Natixis Investment Management has surveyed <\/a>a bunch of people and apparently (and not surprising in the slightest to Spy), 70% of investors responded that the \u201cworld feels unstable\u201d and they\u2019re \u201cworried about their finances\u201d and nearly a quarter felt \u201clost\u201d. But, and Spy tips his hat to David Herro, Co-CIO \u2013 international equities at Natixis boutique, Harris | Oakmark, who has gently reminded everyone, \u201c[The world is] unpredictable every day. We don\u2019t know what\u2019s going to happen in the future. First and foremost, people have to realise that unpredictability is just part of the environment. There are different things that cause this unpredictability. There are wars, there\u2019s energy policy, there\u2019s interest rate policy, there\u2019s natural disasters, there\u2019s pandemics, there\u2019s trade war. We are constantly in a period of flux and uncertainty.\u201d So, what is the answer to this pervasive uncertainty, you might wonder? Well, it turns out it to be quite simple really: \u201cThink like an investor and not like a trader.\u201d In other words, let time do its thing.<\/p>\nSpy loves a good thematic fund as much as the next chap. It always seems like such a good idea \u2013 back a theme that is going to transform an entire industry and own all sorts of companies that form part of that industry supply chain. The only problem, according to Morningstar, thematic ETFs underperform, and rather badly. Only 20% of thematic ETFs have outperformed their benchmark index, and on average, they lagged the broader market by 8.5 percentage points over the past five years, according to the fund data giant. The simple problem is, by the time investors dive into a theme, it is already too late. They are buying the hype when the fast money is starting to move on.<\/p>\n
Do you feel like worrying? Apparently, Warren Buffet has a favourite measure of whether the stock market is overvalued. It is commonly known as the \u201cBuffet Indicator\u201d. It compares the total market capitalisation of publicly traded companies to a country\u2019s gross domestic product. Buffett once called it \u201cprobably the best single measure of where valuations stand at any given moment\u201d. When the ratio exceeds 100%, it indicates that the market is valued higher than the economy it reflects\u2014often seen as a warning sign. Currently, the US version of this indicator has soared beyond 200%, marking its highest level on record. This surpasses even the peaks reached before the dot-com bubble (about 140%) and the 2008 financial crisis (around 100%). Markets and economies change, so who knows whether this measure still holds but nobody can say there aren\u2019t signs of froth around.<\/p>\n
Microsoft and Meta stole the show this week. Their shares have soared on the back of stellar, analyst-crushing earnings. Microsoft joined Nvidia above $4trn in market cap. The magnificent seven are not dead. Those two companies alone are worth about $6trn; combined they are worth more than the entire FTSE 100. If wealth managers and asset managers were hoping for a little respite from extreme concentration, they will be disappointed. And for all those people pushing the \u201cend of American exceptionalism\u201d narrative, Spy presents exhibit A for the defence.<\/p>\n
Spy is marvelling at what collectors will buy and pay for. The news broke this week that a single sock, admittedly a glittery one, which was worn by the late pop icon, Michael Jackson, during a 1990s concert in France, was sold for over \u20ac7,688 ($8,667) this week, according to a French auction house that sold the item. Spy can just imagine, in an oversized boardroom, somewhere on Wall Street, a young executive is working out how to turn this marvel of human nature into a fund. \u201cWe need to buy up discarded memorabilia at concerts and then tokenise them and wrap them in a private markets fund\u2026\u201d Spy, for one, is just going to enjoy the concert.<\/p>\n
Spy was lucky enough to attend the Hong Kong Football Festival this week and watch the Arsenal versus Tottenham Hotspur game with more than 49,000 other fans. It seems football and the English language remain Britain\u2019s greatest exports, if the cheering fans are anything to go by.<\/p>\n
As Spy stood waiting for the barista to make an espresso that seems to have jumped 50% in price, he was reminded of the line by Benjamin Franklin, \u201cBeware of little expenses; a small leak will sink a great ship.\u201d<\/p>\n
Until next week\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"Spy was sinking a very satisfying glass of chilled Montrachet this week, when the great blusterer-in-chief, Donald Trump,…\n","protected":false},"author":2,"featured_media":37592,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[21984,84,21987,141,21986,467,1324,15741,696,21989,21983,3352,21988,5110,156,21985,56,54,55,5465],"class_list":["post-37591","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-benjamin-franklin","tag-business","tag-david-herro","tag-donald-trump","tag-harris-oakmark","tag-markets","tag-meta","tag-michael-jackson","tag-microsoft","tag-morningstar","tag-natixis-investment-management","tag-nvidia","tag-spdr","tag-state-street-investment-management","tag-tariffs","tag-thematic-etfs","tag-uk","tag-united-kingdom","tag-unitedkingdom","tag-warren-buffett"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/37591","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=37591"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/37591\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/37592"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=37591"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=37591"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=37591"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}