After the juicy US rally, reducing cash holdings now is (supposedly) not so smart in my opinion.
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@FairValue but there is a difference between a cash quota and strategic cash for additional purchases.
When I reduce cash holdings, I always keep a reserve for additional purchases in the event of setbacks.
I always trade long term according to "time in the market beats timing the market" and according to this motto I don't need a large reserve.
When I reduce cash holdings, I always keep a reserve for additional purchases in the event of setbacks.
I always trade long term according to "time in the market beats timing the market" and according to this motto I don't need a large reserve.
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•@FairValue There are shares and sectors that are significantly below their value. Those who act anti-cyclically now will be rewarded. Example software vs. overvalued ki hype stocks ;)
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•@Tomtom12 What method did you use to determine the "value" of the software shares and which hype AI values did you compare them with?
And what is your own learning from your portfolio?
And what is your own learning from your portfolio?
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@FairValue I mainly look at valuation levels relative to historical growth and cash flow. Many profitable software companies are currently trading well below previous multiples, although margins and recurring revenues remain strong.
By "AI hype" I rather mean certain extremely highly valued AI/chip/infra stocks where a lot of perfect growth already seems to be priced in. Not AI in general.
By "AI hype" I rather mean certain extremely highly valued AI/chip/infra stocks where a lot of perfect growth already seems to be priced in. Not AI in general.
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59Min
@Tomtom12 Then you are assuming that the market will have to price software at the same valuation levels in the future as in the past.
This may be the case to some extent, but it can also end in a classic value trap.
If the average valuation levels in a sector adjust downwards over the years, this means massive underperformance compared to the broad market.
This may be the case to some extent, but it can also end in a classic value trap.
If the average valuation levels in a sector adjust downwards over the years, this means massive underperformance compared to the broad market.
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56Min
@FairValue Of course, there is definitely a risk of a value trap. I also do not assume that all software stocks will automatically return to their old multiples.
My thesis is rather that the market is currently making a very strong distinction between "AI winners" and traditional software and is perhaps valuing some profitable companies with strong cash flows too negatively.
In the end, the decisive factor will probably be which companies can integrate AI productively and maintain their margins/growth rates.
My thesis is rather that the market is currently making a very strong distinction between "AI winners" and traditional software and is perhaps valuing some profitable companies with strong cash flows too negatively.
In the end, the decisive factor will probably be which companies can integrate AI productively and maintain their margins/growth rates.
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