Where is Germany (...and Europe) going to?

victor

Since Henry posted the comment about Bill Gross I've been surfing pimco's website.

All the comments are high quality.

This is one I liked very much:

http://europe.pimco.com/LeftNav/Regional+Market+Commentary/European+Perspectives/2005/European+Perspectives+Oct+05.htm

Best regards.

rffrydr · Posted: Thu Mar 09, 2006 6:43 pm Post subject:

Take apart that BMW and you will find plenty of GM parts. No-one does a better transmission for the price and longevity. Which is why I'll drive them--their trucks that is.
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HenryTo · Posted: Sat Dec 31, 2005 11:30 am Post subject:

Goodfella,

That depends on what you're looking for in a home. In terms of price, I believe the only developed country in the world that has not seen its housing prices appreciate in the last 35 years (in real terms) is Germany. Number 2 (second lowest) is Switzerland, number 3 is New Zealand, and number 4 is Japan.

Given home ownership is low (44%) in Germany, there is also no incentive for the general population to see housing prices go higher for the foreseeable future.

Have a good New Year's,

Henry

Goodfella · Veteran Poster Joined: 14 Oct 2005 Posts: 301

Buyout Firms, Scorned as `Locusts,' Invade German Home Market

http://www.bloomberg.com/apps/news?pid=10000100&sid=abmTxLYFznZ4&refer=germany

Anyone have any views on the German property market?

If anyone could suggest the best country to buy a house in now i would be very gratefull.

nodoodahs · Moderator Joined: 06 May 2005 Posts: 1872

http://news.ft.com/cms/s/4875157e-62d9-11da-8dad-0000779e2340.html

Article is very negative on the general state of corporate governance in Germany, placing it on a par with China.

Maybe it's more societal than it is whether the economy is based on clicks or bricks ...
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He was wearing my Harvard tie. Can you believe it? My Harvard tie. Like oh, sure, HE went to Harvard.

Goodfella · Veteran Poster Joined: 14 Oct 2005 Posts: 301

France Germany both have low home ownership rates. And relativley low HPI.

Uk and Ireland are the opposite. GDP growth has been high compared with other established economies in the EU.

Without doubt HPI increaes consumer spending, a large part of GDP.

victor · Posted: Mon Nov 07, 2005 2:33 am Post subject:

Hello again,

Here is a the composition of the Eurostoxx50, the 50 biggest companies in Europe (excluding UK).

They are ordered by descending P/E.

As you can see, the market values 1€ of SAP earnings at 29,27€. This is twice of say Bayer or Allianz.
The market values more SAP, l'Oreal, LVMH or Danone than the others because it believes that this companies may be able to improve their earnings above the others.

Now, tell me. Can you see in this list any real blockbuster that may rule the world as Coca-cola, Microsoft or Intel do?

tick/ company/ last/ market cap/ div.yield/ p/e (2005)
SAP sap 144,20 € 45.588 0,82% 29,27
OREP loreal 60,80 € 40.053 1,48% 24,03
LVMH Louis Vuitton Moet 66,85 € 32.752 1,66% 21,63
DANO danone 84,50 € 22.328 1,81% 20,29
GASI generali 25,30 € 32.283 2,09% 19,73
AIRP air liquide 151,20 € 16.503 2,49% 18,03
SIE siemens 62,14 € 55.372 2,14% 17,96
NOK1V nokia 14,46 € 64.112 2,49% 17,87
DCX daimler 41,60 € 42.133 3,61% 16,91
CGEP alcatel 10,05 € 13.123 0,70% 16,75
TLIT telecom italia 2,41 € 44.423 4,57% 16,43
AHLN ahold 5,70 € 8.859 0% 16,29
PHG phillips 22,38 € 29.454 1,88% 15,74
EAUG vivendi 26,70 € 28.641 3,30% 15,62
TEF telefonica 12,74 € 62.695 3,38% 15,36
UNc unilever 56,70 € 32.427 3,44% 15,18
IBE iberdrola 22,16 € 19.978 3,47% 14,80
SASY sanofi 67,00 € 93.511 2,07% 14,71
LYOE suez 22,60 € 26.000 3,89% 14,66
CARR carrefour 37,28 € 26.287 2,76% 14,51
SPI sanpaolo 12,45 € 23.277 4,42% 14,39
ELE endesa 20,42 € 21.620 3,62% 14,10
ENEL enel 6,72 € 41.296 8,04% 13,99
BAYG bayer 29,29 € 21.392 2,97% 13,98
RWE rwe 56,28 € 31.357 3,20% 13,90
CRDI unicredito 4,97 € 31.517 4,43% 13,44
BBVA bbva 14,73 € 49.947 2,42% 13,39
DTE deutsche telekom 14,93 € 62.672 4,62% 13,33
AXAF axa 24,95 € 47.626 3,17% 13,06
SAN banco santander 10,53 € 65.858 3,35% 12,61
EONG e.on 75,50 € 52.246 3,64% 12,28
ALBK. allied irish 17,20 € 15.034 3,78% 12,03
LAF lafarge 68,10 € 11.912 3,67% 11,62
FTE france telecom 21,97 € 57.142 4,55% 11,30
SGOB saint gobain 45,45 € 15.692 3,08% 11,30
DBK deutsche bank 79,65 € 43.669 3,14% 11,16
ALV allianz 119,20 € 47.190 1,74% 10,93
BASF basf 59,02 € 30.929 3,22% 10,73
SOGN societe generale 97,70 € 42.970 3,99% 10,67
CAGR credit agricole 25,00 € 37.433 3,52% 10,42
AAH abn amro 20,15 € 37.892 4,96% 10,37
TOTF total fina 217,10 € 134.925 2,86% 10,33
MUV muenchener 102,73 € 23.585 2,53% 10,33
AEGN aegon 12,96 € 20.439 3,40% 10,31
BNP bnp 65,20 € 57.221 3,82% 10,12
ENI.MI eni 22,64 € 90.661 4,20% 9,72
REP repsol 25,39 € 30.998 1,97% 9,13
ING ing 24,59 € 54.214 4,55% 9,06
FOR fortis 23,94 € 31.148 4,59% 8,96
REN renault 71,00 € 20.231 3,00% 5,66
simple average 39.772 3,17% 13,97

What I see is a list of very mature industries. None of them will go bankrupt (despite I will take care with Ahold, Vivendi and all italian related stocks), but quite probably none of them will be a 21st century world champion.

Just 2 stocks, from my point of view, may become big players.

The first one is NOKIA.
Nokia already is a world champion in mobile phones. Despite than its market share is decreasing because competition from Motorola or Sony-Ericsson, they still have the best known brand in this list.

The second is DANONE.
Danone is the closest thing we have to Coca-Cola. A well managed company with a solid brand in Europe, a good R+D team and focused in producing healthy food. And, by the way, it's an impossible target for merger or adquisition (ask Pepsico).
If ever it reaches a p/e near 12 I swear I sell my house, my car, ... even my wife and two children just to accumulate as much stock as possible.

HenryTo · Posted: Sat Nov 05, 2005 9:31 am Post subject:

In the U.S., 80% of millionaires are entreprenuers, while the remaining 20% are generally doctors, lawyers, and executives in major corporations. Starting your own business is encouraged - but that's mostly because the U.S. has a sufficiently big market to cater to most interests and hobbies - along with the business-friendly laws to boot.

Take this website, for example. There are 300 million potential subscribers domestically - not to mention the many potential international subscribers that are interested in the U.S. financial markets, such as yourself. I just cannot start such a website if I was in Germany, for example, or even in the UK primarily because of the lack of markets. I can try to become a very small niche (by focusing on the UK or German markets) catering to the world's customers, but this is a pretty risky endeavor.

Home ownership in U.S. is about 68% of all households, while home ownership in Germany is only 44%. Yet, mortgage debt as a % of GDP in the U.S. is only 10% higher than Germany's - 64% vs. 54%. Italy and France have been outperforming Germany, but mortgage debt as a % of GDP in Italy is only 13% while in France is only 25%.

Germany usually does very well in a global upswing, mainly because of its reliance on exports. But once this global upswing turns down, then the upward momentum of Germany's economy could quickly turn south. IMHO, Germany is one big cyclical stock.

Goodfella · Veteran Poster Joined: 14 Oct 2005 Posts: 301

SAP Deutshe Bank both based in munich and the best in their sectors.

The reason other western economies are outperforming Germany is because their is no housing bubble. Germans rent their property and dont take on debt. sensible

victor · Posted: Sat Nov 05, 2005 2:51 am Post subject:

One more thing.

The problems detailed in Pimco article explains our mentality quite well.
Why do we have a huge social welfare system?
Because we love security (or better stability) and we hate risks.

Will you leave a good actuary job and risk your future in order to start a website? Well, man, maybe you will in the USA, but not here in Europe.

All my comments are my point of view. I'm not Mr Europe, so I will be glad if any other european reader is so polite to crush all my opinions. This is a discussion forum, isn't it?

victor · Posted: Sat Nov 05, 2005 2:39 am Post subject:

I think I get your point of view, here is what I see:
While in your country the brighest people is developing start ups which may become global leaders in a near future (think of all internet related bussines a few years ago: google, dell, e-bay, ...), here in Continental Europe I see very talented people who aspire just to, say, be director of Google Europe, Dell Europe or E-bay Europe.

Thanks to our mentality, I believe Europe can produce the highest quality gadgets in the world (well, take Japan too). BMW is not the best example, they have good marketing and good reputation but they’re not the best car markers around (I and my service station know this first hand). But german Daimler or french PSA manufacture excellent cars.

Another example: SAP.
Here is a joke that says that if Bill Gates instead of making software, someday he decides to make cars he would last just one week, “Brake critical error: Continue? - Ignore? - Retry?”. Check how many times a day you press “Ctrl+Alt+Del”.
This kind of things don’t use to happen when you work with SAP.

One last example: The stock market in Spain.
Question: How many of the 20 biggests Spanish companies are born from an entrepreneur?
Answer: Just one. Inditex (= Zara retail stores). The others are former privatised monopolies, banks, and real estate.

Conclusion: We know how to do it well, but we lack the entrepreneurship spirit. Our future is not as bright as our bright people are.

HenryTo · Posted: Fri Nov 04, 2005 11:33 pm Post subject:

Thank you Victor, for posting that.

Germany is a global manufacturing power. German-made vehicles for example, are the envy of the world, especially by American auto manufactuers.

But then one has to wonder: Is this such a great thing? Because of the fact that Germany is a manufacturing power, and because the German labor force is so engaged in manufacturing, it also becomes a much more cyclical economy - totally dependent on exports and thus the spending patterns of other countries.

People then compare BMW with GM and cite this as evidence that the U.S. is going down the tubes. But consider this: While some of the best talent in Germany works at BMW, that is not the case here in the U.S. The best and brightest are working at places like Google, Microsoft, Yahoo, Goldman Sachs, Morgan Stanley, etc., and they are dominant in ways (on a global basis) that would have made John D. Rockefeller and Robert Woodruff proud.