What’s it worth??
“Price is what you pay, value is what you get” (Warren Buffet)
November has passed and 2017 is rapidly drawing to a close. The bulls still appear to be rampaging in the US, where we have a confident economy and we should all be wealthier than we were this time last year given the market increases….. Regular readers know my focus on global players and again these have led the way in November.
That said there was also some pullback in Europe, UK and China…..the raw data being
November YTD
Dow Jones +3.8% +22.8%
Nasdaq +2.2% +27.7%
FTSE -2.2% +2.6%
Nikkei +1.4% +18.9%
SSE -2.3% +6.9%
Dax -1.5% +13.7%
On currencies, the US Dollar continued to give back (except against the Aussie dollar) and I still see it as slightly overvalued in general. GBP is still undervalued, perhaps EUR & JPY around where it should be…..gains / losses are:
GBP -0.5% -9.6%
EUR -2.5% -13.4%
JPY -1.8% -4.6%
AUD +1.4% -4.8%
CNY -0.3% -4.7%
Due to compounding which I have spoken of many times, it was announced earlier in the month that the wealthiest 1% of people in the world now own more than half of the world’s wealth according to a Credit Suisse report.
Much is made of the wealth gap that exists in the media and how the gap is widening often insinuating the rich are getting richer and the poor poorer. However as there are growing numbers of middle class / consumers in developing countries, perhaps some of the poor are actually getting richer also.
Luxury goods is a sector of the market that I have always followed and believe will continue to grow. The pure spending power of the wealthy drives this growth. A couple of the big players / stocks I like in this sector, Cie de Richemont & LVMH are up 30% & 44% respectively. More people with more money may be spending but its not just the wealthy consumer who is contributing to the current economy.
Diageo and Unilever, two stocks that everyone in the world should own, up 31% and 37% . These numbers far outperform the market results as you can see. I know I may sound a but repetitive but these global players in the consumer driven industry will be a place your money will grow. More people will buy Magnum ice creams and Johnnie Walker whisky tomorrow than they dd today, why? Because they can
The compounding effect on the wealth of the mega rich or 1%ers has created some staggering statistics. This has nothing to do with inequalities / injustices etc, its just science. As Albert Einstein said of compound interest it is the eighth wonder of the world.
The combined wealth of the top ten richest people in the world added together would place them 21st in a list of countries GDP, sandwiched between Saudi Arabia and Argentina.
Its this sort of incredible wealth which allows someone to pay US$450m for a painting, emphasising that something is worth what someone is willing to pay for it. The auction house, Christies that night made a cool US$50 million, not bad for a night’s work for the owner Francois Pinault.
Then again for those of you old enough to remember when bank’s paid interest on monies deposited with them, 5% was achievable…..Monsieur Pinault’s US$25 billion fortune would have earned that US$50m in just two weeks…..
