Monthly, we update our wholesale investors on what’s happening in the market. Running what’s probably the only late-night trading desk from New Zealand, we’re well-positioned to feel the pulse of the market’s direction.

 

If you were a kid in the 1980s, you might remember the Cadbury Crunchie bar yo-yos.

Collect up enough of the chocolate-bar wrappers and you could claim these and other prizes. As an 8-year-old, I loved it. I admit to scavenging for the wrappers from rubbish bins.

 

Source: Pexels / Photo by Thang Cao

 

Well, November’s trading desk has felt like one of those prize yo-yos. Plenty of dips for us to scrounge around and buy the quality we see. Then some gentle rises to provide proof of concept.

Much of the yo-yo up-and-down pattern has come from the Trump trade:

  • The prospect of tax cuts and deregulation fuels the market.
  • The fear of tariffs raises the spectre of inflation and cools it.
  • Geopolitics feels volatile while there’s transition uncertainty.

For November, the spectre of inflation has played out. Treasury yields are well up.

But ‘Econ 101’  tends to suggest tariffs may not be that inflationary. Most inflation comes from expanding the money supply. (More money chasing fewer goods).

Tariffs are also a negotiation tool. When they are levied:

  • Exchange rates often adjust to offset their effects.
  • It’s a one-time price change, not ongoing.
  • Consumers tend to substitute or reallocate.
  • The import tax can be offset by cuts to income and company tax.
  • Local manufacturers tool up to make more.

In any case, it’s good to buy into irrational market fear and lock in value in November. 

 

During the holiday season, the yo-yo tends to stay up

 

Trump’s yo-yo. Source: AI-generated image by Freepik

 

Value Investor Daily finds:

  • ‘The S&P 500 has gained an average of 1.38% from Thanksgiving through New Year’s, with positive performance 75% of the time.
  • ‘In years with double-digit YTD gains by the Tuesday before Thanksgiving, the index has risen 70% of the time during this period, averaging a 2.4% gain.
  • ‘Historically, the last week of December and the first two trading days of January have delivered a ‘Santa Claus Rally’ 79% of the time, averaging 1.3%.
  • ‘There have been no significant December selloffs in the 35 prior years with double-digit YTD gains by Thanksgiving.’ (Which is where we are now).

A lot of this positivity is due to tax-loss harvesting, rebalancing, and the optimism of the holiday season. One thing to watch out for is growth and speculative stocks becoming too frothy.

Yet for the value opportunities we aim to capture, some of the rebalancing can also see key sectors oversold.

As we head toward 2025, we are actively hunting in real estate (still), financials, industrials, and certain opportunities for Trump 2.0.

 

Managed Account performance*

 

For the month of November 2024, we were up 1.03% across the composite portfolio (total aggregate TWR return across all portfolios following the strategy).

Our MSCI EAFE benchmark was down 0.59%.

Our YTD performance is 11.72% (January to November 2024), or 12.79% on an annualised basis.

Our average annualised return since inception is 13.65% p.a.

Please see our performance chart for more details.

 

Finally, a big thank you to our wholesale clients this year

 

We don’t take your faith in our strategy lightly. Thank you for your trust.

Wishing you blessings for Christmas and even greater prosperity in 2025.

 

Regards,

Simon Angelo

Editor, Wealth Morning 

*Past performance is not an indicator for future performance. Your actual portfolio will differ from the composite portfolio mentioned. The information contained in this document does not constitute an offer to sell or a solicitation to buy an investment, nor should it be construed as investment advice. Wealth Morning Managed Accounts are available to Eligible Investors and Wholesale Investors (not to Retail Investors) as defined in the Financial Markets Conduct Act (2013).

 

 

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