Sam Dickie: Fisher Funds expert on the state of equity markets around the world

Equity markets around the world are experiencing lifetime highs - but one expert has warned of the possible risks involved.

The US, Japan, Europe and Australia are all thriving, amid a collective battle with inflation.

Sam Dickie from Fisher Funds explains the situation further.

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Episode Transcript

Speaker 1 (00:00):
Heather duple Clan.

Speaker 2 (00:02):
Most equity markets around the world continue to break all
new high, all time highs. You don't need me to
tell you, obviously that there are risks attached to that.
To talk us through those risks, Sam Dickey, Official Funds
with US, Hey, samm, Let's start with why these what
the markets are? First? What markets are the ones that
are hitting the all time highs?

Speaker 1 (00:20):
Yes, overall global equalities that are making new lifetime highs
almost every day, and we're up another twelve cent this year,
and that's again been driven by the US, but Japan,
Europe and I was a year all sitting kind of
right near those all time highs.

Speaker 2 (00:32):
And why is this happening?

Speaker 1 (00:35):
It does remind us how far we've come. So who
are back to the lows of October twenty twenty two,
and back then we know global inflation was right near
as forty year peak of ten percent. In markets, we're
expecting an eminent recession globally, and then in fashion it's
fall and sharply as we know, and global economic growth
has been much more of vice bor robust and expected,
and that's driven a fifty one percent rally from that

(00:57):
low point in October twenty twenty two.

Speaker 2 (01:00):
Now, obviously, Sam, if you're whenever you hear that markets
are heading all time highs and breaking records and stuff
like that, you should know that there is risk, right,
So what are the key risks that investors are focused
on right now?

Speaker 1 (01:12):
That's right. There's always risk in investing, and there's always
many things to worry about. But there are three things
in particular that investors are grappling with right now. And
the first one is decelerating global and especially US economic growth,
and I talked about this present. Second one is the
return of animal spirits or height in some pockets of
the market, and the third one is and as a

(01:34):
result of both of those two things I just mentioned,
the global stock market values once again been driven by
a much narrower subset of companies. So just to go
through each one of those really briefly, key com of
growth rivers have shifted from surprising positively for eighteen months
as 'n interrupted is now surprising negatively. And as a
result of that twenty twenty four US GDP growth you

(01:54):
know I've been talking about for months, there has been
getting upgraded is now getting trimmed by economists for the
first time in a while, and that's driven a sharp
underperformance of economic sentitive stocks like transport and housing related
companies in the US. On the second thing, we are
seeing the return of animal spirits, so mean stocks are
on the move. We've talked about that one game stop
at AMC up hundreds of percent, and there's lots of

(02:16):
hot money in AI stocks. And the third thing is
because of those two factors of the stock market rally,
you and I talked about being much healthier and much
broader than Q one after that March quarter is now
quite narrow. And to give you an example of that,
while the broad use of stock market is up sixteen
percent this year, almost half of those stocks in that
index are actually negative on the year, and we know

(02:38):
that it's been driven by a few log tech companies,
and that tells us that the average stock is not
as healthy as the headline stock market index, whatever you believe.

Speaker 2 (02:46):
So what does all of this mean for investors?

Speaker 1 (02:50):
There are always risks, like you said here, and we've
had a fifty cent rally in twenty odd so investors
should not be surprised that that comes for evaluations and
more exuberance. But the good new users. Central banks are
in a very different position now than they have been
at most times in marteen or fifteen years. So they
have significant firepower pushing any economic growth your pocket or

(03:11):
other risk. And that is quite different to that twenty
and nine to twenty and sixteen period in twenty twenty,
twenty twenty one, when central banks had already set benchmark
rates to zero and had less mo to cut rates
and Cushing a blow. So that's the first bit of
good news. The other bit of good news to opposite
these risks is means that outside of that narrow subset
of companies we've talked about the driving these markets, there

(03:33):
are more attractive valuations on offer.

Speaker 2 (03:35):
Well that's something I suppose Sam. Thank you very much
as always really appreciate you expertise at Sam Dickey if
for your funds.

Speaker 1 (03:43):
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