So quarter 1 has come to an end. This time last year there were fears over China and recession swirling around. Whilst we saw a little pull back in some of the markets in March most seem happy with the current status quo. The returns this year have been good and the general consensus is that there is still good value in the bull market out there…though of course only when invested the right places…..the raw data:
Dow J -2.1% +4.6%
Nasdaq +0.1% +9.8%
FTSE -0.8% +2.5%
Dax +1.4% +7.3%
Nikkei -2.5% -1.1%
SSE -0.2% +3.8%
Despite seeing a US interest rate rise in March, the US Dollar has continued to “pull back” against most major currencies, seeing the following movements:
GBP -2.2% -1.6%
EUR -1.2% -1.3%
JPY -2.5% -5.0%
CNY +0.2% -0.8%
AUD +0.4% -5.9%
Whilst most of those returns look good active investing over passive and choosing the correct managers / asset allocation should see your return be above and beyond that of the markets.
Those of you who are clients are sure to own some nice tech funds that have performed great this year and many of the analysts I listen to still believe this sector to hold great value…and why not.
Warren Buffet at his recent interview with CNBC explained his love of Apple in his usual typically brilliant yet simple manner. Why does Warren love this company so much, because it has a product called the Iphone which just happens to be an excellent product. He was referring to events where people were taking photos using their smartphones and that everyone seem to have one…..These smartphones are such an integral part of all of our lives, the younger generation especially, and while sometimes we may be critical when a three year old can play any number of games on a smartphone but not tie their shoelaces or ride a bike, this for better or worse is the face of the future.
The numbers and the growth potential is still there. Look at Samsung, although their smartphone sales form a significantly lower percentage of their revenue than Apple (29% versus 69%) what we remember from recent times is the problems with the S7 exploding …… yet the share price is up 61% in the last 12 months!
Apple’s share pice is up 24% this year. In the last quarter of 2016, Apple made US$54bn from smart phone sales alone, that more than US$25m an hour.
Today they estimate there to be 2.1 billion smartphone users. Whilst this sounds a lot bear in mind that the world’s population is now just under 7.5 billion there is certainly room for growth and also enough to go round for both the major players in this space.
Developing countries such as where I am in Vietnam have an incredible number of stores offering smartphones which always seem to be busy. In many economies like this around 90% of the lending done through finance companies can be for mobile phones.
There has never been a more “must have” product in history. Kids need to be connected and parents will not allow issues such as financial barriers to get in the way hence the enormous market in interest free lending.
As the father of two teenage boys I am sure many of you as I do used to feel a little aggrieved when you take them somewhere special and what’s the first question…..Dad , whats the Wifi…?”…like it or loathe it you can’t escape it.
All too often when I speak to potential clients they talk about market timings crashes etc. Yes of course timing matters but to quote Warren again it’s “time in not timing” that matters when selecting investments. And more so “Time in’ the right company with products that people want and will buy, whether that product is a can of coke, a Big Mac or indeed an smartphone………..