Yet another month has passed us by and I think it is fair to say that markets in general are still struggling to find their direction.
We are of course in unprecedented times what with interest rates being virtually nothing for coming on 8 years, inflation so low, wage freezes, oil price lows etc etc so I suppose it is understandable.
The raw data is not pretty but also not a disaster either:
Both in April and year to date there has been less than 1% movement in the Dow Jones. Bear in mind that all these companies pay dividends, any fund manager worth his salt should be in positive territory.
Down 2.8% in April, down 5.7% year to date. Volatile for sure and this volatility is highlighted by my bundle of four which sees all four either up or down by over 10% in the year (Facebook being the only one up, despite all four growing their revenues and profit margins)
Flat on paper for the month of April (though was up and down like a fiddlers elbow to finish where it started), so remains 15% down of year. Those of you who watch my weekly updates have heard me speaking Japan. Whilst it cannot be ignored, it does not feature in my asset selection at the moment.
Down 2.3% in April to continue its bad year after such an awful start, now down 17.6% in 2016. Again I have no direct exposure here
Some positive news here, up 3.1% on the month, down 6% on the year. The QE is likely to be having some effect, and we are seeing a strengthening Euro. Have been bullish about Europe for a while and remain so.
With the exception of the Japanese Yen which is crazy volatile ( I am sure it has made some currency traders very rich and some very poor of late), generally we are seeing Sterling and Euro slowly claw their way back against the US dollar. As I mentioned in my video this morning, there was 4/5 % profits to be made on simple cash trades since end of February when we saw a clearly overvalued US dollar.
You will mostly all know that my thematic approach is often based around investing in companies who are a part of our every day lives and whom are likely to be a part of the lives of people who are coming out of poverty in developing worlds.
Unilever, Facebook and Apple are “poster childs”. A few reasons why:
Unilever (whose sales rose 8.3% worldwide in the first quarter) generates approximately 60% of its revenue from the emerging markets, Paul Polman their CEO believes that number will be 90%
Facebook hopes to capture 75% of worldwide online revenue. It currently has 1.65billion users (which as there are around 4 billion with internet access is a large share). Of that 92% view on mobile devices which fits in with Apple’s growth prospects especially given they only have 2% of the Indian market right now (over 1 billion people).
To put the value of advertising through Facebook into perspective,as the average user spends 50 minutes a day on there, that is the equivalent of 157,000 years of people’s time daily, works a bit more than a tv ad I would guess.
Also to come back to my point about the 4 billion internet users, what that also means is there is abut the same number without internet access. Two billion of those people is because they have no access. Facebook, (along with Google and other big techs) are sending drones to enable this. Guess who will benefit from these new users…not rocket science is it?
Finally and whilst everyone wants to get good capital growth, make their hard earned money work hard for them etc, ultimately our roles are about Wealth Preservation and Financial Security
The recent developments with Tata and BHS pension schemes is endangering both of the above for people who simply thought they were doing the right thing.
British companies alone have an GBP800 billion hole on GBP2 trillion of pension liabilities, startling figures, about the same as the GDP of Ireland, South Africa and the United Arab Emirates combined. Jump off the sinking ship and don’t end up like the chaps in the cartoon above.