B.U.Y. BASIC STRATEGY
B.U.Y. EQUITY PORTFOLIO
WHY
Another
Equity PORTOFLIO?
Having an idea of the floor matters more than chasing the ceiling
all that matters
Price and Fundamentals
The SPX Price Gauge
Shiller CAPE Ratio
Important Note: The data presented does not constitute investment advice. It is sourced from Professor Robert Shiller and the data he publishes, intended for informational purposes only.
Why Shiller CAPE Excels as a Gauge for Equity Portfolios, Especially Passive Ones
1. U.S. MARKET
Global and index investors predominantly allocate to U.S. equities, with broad passive funds averaging over 60% exposure, making the U.S. a key benchmark for market valuations.
2. SHILLER CAPE
The CAPE (Cyclically Adjusted Price-to-Earnings) ratio adjusts the S&P 500’s price to its 10-year average real, inflation-adjusted earnings, mitigating short-term fluctuations to assess long-term market valuation trends.
3. MEANING FOR INVESTOR
A CAPE of 40 indicates subdued future returns, with an expected yield of about 2.5%—historically low relative to risk-free rates. At stable earnings growth, capital recovery would take approximately 40 years.
4. VALUATION MEAN REVERSAL
High valuations heighten the risk of a significant correction: with a historical median CAPE of 16, a ratio of 40 suggests a potential 50% decline in market value, requiring a 100% gain afterward to break even.
Such a correction can trigger economic disruptions, delaying recovery and risking decades of poor or negative equity returns.
Many investors, facing emotional strain, may avoid re-entering at lower valuations due to recency bias from recent losses, leading to long-term wealth erosion.
INVESTING in equity 101
Creating a Portfolio based on Fundamentals and with a Margin of Safety
01
PROFITABILITY
A consistent track record of profitability and free cash flow (FCF) generation is the cornerstone of strong fundamentals, proving a company’s product or service is in demand and can be delivered profitably.
This enables reinvestment for growth, provides a margin of safety during downturns, and contrasts with today’s market trend of valuing companies on revenue multiples rather than FCF.
02
Asset utilization
Efficient asset utilization, measured by metrics like ROIC or ROCE, signals a company’s ability to maximize returns from its assets, increasing the likelihood of generating strong returns on new capital invested—making it attractive to financiers seeking compensation for their investment.
03
PRICE
​
Low Price = Higher Safety:
Protects against losses with a valuation floor, boosting relative dividends or buybacks if fundamentals stay steady (e.g., 20% price drop lifts dividend yield by 20%).
​
High Price = Higher Risk:
Bets on uncertain, volatile future profit growth, where higher valuations make value harder to assess and raise correction risks.
04
DIVERSIFICATION
Spreading investments across industries and regions reduces industry-specific and geographic risks, strengthening the portfolio.
B.U.Y. Equity Portfolio
Geographic Allocation
Disclaimer: The information presented does not constitute investment advice and should not be used as a basis for investment decisions. It is provided for illustrative purposes only, reflecting a specific point in time. The strategy's allocation may have changed, and the data may not be current or accurately represent the strategy's fiduciary position.
EXPLORE OUR PARTNERS' SOLUTIONS
Contact US
This website is for informational purposes only and does not constitute investment advice, financial advice, or a recommendation to buy or sell any financial instruments. The information provided herein is based on publicly available data and internal analysis, which may be subject to change without notice. No guarantee is made regarding the accuracy, completeness, or reliability of the information. Any investment decisions made based on this content are at the sole discretion and risk of the individual. Past performance is not indicative of future results. Please consult a qualified financial professional before making any investment decisions. B.U.Y. INVEST GmbH is a Swiss-based company connecting professional and institutional investors to investment opportunities. In compliance with the Swiss Financial Services Act (FinSA), specific personnel of B.U.Y. are individually registered as client advisors with RegService, a FINMA-approved client advisor register. We exclusively serve professional and institutional clients, as defined by FinSA. For further details, please contact us.
Copyright B.U.Y. Invest GmbH
www.buyinvest.ch