Last week, Saturday's episode of "All About Stocks" [1] featured an excerpt from the study "Do Stocks Outperform Treasury Bills?" [2], which sounded quite interesting and the contents of which I subsequently read again in more detail.

The essence of the study is that only a small proportion of companies are responsible for the majority of returns.

It therefore serves as a reminder that it is probably the best choice for the "average investor" to invest in a well-diversified ETF.

Here is a brief presentation of the results.

Hendrik Bessembinder from the W.P. Carey School of Business at Arizona State University has investigated which stocks really drive the market in the long term.

According to the study, since 1926 only 4% of all stocks have generated the total net profit of the US stock market [2].

The other 96% of stocks in total have only generated as much return as safe one-month US government bonds or even less [2]. The average monthly return here was 0.37% (which is roughly equivalent to an annual return of 4.53% when compound interest is taken into account).

Almost more interesting is the following:

The top 50 companies were responsible for 39.29% of the total value creation of the US stock market and.

... the top 90 stocks (only 0.36% of all companies) even generated more than 50% of the total market profit [2].

The 4% mentioned still represent just under 1,092 of over 25,000 companies. It doesn't seem so unrealistic to find them.

The only problem is:

The best stocks are usually only recognized in retrospect

• Apple, Mircosoft and Amazon were still small, unknown companies 30 years ago.
• Many investors would have bet on "safe" large companies back then, but some of them (e.g. Kodak or Nokia) are no longer among the top performers today.
• We will only know today's 4% winners in the future.

Even professionals often fail

• Active fund managers try to do just that: find the best stocks and avoid the bad ones.
• But most fund managers do not beat the market over the long term.

Timing is often extremely difficult

• Many of the best stocks looked like losers in the meantime.
• For example, the Amazon share fell $AMZN (-2,39%) after the dotcom crash by almost - 90 %, even after mid-2021 Amazon lost almost - 50 %, would you have held it?

More than half of all stocks have even generated negative returns over their entire lifetime [2].

That means: The average stock return we all know is not generated by the "broad" market, but only by these 4% of stocks.

Further results of the study:

Value creation on the stock market is extremely unevenly distributed.

• ExxonMobil $XOM (-0,73%) alone generated the most shareholder value creation with 1 trillion dollars and was responsible for 2.88% of the total market development from 1926 to 2016 [2].
• Apple $AAPL (+0,26%) ($745.7 billion), Microsoft $MSFT (-1,57%) ($629.8 billion), General Electric $GE (-4,03%) ($608.1 billion) and IBM $IBM (-0,47%) ($520.2 billion) are among the top 5 companies that together account for over 10% of total stock market value creation [2].

The question now for us as investors is:

Do I really think I can buy these 4% winning stocks early can find them early?

... and at the same time can I at least stay away from the biggest losers from the remaining 96%?

... or do I prefer to stick with John Bogle the founder of Vanguard, who gave the following famous quote:

🧠 "Don't try to find the needle in the haystack. Just buy the whole haystack."

The haystack is in that sense an ETF:

• ETFs are a self-optimizing system in which well-performing sectors and companies are overweighted and weak companies gradually lose importance.
• You don't have to find the 4% yourself, the ETF does it for you.

Conclusion

Yes, it is theoretically possible to find the 4% yourself, to time it correctly and to hold it, as well as to stay away from the biggest losers of the 96% in the long term.

The question is: do you want to bet your portfolio on it, or would you rather make sure you automatically profit from the 4%.

💡For most investors, a simple ETF investment as a "core" is therefore probably the best choice.

Thank you for reading 🤝

__________

P.S. The study was published in 2017 and last revised in 2018.

With regard to a more recent analysis, which refers specifically to the last few years, the study does not contain separate results for shorter periods. However, it does mention that this effect has been even more pronounced in recent decades, particularly since the 1980s. To get a detailed current analysis, one would have to search more recent research.

__________

Source:

[1] https://open.spotify.com/episode/7ik1W0e9zq7TBYacPW0eVl?si=Sw2Mu0XSSH2SQFp5cHtpLQ

[2]

published 01/2017, revised 06/2018
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447&utm_source=chatgpt.com

#Aktien
#ETF
#StockPicking

Earnings next week 🗓️

$SAP (-1,87%)

$NUE (-2,98%)

$VZ (+1,11%)

$GM (-2,75%)

$MMM (-2,37%)

$RTX (-1,21%)

$GE (-4,03%)

$ENPH (-1,43%)

$TXN (-0,26%)

$VRT (-7,34%)

$BA (-1,57%)

$T (+2,01%)

$KO (+2,3%)

$NEE (+2,37%)

$GEV (-8,21%)

$TMO (-0,59%)

$TSLA (-4,32%)

$LRCX (-3,19%)

$IBM (-0,47%)

$NOW (-2,3%)

$TMUS (+0,32%)

$AAL (-2,99%)

$UPS (+0,29%)

$LUV (-1,75%)

⚙️ Giants of industry: Siemens, Schneider Electric, GE & ABB in a power comparison 💪

Company presentation

• Siemens AG: Headquartered in Germany, Siemens is a global player in the fields of electrification, automation and digitalization. The company operates in a wide range of sectors, including industry, energy, mobility and building technology, and drives technological innovation to increase efficiency and sustainability.

• Schneider Electric SE: The French company Schneider Electric specializes in solutions for energy management and automation. Schneider has a strong focus on sustainable energy and increasing efficiency in various industrial sectors, which gives them a leading position in the industry.

• General Electric (GE): GE is an American industrial conglomerate that focuses on aerospace, energy, healthcare and renewable energy. In recent years, GE has increasingly focused on the development of aviation and divested other businesses.

• ABB Ltd: ABB, based in Switzerland, is a provider of electrification and automation technologies. ABB is particularly known for its innovations in robotics and digital solutions, which have made the company an important partner for industry.

Historical development

• Siemens: Founded in 1847 by Werner von Siemens, the company evolved from a pioneer in telegraph technology to a global innovation leader in automation and electrification technology.
• Schneider Electric: Originally founded in 1836 as a railroad and armaments company, Schneider Electric transformed over time into a company specializing in power distribution and automation.
• GE: Since the merger of Edison General Electric and Thomson-Houston in 1892, GE has pioneered technology in many areas, particularly in aviation and power generation.
• ABB: ABB was formed in 1988 from the merger of Sweden's ASEA and Switzerland's BBC and has since become one of the leading companies in automation and power technology.

Business models

• Siemens: Siemens operates in several segments, including Digital Industries, Smart Infrastructure, Mobility and Siemens Financial Services. The company pursues a business model based on the use of innovative technologies to improve efficiency and sustainability.
• Schneider Electric: Schneider Electric's focus is on digital solutions for energy management and automation. Its business model relies heavily on digitalization to increase sustainability and efficiency.
• GE: GE specializes in cutting-edge technological products, especially in aviation. The company pursues a strategy of diversification, with a clear focus on breakthrough technologies.
• ABB: ABB offers a wide range of products and services in the fields of electrification and automation. Its business model aims to improve operations through innovative software and automation solutions.

Core competencies

• Siemens: Outstanding innovative strength in automation technology, digital infrastructure and mobility solutions.
• Schneider Electric: Market leadership in energy management solutions and digital automation technologies with a strong focus on sustainability.
• GE: Leading position in aviation technology.
• ABB: Expertise in industrial automation, robotics and digital solutions to increase industrial efficiency.

Future prospects and strategic initiatives

• Siemens: Siemens is increasingly focusing on digitalization and sustainable technologies. The "Siemens Xcelerator" initiative is driving the development of digital solutions for a wide range of industries.
• Schneider Electric: Schneider Electric is planning further investments in sustainable technologies and digital solutions to increase energy efficiency worldwide.
• GE: GE is focusing on spinning off non-strategic businesses to focus on aviation and energy.
• ABB: ABB is investing heavily in research and development in artificial intelligence and robotics to further improve its product range and remain at the forefront of industrial innovation.

Market position and competition

• The company
• Market position
• Main competitors

• Siemens

Leader in industrial automation

Strong competition with Schneider Electric

• Schneider Electric

Market leader in energy management

Competition from Siemens and ABB

• GE

Dominant in aviation technology

Competition with Boeing in the aviation sector

• ABB

Leader in industrial automation

Competition with Siemens and Schneider Electric

Total Addressable Market (TAM)

• Siemens: The TAM for digital infrastructure solutions is estimated at several trillion euros.
• Schneider Electric: Schneider Electric sees a TAM in energy management and automation also in the trillions.
• GE: The aviation industry's TAM is estimated at over $800 billion.
• ABB: Industrial automation TAM is in the hundreds of billions of dollars.

Share performance

• Siemens AG: TR 10 years 169%
• Schneider Electric: TR 10 years 395%
• GE Aerospace: TR 10 years 74%
• ABB Ltd: TR 10 years 229%

For the development (company figures), better view and more check out the free blog: https://topicswithhead.beehiiv.com/p/giganten-der-industrie-siemens-schneider-electric-ge-abb-im-kraftvergleich

Conclusion

In terms of capital efficiency, ABB is clearly the top choice, followed by Schneider Electric, and their valuations are quite similar. However, ABB's domicile in Switzerland makes it a bit more cumbersome to buy its shares.

Looking at the last ten years, Schneider Electric has achieved remarkable results and could be considered a solid choice.

When it comes to innovation potential, Siemens is the most exciting candidate. The brand has a long history and has not always been at the forefront of change, but it has a wide range of interesting businesses. Despite its size, Siemens still has spin-off potential - an option that is often denied but demanded by many shareholders. Such a spin-off could be particularly beneficial, as similar moves have often had a positive effect in the past. The Mobility division, for example, could develop a new, independent focus. In the range between 125 and 145 euros, the share is already very attractive, as the company has strong figures and a leading position in promising areas.

For a rational investment decision, Schneider Electric and ABB combined offer a compelling package - both companies are strongly positioned and cover broad areas of industry, while also delivering excellent financial values.

Personally, I would prefer ABB and Siemens, in which I have not yet invested. Schneider Electric has clearly outperformed, but being based in France brings challenges - from withholding tax to domestic political decisions. The argument that "political stock markets have short legs" does not always apply here, as these factors are sometimes important. In addition, Schneider Electric's diversification is quite concentrated, which doesn't quite fit my idea of an industrial giant. Nevertheless, the share is definitely recommendable.

General Electric (GE), on the other hand, is less interesting for me due to the company's complex structure. Even though the company has just repositioned itself in order to regain its former strength. However, the spin-offs GE Healthcare and Vernova as separate units are definitely interesting, even if they have less to do with the topic now.

In conclusion, Siemens and ABB are well-diversified industrial groups that are driving modernization and automation worldwide and benefiting directly from change. Even in important markets such as Germany, there is still some work to be done, but in the medium term, modernization will hardly be avoidable here either. Both Siemens and ABB are excellently positioned for these developments, as well as in dynamic regions such as the USA and China. So if you want shares in this sector, here is the go-to. Schneider E. for those who really don't want to do without and otherwise ABB or Siemens, with a slight majority for ABB.

$SIE (-0,45%)
$ABBNY (-0,56%)
$GE (-4,03%)
$SU (+0,5%)

Let's see if I'm unlucky again this time or if the others win too

Long on $GE (-4,03%)

• ticket: https://www.sg-zertifikate.de/product-details/SW5UJ5
• Leverage: 8
• Knock-Out: 142.87$
• Portfolio weighting: 0.34%
• Stoploss is set at -20% // Edit1: Stoploss set at 1.91€ // Edit2: Stoploss set at 2.25€ (+17%)

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no risk no fun. that's my motto

https://www.youtube.com/watch?v=7Foftj4voa0

What we can expect from tomorrow:

Monday:

• SAP ($SAP (-1,87%)) Verizon, Communications ($VZ (+1,11%)) Ryanair Holdings ($RYAAY (+1,4%)),
• Truist Financial ($TFC (-1,73%)) report figures

Tuesday:

• Existing property sales (June)
• Alphabet ($GOOGL (-2,28%)), Tesla ($TSLA (-4,32%)), Visa ($V (-0,16%)), Coca-Cola ($KO (+2,3%)), GE Aerospace ($GE (-4,03%)), Comcast ($CMCSA (+0,26%)), United Parcel Service ($UPS (+0,29%)) report figures

Wednesday:

• S&P Global Flash Composite U.S. PMI (July)
• New real estate sales (June)
• Advance International Trade (June)
• Advance retail inventories (June)
• Advance wholesale stocks (June)
• Thermo Fisher Scientific ($TMO), IBM ($IBM (-0,47%)), ServiceNow ($NOW (-2,3%)), AT&T ($T (+2,01%)) report figures

Thursday:

• Gross Domestic Product (GDP) (Q2)
• Durable goods orders (June)
• FigVie ($ABBV (+0,94%)), AstraZeneca ($AZN (+1,03%)), Union Pacific Corp ($UNP (-0,01%)), Unilever ($UL (+1,42%)), Honeywell International ($HON (+0,19%)) - report figures

Friday:

• Personal Consumption Expenditure (PCE) Index (June)
• Consumer Sentiment (July)
• Bristol Myers Squibb ($BMY (+0,76%)), Colgate-Palmolive ($CL (+2,47%)), 3M ($MMM (-2,37%)) report figures

Sale 1 of 4 due to error limit instead of stop.

So after about 7 years I am parting with General Electric.

What made me buy in 2016/17? Share price performance and high dividend yield.

What was the result, pension provisions and mismanagement halved the share price again, dividend was canceled.

$GE (-4,03%) Restructuring case.

After 7 years, 2 with dividends, I have now reached my entry price again. There were also spin-off shares $GEV (-8,21%) and $GEHC (-0,32%) I hold them for less than 5,000 euros.

What have I learned? Despite blue stocks, US and dividend stocks, even aristocrats at the time, things never go as expected.

In my inbox today:

$GE (-4,03%) GE divests GE Vernova

GE announces the filing of the registration statement on Form 10 for the proposed spin-off of GE Vernova

GE Vernova, a global leader driving electrification and decarbonization, will become a standalone public company

GE Vernova is well positioned for decades of growth driven by the energy transition

Latest milestone: GE Vernova prepares for spin-off in early April following strong 2023 results and continued momentum

GE's financial position is strong and supports the development of GE Vernova and GE Aerospace as well-capitalized, investment-grade companies

(WK internal) - BOSTON - GE (NYSE:GE) today announced the filing of its Form 10 registration statement with the U.S. Securities and Exchange Commission ("SEC") for the proposed spin-off of GE Vernova.

A copy of the Form 10 is available on the SEC's website at www.sec.gov.

H. Lawrence Culp, Jr, Chairman and CEO of GE and CEO of GE Aerospace, said, "Today's filing underscores GE Vernova's important progress toward its spin-off as an independent, global leader driving electrification and decarbonization." Our financial position is strong to support the development of GE Vernova and GE Aerospace as well-capitalized, investment-grade companies, and we look forward to introducing them to the world in early April."

Scott Strazik, CEO of GE Vernova, said: "GE Vernova is a purpose-built company serving the energy industry with a unique scope and scale of solutions to create a more sustainable world." Today's milestone demonstrates the significant progress our teams have made in preparing GE Vernova to launch as a standalone company and shows how we will capitalize on the growing demand for products and services for the energy transition. Our momentum continues to build with this latest milestone as we approach our spin-off."

Source:

Windkraft Journal

My portfolio

$GE (-4,03%) can anyone say when the last distribution of $GE will be carried out?