Nevstar Links 15 March 2024
Welcome back to the Nevstar Links, your guide to some of the best articles on markets and investing available on the internet.
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Onto the links for Friday 15th March 2024:
Optimists Were Right About FANG Stocks
Interesting post from our friends at Morningstar looking at how the growth stocks sceptics were absolutely wrong in their aversion to the richly valued (at the time) FANG stocks. Since 2013, these four stocks, Facebook, Amazon, Netflix and Google have crushed the market. And the reason why – their profits also grew substantially faster than the market.
“Whether measured by revenues or operating income, the FANG businesses grew very rapidly. Even if its stock-price multiple had remained unchanged from its March 2013 level, the value of the FANG portfolio would have increased sevenfold from 2013 through late 2021—thereby far outstripping the performance of the overall US stock market.”
The More People Buy, The More It Goes Up
Bitcoin has recently surpassed its previous November 2021 high breaching US$70,000 per coin in recent market trading. And the reason it has risen is…….? Thoughtful blogpost from the astute Nick Maggiulli tracing the recent rise to no fundamental change in the actual investment but simply because more people are buying it. While it might not end well, that’s not a reason to avoid Bitcoin as he explains.
“Why would someone do this knowing how bad things could turn out? Because many of them don’t have an easier way of becoming rich. It’s the same reason why people play the lottery. In both cases, there’s at least a chance that they can live the life of their dreams. Yes, the chance is very low (<1%), but it’s not 0%.”
On a similar thread is this excellent post by Ben Carlson on the recent rise in the price of gold.
Recommendations from Jeremy Grantham
One of the world’s best investors is Jeremey Grantham from GMO although he tends to be a bit of a perma-bear. In a recent post he reiterates the growing risks he sees in global equity markets but does provide insights into four areas that he believes are attractive for investors.
“Resource Stocks: Not only are raw materials finite – believe it or not! – getting scarcer, and therefore certain to rise in price, but at longer horizons (10 years) resources are the only sector of the stock market to be negatively correlated with the broad stock market."
China’s Economic Growth Plan and Xi Jinping’s Crisis
It is impossible to work in financial services and not have an opinion on the state of the economy in China. Its future and fate are inextricably entwined in the outlooks for equities, bonds, resources, property, inflation and interest rates. Excellent piece looking at the current economic outlook for China and the challenges it faces.
“Its economy has become weighed down by spiralling government and commercial debt, a ticking time bomb that finance experts fear could have reverberating effects across the global economy. That, in turn, is fuelling economic unease internally, dampening consumer spending as well as hiring and business investment.”
Is Private Equity Ready For College Sports
One for those who follow US collegiate sports – this article looks at the growing interest and activity from the Private Equity industry in the supposedly ‘Not-for-profit’ area of collegiate athletics. The landscape is littered with warring factions and perverse incentives but there is money to be made if you can find the right opportunity.
“Successful structured transactions may fund specific growth initiatives like stadium renovation or modernizing local infrastructure, which are backed by contracted revenue streams such as ticketing, sponsorship, and TV rights.”
Quote of the Week
“Nobody who ever gave their best regretted it.”
George Halas
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