Source: Barron's Chinese Author: Nicholas Jaskinski Evan Greenberg, CEO of Chubb Ltd, has a highly influential fan - Warren Buffet, CEO of Berkshire Hathaway. Berkshire Hathaway disclosed last month that it held 6% of the shares in Chubb, one of the world's largest insurance companies, by the end of 2023. Berkshire itself is a major participant in the insurance industry, but it is not the only buyer. In the past year, Chubb's stock return, including dividends, was about 40%, surpassing the S&P 500 index's total return of 25%, and making the company's market capitalization reach $110 billion. This increase in market capitalization reflects Chubb's outstanding performance, which is attributed to its prudent underwriting practices and conservative management of its investment portfolio of about $140 billion. The company's earnings per share increased by 48% in 2023 and its book value per share increased by 21%. Greenberg is the son of Maurice "Hank" Greenberg, the former CEO of American International Group (AIG). Greenberg worked at AIG for 25 years, rising through the ranks. He left the insurance company in 2000 and took over Ace Limited in 2004. The company merged with Chubb in 2016, the largest M&A in the property and casualty insurance industry at the time. Today, Chubb is the largest commercial insurance provider in the United States, and the company is also known for its high-end homeowner insurance for the wealthy. However, about half of the company's premiums last year came from outside the United States. Asia has always been a growth area where the company is bullish: Although Asia accounts for 40% of global GDP, the insurance industry accounts for only 26% of the global insurance market share. This gap is expected to narrow over time. Greenberg sits on the board of several nonprofits that focus on international and Asian affairs. Barron's recently interviewed Greenberg about his underwriting philosophy, the challenges of dealing with increasingly frequent climate disasters, and US-China relations. Following are the edited excerpts of the conversation.
Author: Paul R. La Monica

Look for cheap stocks with strong fundamentals and long-term investment value outside of large technology stocks.

Over the past month, investors have been closely watching news related to the Federal Reserve rate cuts, US job market data, Chinese economic stimulus measures, oil prices, and other macroeconomic indicators. Now it's time to return to fundamentals.

This week, corporate earnings will be the focus of investors.$UnitedHealth (UNH.US)$and$Johnson & Johnson (JNJ.US)$Please use your Futubull account to access the feature.$Bank of America (BAC.US)$N/A.$Goldman Sachs (GS.US)$N/A.$ASML Holding (ASML.US)$,$Taiwan Semiconductor (TSM.US)$and$Morgan Stanley (MS.US)$N/A.$Procter & Gamble (PG.US)$,$Netflix (NFLX.US)$And$American Express (AXP.US)$Waiting for the blue chip stocks to announce their performance.

Last week, JPMorgan (JPM) and other large banks opened the third quarter earnings season of U.S. stocks with strong performances. Analysts believe that overall, third-quarter corporate profits are expected to perform well, with profits expected to increase by 4% year-on-year for the quarter. However, as usual, investors are more concerned about the earnings guidance released by companies. Wall Street currently expects fourth-quarter corporate profits to improve, with an estimated 14.6% year-on-year growth, and double-digit growth expected next year.$S&P 500 Index (.SPX.US)$Craig Sterling, Head of U.S. Equities Research at asset management company Amundi, said, "The phenomenon of the entire stock market lacking profit growth is about to change." Sterling stated that Amundi is reducing its holdings in technology stocks and allocating more funds to sectors with stronger cyclical characteristics like finance and materials.

Last week's performance of US stocks

Therefore, investors should ignore the abundant noise in the market and focus on companies with strong fundamentals.

Todd Walsh, CEO and Chief Technical Analyst at Alpha Cubed Investments, said, "Investors must stand their ground and not be swayed by emotions." Walsh believes that the current volatility in the U.S. stock market is a healthy rotation, as investors are looking for options beyond the tech "seven giants", especially value stocks that can also provide investors with a healthy level of income, which he refers to as the "polaris" of the U.S. stock market.

Investors must stand their ground and not be swayed by emotions." Walsh believes that the current volatility in the U.S. stock market is a healthy rotation, as investors are looking for options beyond the tech "seven giants", especially value stocks that can also provide investors with a healthy level of income, which he refers to as the "polaris" of the U.S. stock market.

In the past three months, the exchange-traded fund SPDR S&P Dividend (SDY) has outperformed the Nasdaq, with this ETF rising by more than 10%, while the Nasdaq fell by 2%. Walsh holds high-dividend stocks in different sectors, including defense contractor Lockheed-Martin (LMT) and$RTX Corp (RTX.US)$,$American Tower Corp (AMT.US)$utilities company$NextEra Energy (NEE.US)$ (NEE), datacenter operator Digital Realty Trust (DLR), and Verizon Communications (VZ).

Other analysts also believe that as technology stocks have risen significantly, it is now time to reduce their holdings. The exchange-traded fund Roundhill Magnificent Seven (MAGS), which tracks the trends of the technology "Big Seven," has risen by over 40% year-to-date. Neuberger Berman's Co-Chief Investment Officer, Erik Knutzen, said: "Investors are concerned about the crowded trade in technology." He recommends reducing exposure to large-cap tech stocks, but not completely abandoning them, Knutzen said: "These stocks are called 'giants' for a reason, don't give up on them."

However, it is also worth noting that some top technology stocks have rebounded significantly after the pullback. $Apple (AAPL.US)$N/A.$NVIDIA (NVDA.US)$And.$Meta Platforms (META.US)$ (meta) Currently, they are less than 5% away from their respective historical highs. The good news is that the stock price rebound highlights the resilience of these large market cap technology stocks; however, there are also some opposing views on this issue.

Michael Skordeles, Head of Truist Wealth's U.S. Economic Research, said, "The U.S. stock market is full of complacency." The current expected PE ratio of the S&P 500 index is 21 times, while the expected PE ratio of the 'Big Seven' technology companies is 28 times. In comparison, the equal-weighted S&P 500 index has an expected PE ratio of less than 17 times.

This is why investors should turn their attention to stocks other than large technology stocks, and look for quality, inexpensive stocks with long-term investment value.

Editor/rice