The Davos Dividend
Let’s begin in Davos, Switzerland, where the world’s financial and political bigwigs are gathering at the World Economic Forum to do deals and await the fate of Greenland. Markets rebounded yesterday as President Trump softened his position on Greenland a bit, thus raising hopes of reaching an amicable agreement.
Gold was a hot topic as investors continue to seek a hedge on uncertainty and volatility. Central banks have been significant net buyers of gold every year since 2011.
Often associated with gold, our CurrencyShares Swiss Franc Trust (FXF) position has performed well. It is up about 15% over the last year while the dollar has declined 9%.
Nice currency arbitrage.
This ETF gives us exposure to a high-quality country and currency with fiscal discipline, a trade surplus, and very little foreign debt, and a reputation as an asset haven in times of stress. Switzerland’s $700 billion economy has a substantially higher average income than America.
The average family wealth in Switzerland is $685,00 - about twice the Nordic average. The Swiss have had a functioning democracy for 500 years with a legislature that meets for only two weeks, four times a year.
It has an open international economy with 40% of its population born in other countries.
Outward looking, Switzerland has almost half of its gross domestic product attributed to exports.
With a population of only 7.2 million, Switzerland packs a punch and is a financial and multinational powerhouse. Switzerland represents the third-largest financial center in the world after New York and London.
Switzerland is home to some of the largest firms in Europe in terms of market value: UBS (UBS), Nestlé (NSRGY), Novartis (NVS), and Roche (RHHBY).
The bull market has broadened considerably over the past year around the world. One powerful trend is that almost 70% of the global index and 47 countries are close to a 52-week high, demonstrating the value of having some international stocks in your portfolio.
The second notable trend is that the Magnificent Seven have lost their luster as a plethora of other stocks outperform these mega tech companies.
Only Alphabet (GOOG) and Nvidia (NVDA) outperformed the S&P 500 in 2025. In fact, it may surprise you that 74 stocks in the S&P 500 outperformed NVIDIA in 2025.
Keep in mind that the top 10 stocks in the S&P 500 index now account for roughly 40% of the index’s total market capitalization. Therefore, if you invest $100,000 in an S&P 500 index fund, roughly $40,000 goes into just 10 companies. The remaining $60,000 gets spread across the other 490.