Unlock the publisher’s digest free
Roula Khalaf, editor -in -chief of the FT, selects her favorite stories in this weekly newsletter.
Friends suspect that the root of my coarse mental health is a Sydney education. Who can think about their inner self on the Dunny when the Redback spiders hide under each seat? As anxious as Steve Waugh, they call me.
The truth is that I carefully manage my emotions. This week, I swam a mile offshore with seals and sunk along the forest trails of the petals of Rhododendron Lilas. And just try to be miserable to drive an open defender with a cigar and the peace of Megadeth“” at full volume.
Avoiding comments under my columns also keeps me healthy-although I respond to emails at the address below. Sorry @vegemitesandwich! Frankly, it is only so many times that you can be called a bald Twat before worrying that you can really stop slightly on top.
The problem is that my companion David will not give me a weekly overview of your comments. Yes, he would bring back, hundreds of readers always agree that you are a Knobhead to sell your American shares. The worst investor of all time, they say.
I doubt that the comments stopped when American actions plunged a few months ago. Even if they did, it is probably back to normal, the shares rebounded approximately 20%. Not that it bothers me. Frankly, I deserve abuse.
This call in September 2023 was bad. Having completely exhausted my Vanguard S&P 500 stock market fund – which represented 13% of my portfolio at the time – the Bougre increased by 36% in books since.
If that was not enough, I put a third of the sale money in an ETF of American obligations which only returned 1.2% in terms of sterling books until I sell it in April. Yes, it was supposed to provide a low -risk ballast. Always boring, however.
To be fair, I said that if the S&P 500 continued to rally, it should slide other actions. So I would not be completely missing next to it. Indeed, the other two funds that I exceeded, ex-Japan and Japan in Asia, increased by 20 and 14%respectively. Likewise, my FTSE UK Fund is 35%higher.
Thus, my home purse and a low dollar saved me even more stupid. But I have no regrets because I thought that American actions were overvalued according to the measure you have chosen to get started.
Why then, and I cannot believe that I even write this, does my finger hover on the purchase button for American actions for the first time in almost two years? My God, I have to reread this sentence just to be sure that I am serious.
Five reasons suddenly have men in my head this week. And I fear that they make the balance of probabilities switch to a long position rather than short, if only.
The first is the setback of my good recent fortune to have a major exhibition in Sterling. (I have already written on the importance of having most of your money in the currency of your daily liabilities.) I am now aware of my insufficient position in dollars, which remains the name of almost two thirds of global commercial invoices, loans, Forex transactions, actions and reserves of central banking.
The domination of the dollar does not scare me. What does is the latest investigation by Bank of America Global Fund Manager that shows that asset beneficiaries are the most under-pondered in the greenback in two decades. There can hardly be a stronger purchase signal.
Consequently, the second reason why I consider the S&P 500. In the same survey, more than half of global fund managers have estimated that international shares will have the best yields in the next five years. Less than a quarter of respondents said the same for American actions. Likewise, a survey felt with European investors has been positive for the first time since the beginning of 2022.
My counter-current bones are also revealed to the beating of business drums for Europe. The latest ZEW survey on growth expectations shows that companies have rejected prices as a threat. Bosses in the euro zone are again optimistic.
This is equivalent to a number three to have done the opposite and by placing my bets on American companies. I am already a fully paid member of the US exceptionalism Club. In this, I am not different from anyone who lived and worked there.
No, my program was the price I was asked to pay for these exceptional actions. Even now, the S&P 500 is probably 30 to 50% too expensive compared to term income or the value of replaceable assets if history is a guide.
But American actions have also been so for centuries – just after the financial crisis, the last time, American actions were unequivocal ex -ante. With hindsight, we know that they were also attractive for years after that because they continued to make new heights.
Another way in which American companies could be good value is an increase in profits. Is it possible? Yes, if productivity takes off. It is already developing more quickly in the United States than elsewhere. How sure I am sure that artificial intelligence will not seriously move the needle?
Not very, which is why a rebirth of productivity is the fourth reason to question my current sub-lash. The other beautiful thing about the increase in production by contribution is that you increase demand and wages without inflation and / or lower gains.
In other words, a virtuous circle appears. And at the moment, it would be drawn in sand already humid with hope. The expectations of the global recession are negative, and the federal reserve still has a relatively optimistic view of the American economy – so why it did not reduce rates on Wednesday. What if peace suddenly breaks out?
So, the reason number five is the risk that investors in equity will wake up soon and say: what does not want to love? In this scenario, all my ETFs do well. But American stocks fly. I need to think about it with a wellness martini in my hand.
I would be eager to read your comments. If I was not at the ad.
The author is a former portfolio manager. E-mail: Stuart.kirk@ft.com; X: @stuartkirk_
