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.
What would life be if we had no courage to attempt anything?
—Vincent van Gogh
This month’s update comes from Venice. One of the most preserved cities of the Old World. And a founding centre of modern banking and finance.
Source: Author
I am nearing the end of my trip. And seeing an old friend on the Venetian island of Giudecca.
It is interesting to note how small threads change the world.
Banking originated in Venice when the government needed war loans.
Today, the Trump victory promises new hope and new fear for markets.
In Italy, amongst productive people — my friends included — I hear the same message:
‘There is too much bureaucracy in Italy. The tax system is complicated. For that reason, things are stagnant, and many people evade tax altogether.’
My self-employed friends are forced to project their income for the next year. And pay high tax rates on that. Apparently, over 50% with all taxes combined. Though the state requires you only to project on your current year’s income — assuming no growth. I imagine a bad year occasionally is welcome as a circuit breaker.
At the Airbnb where we stay, the landlady complains bitterly as she requires us to complete some forms.
‘Too, too much bureaucracy in Italy,’ she said.
I sympathise with her. ‘Forse Meloni risolveranno?’ Can the new popular prime minister Giorgia Meloni fix it?
She looks earnestly hopeful and crosses both fingers.
In any economy, you need growth at some point for stocks to grow
You either buy mispriced assets with the hope that some unexpected growth may appear — or you pay full price where growth is expected.
Italy probably needs some Milei action — the firebrand leader that is transforming Argentina’s red tape bound economy with a chainsaw. There is hope it may come, albeit more slowly.
In any case, many European stocks remain so cheap, any turnaround could see a boost.
Meanwhile, younger people across the continent, at every election, are voting for positive economic change and freedom.
US, Europe, and China
I’m hearing some analysts say China’s markets are now so cheap they warrant some attention.
The trouble with socialism is that it almost always ends up killing the golden goose. While the European goose shows some chance of improvement, China faces deeper struggles.
America is powering ahead. China’s size as a percentage of the giant US economy is now shrinking. We posit Trump and Musk’s deregulation will propel America further ahead.
We’re looking to continue to deploy in Europe and the US.
China? Not at all.
Source: Michael A. Arouet / X
The New Zealand dollar
Last month, NZD has been a major challenge. It has cratered against the majors.
Labour’s economic chickens (and debt burden) came home to roost. Our economy contracted. It is now much more expensive for Kiwi investors to engage and diversify with the wider world of opportunity.
For clients already deployed, this means a wealth increase when measured in NZD. For new money, it has been more challenging with the weak NZD a hurdle.
This should turn in 2025. New Zealand will grow again. NZD will strengthen.
There are plenty of opportunities in a world hungry for growth, change, and freedom.
Managed Account performance*
For the month of December 2024, we were up 0.61% across the composite portfolio (total aggregate TWR return across all portfolios following the strategy).
Our MSCI EAFE benchmark was down 4.52%.
Our full-year performance is 12.33% (January to December 2024). We are still awaiting final benchmark numbers for the year, but we expect to be well ahead.
Our average annualised return since inception is 13.60% p.a.
Please see our performance chart for more details.
Looking at the road ahead
While the S&P 500 did over 20%, it’s important to point out that ours’ is a risk-managed strategy without so much exposure to higher-risk tech.
We’re also at a different part of the cycle. Our real-estate focus should reward investors more rapidly when interest rates drop.
Further, our running yields from dividends are approaching 6%.
We expect more value to be realised against the indexes.
As for 2025, we’re excited. There are opportunities galore for growth and income.
Of course, realising global opportunity takes courage and effort.
If you can sustain that through good times and bad, you’ll do very well.
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).
