The stock market decline for major Swedish companies has now lasted over a year. March was certainly a positive month for Swedish equities, and was very positive for others including the US, but the Stockholm stock exchange is still down from this year’s first quarter and from a year ago.

Upturns typically last 3-4 years, and downturns 1-1.5 years, so we believe the end of this phase is approaching. On the other hand, it is somewhat disturbing that the US stock market has lost barely any ground from its peak.

We are constantly hearing about the negative signals of low growth, low inflation in the West, political turmoil and possible Brexit. But there are bright spots, such as improving US data and a nascent upturn for commodities (although at the cost of a weaker dollar).

Investors seeking earnings growth are unlikely to see many good reports for the first quarter, but margins will probably remain at solid levels. Banking will remain under pressure from negative interest rates, but long-term and forward-looking investors like us believe the focus will soon switch to interest rates returning to zero, at which point banks will start to earn much more, making valuations far too low.

The good news in March was Holmen getting rid of its Spanish newsprint business, and even being paid for it. This company is increasingly becoming a form of real asset, with an excellent paperboard business. This is unique and enticing; who wouldn’t want to buy Swedish land at a discount? We took the opportunity to slightly increase our holding in Holmen. In five years the Swedish newsprint operation is likely to be entirely written down, and Holmen will then be simply power, forest and paperboard.

We slightly reduced our stake in Swedbank after it lost its CEO, CFO and chairman in short order. We believe this will create a vacuum and loss of tempo, even though it is wise to never overestimate the importance of individuals (especially at a bank with thousands of employees). We used the proceeds to buy Nordea and SEB.