Opinion

Corporate governance is one of those topics investors prefer to push into the background as long as markets are rising. Yet the quality of corporate governance is one of the most decisive factors for the long-term valuation of an equity market.

Stel je voor: je baas kan precies zien wanneer je achter je bureau zit. Hoe laat je aankomt, hoe laat je weggaat, wanneer je luncht. Klinkt als een nachtmerrie uit een dystopische roman? Voor driehonderd aandelenanalisten was dit tussen 2017 en 2021 gewoon realiteit.

Every May, a ritual unfolds in Omaha, Nebraska that I have never quite understood. Thousands of investors fly to a shareholder meeting in the middle of the American Midwest to hear a wise old man explain that smart investors can probably find better uses for their money than flying to shareholder meetings in the middle of the American Midwest.

Every time an oil crisis occurs, the recession scenario is immediately dusted off. The oil price rises, analysts pull out their charts, and within a week the first warnings appear that a recession is inevitable. But the relationship between oil crises and recessions is much weaker than is commonly assumed.

With no end to the war with Iran in sight, talk of a recession is resurfacing. Yet other indicators suggest that the bull market is far from over.

European dependence on fossil fuels poses a risk to price stability. That is according to Frank Elderson, the Dutch member of the Executive Board of the European Central Bank (ECB). Energy shocks, which seem to occur with increasing frequency, are making it ever more difficult for the ECB to keep inflation at 2 percent per year.

There was a time when software companies could rely on growth rates and compelling narratives about scalable business models. Revenue was paramount, profit an afterthought. A decade ago, investors routinely paid six to ten times annual recurring revenue for SaaS businesses, and that felt entirely reasonable. Anyone who raised concerns about cash flow was dismissed as an old-fashioned investor who did not understand the future. That era has ended.

For over ten years, I’ve been writing articles for investors, economists, and anyone with even the slightest interest in the financial markets. Extremely negative stories, stories about the issues of the day, or stories with sensational headlines tend to do particularly well. Although I’m occasionally lumped into the first category, I’m usually not very good at writing those kinds of stories. But today I have a topic that tops the charts every day: Artificial Intelligence.

While the whole world was watching the Serena Hotel in Islamabad, where the ceasefire negotiations on Iran were taking place, the real news last week unfolded 6,000 kilometers away.

I have been watching the financial markets with some amazement for the past few weeks. A US president threatening the eradication of an entire society, while equity markets remain largely unchanged. Then a fresh TACO triggers a recovery rally of several percent, even though there is nothing more than a two-week ceasefire and ongoing uncertainty. For anyone looking even slightly ahead, a clear bump appears that we will all have to get over.