stocks? Is this something that has already happened in the past, such a concentration? It's quite a recurring thing, often it's a few stocks that will drive the market. It's true that now, let's say, the top 10 represents 40% of the S&P 500, and globally, that's where the growth comes from. You just have to look at tech, tech, to see that since 2023, 60% of profit growth comes from the technology sector. So, it's really the one who has no tech today, it's very complicated for him. And today, tech grows twice as fast as other sectors. So, globally, it's tech that's pulling the market. But I, just to open the debate a bit, and it's a bit the subject of the video, globally everything is at its peak. We have the S&P 500 at its peak, the Nasdaq 100 at its peak, we have oil which is almost at its peak, we have gold which is still holding up relatively well. So, I think there are quite a lot of assets at their peak. And it makes me ask the question, should we really buy, you know, at this peak? And in fact, when we discuss it, but when we look at the indicators, the profit outlook, what's happening, is there anything else we can do at the same time? Well, I'm not sure. What do you think, Xavier, about staying in this market which is relatively expensive, 21 times earnings? Should we reduce stocks a bit? We always do the same thing, we stay. What do we do? What I like is when I take my magnifying glass, I realize that not everything is at its peak, though. Even if you're right, when you look at the indices at their peak. But what I like is when I still see potential in the S&P 500, no matter what, but let's say in a global index, I still see potential, I see a few stocks that have been massacred or are just a bit undervalued or even at their price, and good stocks, sometimes. I'm not necessarily talking about the software sector, etc., but I mean good stocks, they are not necessarily too expensive today. And I tell myself, well, at some point it will turn around. There will be a breather on the tech side, and there will be more traditional companies that will take off again. So, I tell myself that yes, what's driving this peak, at least on the stock market side, is tech. So that's for sure, someone who fears tech today must have questions about the market. I'm not one of those who are too worried about tech. After all, I remain invested and I don't have too many fears. But what's strange, because I don't look too much at the short term, is when we see the geopolitical situation and especially oil, which is a cost for 90% of people on the planet and companies on the planet, and tariffs, and so on, and on the other hand, prices at their peak, there's something a bit strange. After all, what we shouldn't forget is the results that were better than expected, once again, in Q1, 84% of companies did better than expected, etc. That doesn't come out of nowhere. People who don't look at valuations, yes, the valuation is a bit high, as you say, Loris, but companies are still churning out a lot of money, tech and not just tech, even if that's where we see the most growth. Well, I just think it's cool to have AI driving everything up while the D3 Dormous is blocked. I mean, I'm trying to be positive like that, telling myself, but what's strange is that we know very well that the day or rather when the D3 Dormous is unblocked, it will surely push a part of the economy upwards. In any case, Asia and Europe, even if the Americans are less affected. So, we have the impression, and it's been like this for years, we have the impression that bad news doesn't make prices fall and when there's good news, it makes them rise. And it's been like this for a long time, I think. It's been like this since 2009, even, you see Trump's tariffs, they made prices drop a bit in May, April, May 2025, well, a little over a year ago now, but it quickly went back up, and yet tariffs are much more expensive today than they were then. So, we have the impression that when bad news arrives, it doesn't make prices fall, but then when it's reversed, like D3 Dormous, it boosts things upwards. But as long as it's backed by company results, I'm not too worried. I'm more worried about gold, and even then there are justifications for that. Finally, what else is there? There are still cryptocurrencies which are far from their peak. But even interest rates are not that low. I mean, the 2010s were about quantitative easing, okay, you don't care, but now, with geopolitical problems, the D3 Dormous, interest rates remaining quite high, oil being high, it's complicated to say that the S&P, S&P 500, sorry, is at its peak. It makes me question things personally. And you know, there's this famous TINA, there is no alternative, today, in relation to, well, you have private companies, and if you're not okay with that, what do you do? You invest in states, in state debt. Personally, never in my life. States are spending like never before, they are led by people more or less incompetent, but often more incompetent than... No, but it's true everywhere, in any case, I'm talking about economic competence to manage a budget. To tell you how I, I have 100 and how much I spend 100. Now, they all have 100 and they spend 105, everywhere on the planet for decades. So, I'm not going to lend money to that. So, yeah. Personally, what makes me stay in these markets is that I wouldn't know where else to go. I don't have... There's still inflation that's coming back, which is not neutral, and the latest figures that came out, inflation is still there. So, you don't want to keep money in cash. Interest rates are in a somewhat average zone. It's not exciting to invest at these rates, but they're not rates that boost stocks to the moon either. So, if you ask me personally, apart from the fact that I believe in the stock market in the long term, etc., I wouldn't know where to put my money today other than in the stock market for the long term. I don't know if you have other leads. Well, no, but that's why the markets are so high, too. It's that, yes, after that, there are cryptocurrencies which are not at their peak. That's for sure. That's a good point, Abdallah, that's a good point. It's indeed someone who would have a strong conviction in crypto, Bitcoin, could say, yes, with the current price around 80, 80, which has fallen quite a bit compared to its peak, compared to the peak in stocks. Well, I have my opinion on that, and I prefer to be invested in stocks, but I understand that it can be tempting. But you see, I was discussing with Abdallah, a statistic that surprised me is that if you take since 2009 on the Nasdaq, there's only one year of decline, which is 2022, otherwise it's all up. And no, 2018, I think you had a drop of -0.1 in 2018. Well, for me, that's not a decline, basically. And on the increases, they're not small increases, you see. On average, I think we have 13 or 14 years out of 17 where the increases are double-digit. So, it's true that since, I think most people listening to us today haven't started investing before 2009, you see. So, most people have really only known tech, in any case, only tech. And I remember in 2022, the big topic was, is this the end of technology or not? You know, we were discussing the end of tech, it will be something else, as usual, etc. At the time, maybe healthcare was mentioned. On the contrary, healthcare today is very complicated. So, it's always interesting, but for now, it's tech, tech, tech. And he who has no tech at all, well, he misses out on all the gains, frankly. But then, let's get a bit more into the stock market. In fact, one of the... it's a bit the beginning of the podcast, and the question I asked Loris is that all the performance today comes exclusively from a handful of stocks. But that's been the case for a while with the FAANGs. But now it's really from a theme. That means that the semiconductor theme, mainly, is exploding, and all the stocks, for example, Caterpillar, which are exposed, directly or indirectly, and we see entire sectors, so Loris mentioned healthcare, SaaS, we don't talk about it, there are a lot of sectors like that which, at best, do nothing. I mean, we talk about Visa, all that, it doesn't do much, payments, etc., it doesn't do much. And at worst, they get destroyed if there's any doubt about AI disrupting them. And I find that we're entering a market, we also talked about it in the episode with Julien, where it's a bit unhealthy in the sense that if there are gains... for the whole to gain... for AI to really be a revolution, the whole economy must gain... the majority. And today, I have the impression that there's really only a small minority. And so my question is, does this movement, Xavier, on the markets seem healthy to you? Uh, no, there's a part that's not healthy. That's true. After all, this term "tech" is less and less appropriate. That's a problem. When you talk to me about tech, I don't know if you're talking about FAANGs, let's say, or if you're talking about semis, etc. Because if, for me, semis are indeed tech, but FAANGs, when I think about it, what do they do? They do entertainment. They make productivity tools that help us work daily. We all work on FAANG tools. When I entertain myself, especially if you include Netflix in it, etc., you'll entertain yourself on these platforms too, including YouTube, obviously. So, that's why, you see, in tech, there's advertising, there's entertainment. Now TF1, M6 are finished, now it's YouTube, you see. So, it's included in Alphabet, so it's included in what we call tech. In the end, it's not tech in the purest sense, etc. Where I agree with you, Abdallah, is that it reminds me of when we did the show on the Citrini Research report, a very negative report that explained that in the end the stock market would fall because AI has so improved productivity that there are no more employees, people... So, in the end, money has to come from somewhere, and people have to have the means to pay, and to pay for tech. So, absolutely, it's true that I have my eyes glued to the results, and I tell myself, "So far, so good," you know, it's a bit like "So far, so good." And but you see, you take financials, they're falling, insurance is falling, S&P global, even all those stocks are falling. Discretionary consumption is not benefiting. There are really very few sectors that are... sectors that are rising, they are rising. Yes, but I really don't want to get out of these other sectors. I really don't want to get out of them because at some point it will turn. At some point it will turn. Just like energy and banking, they did nothing for years. Well, it so happens that I didn't have any, or almost none. And the day it turned, well, energy and banking exploded. Defense did nothing for a long time, and then defense broke everything, well, on the European side. So, I know there are sectors that are underperforming compared to, in particular, tech in the broad sense, but I really don't want to get out of these sectors because, in any case, I'm very bad at market timing. So, I don't know when S&P Global, MSCI, or the payment sector, etc., will take off again. And it reminds me of energy and banking, which did nothing for years. Then, you absolutely had to have some. If you wanted to save your years, I don't know when, but let's say 2022, when everything was falling except for these companies. Same for defense. For me, diversification is set in stone, and that's why I'm not worried about tech, because when it goes down, I think the money won't disappear. Okay? The money will surely go elsewhere, and it might go to places where I'm not, like government bonds, or it will go back to the companies we were talking about, the payment sector, or software, etc., and that's it. So, it's true that I don't have any frustration in saying I missed out, I could have been much more in semis, I could have been much more in tech, already because I have a lot, but also because I have a lot in ETFs. So, having half in ETFs, for me, on the stock picking part, it naturally influences my choices a lot compared to you. So, knowing that Nvidia, for example, is 8% of the S&P 500, and that I have almost 50% of my stock market wealth in the S&P 500, it's certain that I won't rush into Nvidia on top of that. After that, I have... That's 4% in fact, if you do some calculations. Exactly, that's 4% of the total. After that, where I am still quite well positioned is indeed, as you know, with the hyperscalers, with the Amazons. It's well loaded, if you take ETFs. Yes, exactly. Here, I'm not necessarily serene, but as long as it's churning out money and I think they're not entirely wrong to invest hundreds of billions each year in data centers and AI, well, we're never very serene when we're at peaks, that's clear. But what's your sentiment? How do you feel now? Are you confident about adding a bit more money from time to time to stocks or not? First, before answering Loris's question, answer Xavier's question. But do you find this two-speed market, which has accelerated, to be healthy? It was already the case in recent years. I had discussed it with Julien, it's the behavior that bothers me, that is to say, it has evolved very rapidly in terms of narrative. You have to remember 2022, 2023, 2024, 2025. It evolves very rapidly. 2022 is the end of hyperscalers. They spend too much on capex. The cloud is not sure to be profitable. Finally, it exploded. FAANGs explosion, 2023-24, Google is finished. AI, Google is finished. Google is exploding. So, it evolves very, very rapidly, and where I stand, I'm a bit like Xavier. I'm relatively diversified. So, I accept having losers, and I have them, in consumption, in financials, etc. And I have my winners, I have them too, FAANGs, a bit of semis, a bit of Costco, and that makes a somewhat average portfolio. But I think the worst thing to do is to change strategy. That is to say, to say, "I missed out on photonic TSMC or whatever, and I'm entering at any price in FOMO mode." The most important thing for me is to protect my capital. And it's clear that I won't have any regrets. For me, the best strategy is, I refuse to have a portfolio that's too volatile. Potentially, I miss out on a bigger gain. That is to say, if the market goes up 15-20%, well, I'll probably do 10-12%. Ah, too bad. But already, I... Yes, I consider myself lucky to have started so early, and I don't need to stress about looking for more risk, more performance. I'll continue like this, and it's fine. So, this year, I'm doing about the MSCI World, 6-7% since the beginning of the year. It's not exceptional, unlike some who have 15% on SKNX or whatever, but, you know, I have positions that are -20%, -30%, I have positions that are +30%, that makes an average. By the way, Xavier, how is your portfolio performing? Is it going well this year? I imagine you don't have the figures because you're long-term like us. But I'm in ETFs, it's going well. Yes, exactly. That's also what's very satisfying with the ETF part I have, is that my portfolio is at its peak, obviously, you'll tell me, but so naturally I feel better, I won't start nitpicking, etc. I think I'm roughly following the World ETF. And the big question I asked myself for a long time but no longer ask today is, when people ask "How is your portfolio doing?", what do you compare it to? That's the thing for me, the big thing, and Loris compares himself to MSCI World. Which I find logical, as long as you've decided to have Europe in your portfolio, like you, Loris, I find it normal to compare yourself to MSCI World, but I think we tend too much to compare ourselves to the Nasdaq, or even to the S&P 500, but we already make a huge choice by comparing ourselves to a purely American index, or by comparing ourselves to the Nasdaq, or worse, by looking, and I sometimes get the impression, Abdallah, that you have a bit of that aspect of saying, you who have been very focused on semiconductors for a while, you say, "I should have put more," or "I should have perhaps gone into memory, which has exploded, or into such and such a thing." Not at all, because you've studied the sector a lot, and I think that I, who have perhaps studied the semiconductor sector less, when you said at some point, "I'd like to increase," and it took off without you, that's the worst, or for people listening who perhaps have very little in stocks and want to invest but are still in the learning phase, I find the current markets very difficult, in fact, when the rise has already happened and you haven't participated. Well, for that, I do have a frustration, which is that I've always considered semiconductors to be too expensive because they've always gone up. But the reality is that I saw very clearly that the prospects were very important. But still, I was always afraid. I always told myself, "I'll wait for a breather." A breather that never came, except in April 2025. And well, there were other fears in April 2025. So, that's another subject. But indeed, that's a real frustration I have, not being sufficiently exposed to semiconductors, and of course, that has a short-term impact. After that, frankly, I'm long-term, so it doesn't worry me too much. I don't have too many concerns. At some point, it will turn. I know I have good stocks in my portfolio, and when it turns, it will take off again, and I think there will be significant outperformance compared to indices that are very concentrated in semis and tech. But yes, that's a frustration I have. But personally, from my side, it's true that when I see all the big investors, how much they are currently underperforming the indices, I tell myself either they have all become stupid, and that's not my preferred hypothesis, or it's that at some point the market is entering a phase that is not 100% rational. Because you look at Terris, well, Terris hasn't been very good for a while now, but all of them, even François Rochon, Warren Buffett, well, Dev Cantasaria, we don't even talk about him because he only has Fico and S&P Global, he's absolutely being crushed, but even Bilam, well, all of them are going through a bad time right now, and so I have the impression that apart from those who invest in tech and very concentratedly in tech, it's difficult. If you want a reasonable portfolio, you are forced to underperform. That's the reality today. It's not a big deal. You take, if you are reasonable, you are forced to do worse. I mean, if you want to have maximum performance while taking the least risk possible, you are forced to underperform. So yes, see Bilakman. After all, it's true that Dev Cantasarian, well, he has, I think he's at -20% since the beginning of the year because, indeed, he only has financials. So, for me, that's not reasonable. But I mean, when you see Buffett, Tropon, etc., yes, they are underperforming, but listen, they will do better next time. We know that they are rather investors, it's a bit my case too, in my portfolio, who tend to slightly underperform in periods of rise. That is to say, the market will go up +20-25%, and I will do 15%. However, when it falls, I know my portfolio can hold. So, you know, I know Costco will fall less than if I have Lumentum or AMD, you see. So, I consider that we are rather in case number 2 where the managers are too cautious compared to the market which is euphoric, and that, a bit like in 1999-2000, I'm talking in terms of behavior, not in terms of price. One, these are investors who are not necessarily comfortable with semis, Buffett, Rochon, and others. They don't have enough knowledge yet, because let's be honest, 90% of individuals don't have much knowledge about semis. To pass that, it's already been 2-3 years that I've been on it, there's still a lot of work to do, you just have to listen to Julien for an hour to realize, okay, there's still work to do, you see. And so, I think, yes, there will perhaps be investors who will enter there later, but I think you shouldn't compare yourself, especially not with stocks, that's the worst mistake to make, like in 2000, I didn't invest in 99 in the internet, and in fact, if you look at the benchmark, you're not that far off. And two, the benchmark over one year, we don't care much. Well, at least I don't care much. What's terrible, in fact, is even the benchmark, you know, sometimes you look at certain stocks, so I'm thinking particularly of even Microsoft, but also others, the worst are the MSCI indices and all that, you look over 5 years, you say, but they're doing nothing at all, you see, because that's the worst mistake. Yes, because in fact, the base effect, you took it at the peak of 2021 or 2020, you look at it with the drop following AI, and so you find yourself saying, damn, I invested in this stock, it's doing nothing in 5 years, I would have just put it in a savings account, it would have been better, you see. Well, I agree, but often I think it's one of the worst mistakes to make, indeed, is to look, while on 20-30 years, it's sure that if for 20-30 years the stock does nothing, there's a problem, but over 3-4-5 years, what can happen is just a contraction, indeed, just of the P/E ratio. So, all the better, the stock is getting cheaper and cheaper. That's what's happening a bit with, well, what happened with Amazon, MSCI Amazon at the beginning of the year was doing nothing over 50, you see. Or or yes. But it's the base effect, in fact. It's the base effect. It's at what day you start. It's very rare that people bought exactly 5 years ago. You see, often people buy 2 years ago, they don't necessarily buy at the top or the bottom, but they buy 2 years ago, 3 years ago. And then they'll look over 5 years. I say, "Yes, but compare yourself, you see, I have MSCI, for example, I'm in slightly positive on it, I must be at 10% perhaps gain, 15%." Well, it's sure that if I look over 5 years, I say, "Well, it's doing nothing," but I didn't buy 5 years ago, you see. And it's rare that people bought exactly 5 years ago. I don't find that it makes much sense. But you see, what I like to do, and MSCI is a very good example, is that you don't look at the stock chart, but you just look at the results. And here I am on the results of MSCI. In 2021, net income was 700 million. And it's projected for this year to be 1.4 billion, so it's x2. So, you have two ways to see it. You look at the stock price and you say it's disappointing, or you say the profits have doubled. Translated, the valuation has been divided by since 2021. And I have companies like that, as long as the P/E ratio decreases, so it stagnates, it stagnates, it stagnates, but it grinds out profits year after year until the market rediscovers that it's not expensive compared to others, and perhaps I bought it too expensively, it was worth 28 and now it's at a P/E of 20, you see, for example. But at some point, it takes off again, and markets are still, money moves within the market, and today money is chasing semis. So, that doesn't worry me too much. After that, to come back to the super investors, I'm mixed. There's a part of me that says some of them are too old, they don't understand, they don't see what's happening. And you're talking more about Buffett, I imagine. Buffett, it's more him who manages. But Buffett, it's obvious. It's obvious. Buffett, in my opinion, and at what point the secretary who showed him, "Look, Warren, at ChatGPT, what we can do," and he said, "Oh, that's nice." No, but at Buffett's age, that's what's happening. I see with my parents, I show them ChatGPT, "Look how nice it is to write a letter." And they find it great. And then 3 months later, I ask them, "Have you used ChatGPT?" "Oh no." You see, you show it to them, they find it good, but they don't see the power, let alone everything we can see. So, there's that aspect, and I tell myself, yes, it's partly true. And then there's the aspect where, well, maybe he sees something we don't, I don't know. And the other point I find interesting is, is the S&P 500, to take that example, has it become an unreasonable portfolio when you say, Loris, yes, but in fact the market is almost too unbalanced. You see, someone who manages a stock portfolio correctly doesn't have that. They don't have 8% Nvidia, they don't have 25% in FAANGs, etc., or the concentration you were talking about. And I tell myself, it's crazy because in the end, today, what is sold, and I'm a part of it, what is sold as "you don't want to stress, you put in a World ETF or an S&P 500 ETF," in the end, for many active investors or stock pickers, it's an unreasonable portfolio, it's too concentrated, even though it has 500 stocks or 1400 stocks, etc. So, it's a question that, and I don't think so, I don't think it's monstrously biased or anything, I think active managers have really missed a wave. I share a bit of both, honestly. I agree with you. I think one, yes, they don't have enough knowledge. Two, on the ETF part, I find that we are at a high level of concentration. As long as the concentration is qualitative, it's not a problem. It's not a problem. What I fear, you know, we talked about it with Microsoft, in the last quarter, 34% of profits come from the rise of OpenAI. For Google, Microsoft, 34% of profits come from that. So, when they tell me that this year the S&P 500 will grow by 19%, in fact, I know that out of the 19%, there might be 4 to 5% that will come from that. Let's say, maybe a bit less, 3-4%. So, basically, you see,
There are still a few small points where I ask myself, is this really reasonable? Likewise, you talked about it in your video on SpaceX, there might be a change to quickly bring SpaceX into the indices. Is it reasonable to do that? You see, and it's this whole little trend of accounting entries, legislation, regulation where I say, "Yeah, I prefer to be a bit more cautious. I'm not Warren Buffett, I don't have 300 billion in cash, or I'm not at 20% cash, you see. But I think those who are listening to us, some are a bit frustrated because they have too much cash. Well, obviously, if you have 35% cash, it might not be the best thing to do. But I think being a bit more cautious in these markets, you'll tell me 2026, 2027, 2028, it can still go up. It's not a big deal, you're here for 20, 30 years, at worst you'll do a little less well.
Yeah, but what's terrible, in fact, what's terrible, is also the momentum. That is to say, you see, you invest, you say wow, great deal, I don't know, S&P Global. Let's take this stock. S&P Global goes down, you go all in, it keeps going down, you go all in again, you say even better deal, bam, bam, bam, you go all in again and it just keeps going down. And on the other side, you have stocks that are generally expensive, in any case well-valued, and that continue to rise. And you can't get into those if you remain reasonable. And at some point, it's really, well, I think there are some people, they have the FOMO, you see, to say, I invest in a reasoned way, as we have always recommended, and others, and the great investors, and in fact, for 1 or 2 years, I've been getting hammered, whereas in fact, maybe you just have to buy what's going up. And what I find a bit unhealthy, in fact, is to say to myself, well, I always come back to the same thing, it's always the same ones that go up, and even good stocks don't go up, for example, MSCI, but it's been a year or two, well, you see, you take S&P Global, you buy over 2 or 3 years, you've made money. Yes, it's only 15 or 20% up, but I've made money.
But I agree with you, Loris, I think there are few people who are truly long-term. That's the thing, in fact. There's also this cult, there's also this cult of, how to say, annual performance comparison, 2026, 2025, 2024, whereas in reality, well, it's just a convention we've agreed on, "We'll compare from January 1st to December 31st," but in itself, it doesn't really have any interest.
Me, me, the reality, I'll tell you, well, my portfolio is at its highest, between the cash that has come in and the fact that this year, well, I'm at 5-6%, I'll take it. It's everything that suits me, like, I'm higher than 3 months ago, than 6 months ago, than a year ago. Yes, I might have bought a stock a bit too expensive, or I might have missed an opportunity, etc., but I think the investor who thinks like this and who tries not to have FOMO, etc., in 20 years, they'll still be here. And instead of having a portfolio with a 30% chance of being at zero, a 30% chance of doing better, and a 20% chance of doing x5, x10, well, it will grow little by little, you see. And I think that's the simplest solution for most people, it's not to have FOMO for missing out on the rise.
Right now, I think in any case, it's really frustrating to see that good stocks, good companies whose profits are increasing, etc., continue to fall. Conversely, there's a small handful that are rising. Is it frustrating or is it good? I'm more on the other side, you see. Frankly, but I'm very happy. I'm very, very happy. But I think for some people, it's very frustrating. Yes, I agree with that. But very often, that's psychology. But as Xavier said, well, frankly, buying certain stocks that have gone from 40 to 22-23 times earnings, and where everything is fine, and there's not even, you know, there's not even this issue of AI disruption, well, that, I'm delighted. On the other hand, indeed, if we take luxury, luxury, well, fundamentally it's not doing well, well, it's not doing as well as 2 years ago. That's something else. There, on the other hand, I'm, well, we sold, etc., you see. But it's always this, you really have to be, you really have to be long-term. That's what I tell people, and you have to, yeah, you have to try not to compare yourself, really. And where I, you shouldn't, you shouldn't look at the thing. I see some. If I had put $10,000 in S&P, in Nvidia, I would be a millionaire, very good. I would have put $10,000 in Bitcoin, I would be a millionaire, very good too. The reality is that every month you invest a little, you make the effort, and you get 10%, 8% per year. In 20, 30 years, you'll be happy too, and you'll have much less risk.
I think everyone has a limit on the aspect. That's what you were saying, Abdallah. You do your homework, so to speak, you analyze a company, you realize that it's, let's say, undervalued or in any case that it has a magnificent future, a magnificent competitive advantage, etc. You buy it, it loses 10%, you reinvest, etc., and then there's still a limit at some point where you say, am I going down the wrong path, am I mistaken in my strategy? Shouldn't I ultimately worry less, analyze less, and then take what went up +30% in January because after that it went up +40% in February and +20% in March? And you say, I should have surfed the wave, it was good. But for me, these are two different things. Long-term investing and trying to surf these waves, doing momentum. They are almost two different worlds, in fact.
But by the way, the rest of this podcast, what I wanted to talk to you about is, do you think some strategies, should we change strategy now? Well, I know the answer, well, I imagine, but I'll ask you, Xavier. What do you think of people who say, "Well, in reality, my value quality strategy, well, whatever it is, it's underperforming." In fact, I believe there's a complete paradigm shift in the stock market. It's going to be that the semis will do well for 10 years and everything else will suffer, and I'm changing. So, it's better to get on board. What do you think of people who would have this reflection?
As soon as I hear underperforming or outperforming, but often underperforming, the first thing that makes me tick is compared to what? Because if you ask people, you'll see that generally, they'll compare themselves to the S&P 500 in the best case, or to the Nasdaq, or say, well, Micron did +300%. And that's it. And why do I say that? Because what do I compare myself to? I compare myself to a portfolio, even to a global net worth. So, what is a global net worth? There are stocks, there are bonds, there is real estate, there is private equity, there is gold, there is crypto, etc. That's a global portfolio. Already, by having 50% in stocks, we're not even talking about outperforming, just by having someone who has 50% or even 100% in stocks, they're already outperforming. Outperforming what? Someone who is not invested, or someone who only has real estate, or who has, well, or who only has, well, they will outperform most net worths. And I find that, so to go back to your example, Abdallah, even someone who is full, who does value, but instead of making 10%, makes 8%, I already, if they make 8% with their value system, etc., compared to a real estate portfolio, they're already making more money, you see. So it depends, and maybe with value, they sleep better at night, their portfolio is less volatile, I don't know. So, you see, I'm happy, I'm happy to be in the stock market. Yes, I follow the indices. Yes, I, well. And even if I underperform the MSCI World, or even less, as long as it's not too much less, you see, or if it's for a good reason that I haven't taken, I haven't taken less risk, but it's because I've made the right choices. After, if you start losing money in the stock market by doing value, when the stock market has had the years it's had for a few years, then you can ask yourself questions. Go ahead, Loris.
No, but what I agree with you on, what I wanted, was a bit my idea at the beginning, you see. I'm already lucky to have started early, to have, well, I'm happy about that. And the second point is, I totally agree with you. You have to look, you have to look at the capital allocation of the person, of their net worth. And people who are already in the stock market in France, if you do that, you're already outperforming 99% of people, and people always tend to look at the 0.01%. The stock that did that, the manager who did that. The reality is that you're already invested in the stock market, you're diversified, you have a bit of net worth, you make 7-8-10% per year, but that's already exceptional. 20% of French people are overdrawn. There are people who are not homeowners. If you're already a homeowner, that's good. There are quite a few things where I say to myself, you're outperforming in people's net worth. So I agree with you a bit on that. I prefer to look at it philosophically, that it's good to do it, but I think you're a bit too global. I was really talking about the stock portfolio here and not the global net worth, if we compare ourselves.
Yes, but but you see, it's already a choice to be in the stock market. You have to congratulate yourself for that, you see, and for having made the right bet, because there's inflation, because there's all that. The right bet to make in recent years was already the stock market compared to bonds.
It reminds me of sports. You know, it's like people who say, "Oh dear, I only ran my marathon in 3 hours and 11 minutes." But already, 30%, 30% of Americans are obese. There are people who can't run. Already, if you run 5 to 10 km every day, let's say three times a week, you're already in the top percentile of the population. You can do two pull-ups, you're already in the top percentile of the population. And people, they compare themselves to what? They'll look, they'll compare themselves to bodybuilders, to elite athletes. The guy on Instagram, "Oh yeah, I made 300% on Micron." Already, you see, if you have Nvidia, you made 30%. You have Amazon, you made 20%, that's already very good, you see.
But I'll answer your question, Abdallah. I'll answer your question about a portfolio for my stock market. First of all, the first thing is, do you understand why you're performing? And I think many people don't know why. If someone tells you, "I do value with a lot of Japanese companies, a lot of tech, a lot of this, and right now the value factor is underperforming for such and such a reason, and because interest rates, this and that," that person can live with underperformance. They explain it and they think it will come back, obviously, and that there will be a rebalancing at some point. For example, my part that is underperforming, I fully accept it, it's software companies that are threatened by AI, for example. I accept that. When I took positions that have gone down since, I knew very well, I took small positions because I know very well that it's going to be shaken up until AI determines the winners and losers. That is to say, we're in for a while, it's not a 6-month story. Well, this part, I understand it. Then there are underperformances that are due to companies that underperform less. Like Zoetis, for example, I had already talked about it, I had said, well, here's a failure, I'm selling it, etc. I was extremely lucky, for that matter, to sell a large part of it before it dropped by -20%. I discovered that during the week, or a little before. Anyway, so, for me, someone who doesn't understand why they're underperforming, there's a problem. That is to say, if it's voluntary, saying "I don't want to be too exposed to semis because I'm afraid of this and that," "I don't want to be too exposed," and that's accepted, that's fine. But if you don't understand why, and in fact you've picked randomly, well, you're typically missing out on AI and semis, but without realizing it, just because you picked the names you knew. So you bought Carrefour, this and that, Danone, etc. You don't understand why you don't have the stock market's performance. Well, then you might have to ask yourself questions, but if you don't understand, you have to change your strategy, right?
I agree with you, Xavier, but I'll come back to the annual performance aspect, so your total, etc. And I think there's something we shouldn't forget, and that is that in the long term, performances will be made over a limited number of years, or even weeks or months. You were talking about defense earlier. Defense for 10 years, it does nothing. It does absolutely nothing. Yet, if you look at the performance over 15 years today, it's exploding the indices, European defense. But you were looking at that just in 2021, until February 23, 2022, before the war in Ukraine, I think, I haven't done the exercise, but I think it was a very marked underperformance compared to the indices. And it's the same thing, especially with Total, Total Energies, it's a stock where I always saw comparisons with the S&P 500, the CAC 40, whatever you want. You compare and you say, "Oh, Total is an old stock! It hasn't done anything for X years, even if you take the dividend." But now, with the rise of oil prices, well, you make the same comparison and you say, "Ah, well, in the end, the performance isn't that bad." I think now they are like the MSCI World, or slightly above, but in any case, it's not as disconnected anymore. And the reality is that you can underperform for 4 years, and typically, memory, it wasn't a particularly exciting sector. And one year, you can gain 500%, and that's not impossible in the stock market. And that's what I find difficult, is that yes, you can underperform for a while and have a big outperformance in one year. It's the cycle, yes, the cycle of returns, of performances. As Xavier said, it's sure that if you do, well, -10, +10, and at the end you have +100% after 5 years, it's tough. And conversely, if the first year it's good and then nothing happens, it's also tough. It's better to have a smooth average of 10-15% per year than extremes. But then, I'm where I agree with you, Abdallah, it's the psychological aspect. That's why stock picking isn't for everyone, and sometimes you have to accept that sometimes it does nothing for a while. I know my limit is after 3 or 4 years, you see, I know that. So it's a 10-year thing, for example, you see. Let's say I have a stock that does nothing for 5 or 6 years, I think I'll have trouble holding on to it, I know that. So that's how it is, and maybe others have other limits, etc., one or two years, you see. For example, if I take, if I take Warren Buffett, I have the impression of listening to some people, they outperform over the last five years, by far, not at all. Look at 2022, he did better. 2025, he did a bit worse. 2024, he did the same thanks to Apple. 2023, he did a bit worse. But overall, you listen to people, you have the impression that Buffett is doing anything, he doesn't know what he's doing anymore. And what I'm saying is that overall, there are cycles where you'll do better, cycles where you'll do worse. And I like this quote from Rochon, which is basically, one year out of 3, I'll beat the index by a lot, one year out of 3, I'll do roughly the same, and one year out of 3, I'll be called an idiot, you see. And that's precisely what's happening now, that is to say, whoever doesn't have a lot of AI, I mean, I don't know, let's say if you have 5-6%, which is my case, you see, I have 5-6% in semis, whereas some have 30%. Well, the one who has 30% will tell me, "But in fact, you haven't understood anything, the AI cycle, the semis cycle, it's incredible, etc." And then me, well, the day, I don't know, insurance, financials pick up again, I'll say, "But in fact, you haven't understood anything," you see. So, for me, that doesn't make sense.
That's a very good quote from François Rochon. I like that one a lot too. After all, yes, being called an idiot one year out of three is still very regular, mind you. Well, that's 33% of the time. You look stupid. You see, this year, well, I'm roughly the same as the MSCI World, so well, it's a year like that, and maybe next year I'll do much better. Well, you see, it's an average. After, I'm not saying it will happen 33% of the time. But what's certain is that you have to accept being stupid, even being an idiot, let's use the terms, for a year or two. It can happen, and it's not a big deal.
Me, for example, I discussed it, I discussed it with my father who, overall, only invests in French companies, you see, and a bit of FOMO. He looks at the performance in the United States, and he tells me, "I might put a bit of S&P 500 in my portfolio, you see." Even though he didn't want to. And typically, because he looks at the CAC 40, the CAC 40 since the beginning of the year, it's not incredible. And just being allocated to the United States, I'm already very happy, you see, because there are people today who are in the stock market like us, but they have their entire net worth in CAC 40 companies, they have LVMH, they have companies that are struggling, you see. So, yeah, I like to compare myself, if anything, to those who do worse than to compare myself to those who do much better, because there will always be some, you see. And so, there's a good FOMO, you see. In fact, there's almost a good FOMO. For example, someone who is not invested in the stock market and says, "Ah, but the stock market has performed quite well in recent years. What if this encourages them?" Not to go all-in, perhaps, at the worst moment, especially if they're not, if they don't know too much, but it can encourage them to go, you see, or even in the United States, in your father's example, it's a very good example where someone who is not at all in semis, even if they are very expensive right now, to say, well, it's a shame not to be in that sector. So there's still a part of FOMO that is healthy, if it's taken sufficiently long-term, etc., but for me, if it's reasoned, there you go, if it's reasoned, pay attention to, well, the Nasdaq X or things like that. Exactly. And if it's something broad enough, not on a single stock or a very small sector, etc.
To finish, I'm very clear in the comments, how do you feel about this period? Are you serene? Do you have an ETF? Is stock picking working well for you? Do you have many stocks that are performing? On the contrary, are you frustrated because you're doing less well? Do you not care about indices? That can also make sense, you know. I know many people are like that, you're right. That is to say, sometimes comparing yourself to a benchmark over one or two years, you don't really care, or on the contrary, well, maybe it's the end of the month. Now, if you're not invested in the stock market, someone who's listening to us, Xavier, what do you tell them? S&P 500, be patient, get a foot in the door. What do you say?
Yeah, exactly. Get a foot in the door, because I think if you find the stock market expensive, and that can be perfectly understood right now, it's rather expensive compared to historical standards. For me, having a foot in it, we're already breaking barriers, and especially after that, it's all profit, because if we put, for example, 20 or 30% of what we want to invest, if it continues to rise, well, we're very happy, we've already put a foot in it, and it's not so bad if it continues at slightly higher levels, or we can even decide to wait, and if it goes down, well, then we enter at more attractive levels. What I don't like about FOMO, where it was, well, emotions are really at their peak when you're fully invested, or even worse than that when you've put in more than you had, so leverage, then emotions are at their peak, and emotions are also at their peak when you're not invested and you watch everything rise, or certain things rise, and you're not in it. And already, putting a part in the stock market, or in a sector, or in tech, or in the US, whatever, but something where you say, "It's working, but I'm a bit scared because it seems too valued." Having a foot in it, but it's neither total nor zero, allows you to have emotions that are at the right level, I think, for an investor. And that's why I never get out of the market completely, or to a large extent, because my emotions start to explode, and I don't use leverage, because likewise, my emotions explode, and emotions mean doing anything behind it. So I would say, yeah, at least, at least get a foot in the door and start investing a little.
Yeah, clearly. After all, that's the principle of dessert, it's made for that too, you know. But yeah, I completely agree with you, Xavier. Well, gentlemen, we've covered a lot. Don't hesitate to tell us what you think of the current situation in the markets. Are you more frustrated? Are you more happy? Tell us everything. And then Xavier, Loris, we'll see you soon for a new episode. Bye! Bye everyone.