We have identified four pivotal changes that point to an emerging change in market trends with investors refocusing more on fundamental and structural growth. These four changes are a revival of quality stocks, broadening out of the AI theme, the rise of China and India and the peak of US equity market capitalisation dominance.
Today, economic growth and equity market leadership are very narrow and rely on a few. This has created a more volatile and uncertain environment, but also opportunities for active investment management.
The world currently seems rather unipolar with the US and President Trump setting the agenda. Investors are kept busy trying to distinguish noise from reality. This has shortened investors’ time horizon and created a more complex investment environment.
Magnificent Seven stocks dominated the stock markets in 2024, reaching a market value equivalent to 16% of the global economy.
Avoiding the worst days is appealing – however, catching the good days in the stock market is crucial, and they often tend to follow close behind the worst days.
2024 is the biggest election year the world has ever experienced, with about half of the world population voting. Why is this important to longer-term investors?
Although we think it is too early to call off the risk of recession and predict a clear sky outlook, the current trends look surprisingly strong.
We believe that 2024 will be another year with significant divergences in global stock markets driven by a more accommodative monetary policy and a challenging economic environment.
There are good reasons for excitement, but a grain of realism is needed not expecting AI to solve all world problems. We are following the AI revolution which will probably be more of an evolutionary process.
Equity investing is not just about managing risk but also understanding the dynamics of opportunity. Twelve months ago, an extreme peak in the monetary cycle coincided with a peak in asset markets.
