One of the most visible developments of the year has been Europe's rapid decline. A combination of misplaced priorities, moral arrogance, excessive faith in the state, an aging population, and rampant regulation and bureaucracy has led to economic stagnation and political apathy on the continent. Several European countries are struggling to form governments capable of taking action. Additional government debt, more state intervention and low interest rates appear to politicians to be the way out. Far-reaching reforms to improve the framework conditions for business find no majority support. In France, reforms are being rolled back, while in Germany they have largely failed to materialise. A free trade agreement with South American countries collapsed after 25 years of negotiations due to European protectionism. Meanwhile, Europe's aging populations want to preserve the status quo, as the inability to reform German pension legislation has once again demonstrated. Even language itself bears witness to the misguided paths that have been taken. In Russia, the war is referred to as a “special operation”, while the German government chooses to label its borrowing “special assets”. It would be better to call things by their proper name.
And the stock market? It delivered an unusually good year. Falling interest rates and a boom in artificial intelligence provided fuel for imagination and momentum. This was stronger than the negative effects caused by American tariffs on friends and foes alike. Even stubborn inflation did not dampen the overall positive mood on the stock market. After all, currency devaluation contributed to a continued rise in the price of gold, silver, and platinum.
There were also some striking developments in bond markets. Yields on ten-year Japanese bonds exceeded the 2% mark for the first time in many years after the central bank in Tokyo raised key interest rates to 0.75%. This did not put an end to the slide in the yen, but yield differentials between the yen and other currencies have begun to narrow. One of the real surprises of the year was certainly the strong appreciation of the euro against the U.S. dollar. Apparently, investors withdrew from dollar assets. There was rather unpleasant news on the German bond market. While the ECB cut key interest rates to 2%, resulting in negative real interest rates at the short end of the yield curve, ten-year German government bonds suffered price losses in view of the new government's huge debt packages. The equity funds of LOYS AG experienced a very heterogeneous year in 2025. LOYS Global, LOYS Aktien Europa, LOYS Premium Dividende and LOYS Premium Deutschland all delivered unsatisfactory results, whereas Vates Aktien USA once again matched the spectacular results of previous years. And the largest LOYS fund, LOYS Philosophie Bruns, had an outstanding year. The fund management is optimistic about the new year, especially as the proven value-oriented, granular, and incremental investment strategy of LOYS Philosophie Bruns is also to be consistently applied to the other LOYS funds.
Sincerely yours,
Fund manager and co-investor
Dr. Christoph Bruns
Chicago, 31 December 2025