Sam Dickie: Fisher Funds expert explains the investing environment six months into 2024

One expert says investors have had to pay more attention to their long-term goals this year.

Ongoing inflation and changing economies have led investors to chop and change their short-term predictions as 2024 went on.

Sam Dickie from Fisher Funds explains further.

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Episode Transcript

Speaker 1 (00:00):
Heather Dukeles L Bendebraders of US in just about ten
minutes time, we're thereabouts. Now we're almost halfway at the
at the halfway point for the year. Of course, question
is how different is the investing environment now versus the
start of the year. And to answer that question we
have Sam Dickey, Officier Funds with US.

Speaker 2 (00:14):
Ay, Sam, Heather, now are you so very well?

Speaker 1 (00:17):
Thank you so remind us of the economic backdrop and
the investing environment as we started the year.

Speaker 2 (00:23):
Yes, So if we look at it through growth the
lenses of growth, inflation, interest rates, and equities to set
up on January one was the market was still pretty
cautious about US economic growth, for example, so they were
only forecasting a poultry one percent growth for the year.
Inflation had been tamed, but not completely conquered. So global inflation,

(00:44):
you remember back in the day it was at a
high of ten percent, and it was at about five
and a half percent of the start of the year.
Bond investors had a slightly bitter year in twenty twenty three,
so they were feeling a little bit less grim after
the worst year in one hundred and fifty years the
year before, but still nothing to write home about men. Finally,
on the share market, those investors were feeling pretty good

(01:05):
about life as they entered twenty twenty four. Remember the
strong rebound in equity markets in twenty twenty three and
within that, remember the twenty twenty three stock market performance
was driven by a narrow bunch of stocks. And I'm
sure you remember the magnificent seven Heather.

Speaker 1 (01:19):
Yeah, totally. What does the backdrop look like now, though.

Speaker 2 (01:22):
It's shifted a bit so through those shame the same lenses.
The US economy has just surprised positively all year, so
economists are now expecting two and a half percent growth
for that all important economy, up from that one percent
initial forecast. Global inflation has fallen a little bit further,
but still not fully wrestled to the ground. Bond investors
are still waiting for their day in the sun, and

(01:43):
returns are approximately flat and shar market investors are enjoying
another solid six months. So global equities are up twelve percent,
But there is one little wrinkle heater. So you and
I took back in March and April about the nice
broadening out of the stock market rally after that very
narrow rally in twenty twenty three, which was funny enough,
correlated with that nice continuous positive surprise in the US

(02:07):
economic growth. Well right now that US economic growth is
still solid, but it's no longer accelerating, and the stock
market rally is again really really narrow, so it's only
been driven by less than a handful of stocks now,
so Google, Apple, and n Video.

Speaker 1 (02:22):
That's interesting. Remind us of the themes we've seen. What
are the investments that are working and what are the
ones that are not?

Speaker 2 (02:28):
You and I have talked about it most of them,
but if we just picked three over the last six
months we've talked about so you and I talked about
how Google and Apple were considered AI laggards or losers,
which seemed absurd, and the lesson there is when high
quality companies are called losers, investors should basically pay attention.
The second thing is we talked about how commodity prices

(02:49):
and doctor copper in particular is a really good barometer
of the health of the economy, and incidentally that price
has fallen a bit lately after a very strong run earlier.
And the other thing we talked about was how geopolitics
are of course sad and elections garner a heck of
a lot of headlines. They typically don't derail long term
stock market investors.

Speaker 1 (03:11):
Why I mean, Sam, is it normal for a backdrop
to change so much?

Speaker 2 (03:17):
It's not, It's not normal. And if you look back
over say the last twenty years or so, and if
we used analyst forecasts of US GDP for the year ahead,
normally those forecasts will move around by maybe half a percent,
maybe a percent until they land on the final actual number.
So that sort of think about that as forecasting era.
Since COVID analysts are having a nightmare forecasting US and

(03:41):
global GDP growth, so the difference between the initial forecast
and that final number can be as wide as two
two and a half percent, so three to four times
the normal forecasting era.

Speaker 1 (03:51):
What does that mean for investors?

Speaker 2 (03:54):
I think it means you stick to your knittings, so
you take a really long term view, and you invest
in high quality, long term growth companies, and you shouldn't
normally be swayed by macroeconomic forecasts because they're normally wrong,
but especially so now in a post COVID world.

Speaker 1 (04:09):
Yeah, brilliant advice. Thank you very much, Sam, Appreciate it
as always talked again next week that Sam Dickey official funds.

Speaker 2 (04:15):
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