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In the current context of volatility on financial markets, we wish to share with you an insightful article by our president and portfolio manager, Philippe Pratte, published in Le Droit.
In his article titled “Turbulence on the Stock Market: Citizens Must Keep a Cool Head,” Philippe emphasizes the importance for investors not to panic during turbulent periods. He particularly notes that pullbacks of around 10% are common, occurring on average every 14 months, often providing interesting opportunities for astute investors.
Philippe stresses the significance of rational portfolio management, reminding investors to thoroughly assess their long-term financial needs with their advisor. He also cautions against impulsive decisions, such as panic selling, as these choices can have long-lasting negative consequences.
Additionally, he highlights the speed at which markets can react, sometimes even to false information, complicating any effective short-term reaction. According to Philippe, the best strategy remains to stay focused on your investment objectives and ensure your risk profile always aligns with your expectations.
We invite you to read the full article by clicking on the following link (article in French only): Turbulences à la Bourse : le citoyen doit garder la tête froide – Le Droit
In this perspective, we have also prepared a market note specifically for you to better understand recent events and their impact on your investments. It includes a detailed analysis of the current context and our outlook moving forward.
Happy reading, and please feel free to contact us if you have any questions or wish to discuss your portfolio.
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Market Note – Artificial Volatility and Opportunities in Technology
A Challenging Week… But Rich with Opportunities
The past week has been challenging in the markets. Stock indexes experienced significant declines amid increasing uncertainty: rising interest rates, economic slowdown, geopolitical tensions, and persistent fears around trade policies. Result: extreme volatility, nervous investors, and a highly sensitive market.
But today’s session offered an important reminder: market reactions remain driven more by emotion than fundamentals.
A Seven-Minute Rebound That Speaks Volumes
After sharply opening lower yesterday morning, the markets suddenly rebounded for seven minutes. The reason? A simple tweet suggesting some tariff hikes might be cancelled. No macroeconomic change, no corporate results—just a rumour.
This kind of movement highlights an unavoidable reality: the current volatility is largely artificial, fuelled by impulsive, often automated reactions to surface-level news. Investors should therefore remain calm and avoid being carried away by short-term turbulence.
Our Models Reveal a Significant Valuation Gap
Stepping back, our analysis is clear: according to our internal valuation model, the gap between current market prices and our 12-month targets is 69.2%. In other words, several quality stocks are trading far below their fair value, due to prevailing fear rather than fundamental deterioration.
It is precisely in such environments that attractive opportunities emerge.
Focus on Liquid Tech Stocks: Pillars of the Next Cycle
Large-cap tech stocks, despite recent volatility, remain central to our strategy. Why?
• These are strong companies, with healthy balance sheets and significant adaptability.
• They generate substantial cash flows and maintain good growth.
• Their liquidity attracts capital as soon as market confidence returns.
Historically, such stocks often lead the recovery after downturns.
Recommended Strategy: Stay Positioned and Consider Adding
In a fear-driven context, often going against the grain is necessary to create value. Our strategic recommendation:
• Stay invested: fundamentals remain solid despite volatility.
• Take advantage of pullbacks to reposition: current price levels are attractive.
• Focus on quality: liquid, well-managed, profitable companies.
The market is unlikely to remain this significantly disconnected from fundamental values for long. Patience is often rewarded, especially when investing in quality companies.
Conclusion: Confidence, Discipline, and Opportunism
Yes, volatility is high. Yes, it is largely artificial. But this environment also creates rare opportunities to build or strengthen positions at good prices.
Our message to investors is simple: stay calm, disciplined, and attentive to opportunities. Fundamentals will eventually prevail, rewarding those who have the vision and courage to remain engaged in the market.
The Pratte Portfolio Management Team
