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Speaker 1: Welcome to Fear and Greed. Sum are investing series are

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Speaker 1: brought to you by Vantas, specialists in compliance led growth.

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Speaker 1: I'm Sean Almer. Twenty twenty four was a pretty remarkable

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Speaker 1: year for the local chair market, with the S ANDPASX

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Speaker 1: two hundred setting multiple records. So what are the take

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Speaker 1: home messages for investors out of the last four months

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Speaker 1: and what should we expect for the year ahead. As always,

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Speaker 1: this is general information only and you should seek independent

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Speaker 1: advice before making investment decisions. Roger Montgomery is the founder

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Speaker 1: and chief investment officer of Montgomery Investment Management. A great

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Speaker 1: friend of ours, Roger, welcome back to Fear and Greed.

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Speaker 2: Great to be with this, Sean.

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Speaker 1: Highlights of the year, the last four months, Well, you.

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Speaker 2: Might remember when we got together in February or March,

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Speaker 2: you know, one of the things that I said was

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Speaker 2: that despite forecasts of a recession and so forth, that

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Speaker 2: this would be a very good year for stocks. And indeed,

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Speaker 2: it was the reason why I said that at the

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Speaker 2: time was because since nineteen seventy or the nineteen seventies, rather,

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Speaker 2: whenever you've had a combination of disinflation and positive economic growth,

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Speaker 2: it's been very, very good for stocks, particularly innovative stocks

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Speaker 2: with pricing power, and that's precisely what we saw in

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Speaker 2: twenty twenty four. So, you know, there was a continuation

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Speaker 2: of the AI thematic or at least up until June July,

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Speaker 2: and then more recently towards the end of the year,

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Speaker 2: we had Donald Trump's election as President of the United

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Speaker 2: or the next president of the United States, and consequently

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Speaker 2: there was another bump because he's seen as pro growth,

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Speaker 2: lower taxes, and a combination of those policies is seen

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Speaker 2: to be good for business.

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Speaker 1: Were there any surprises though, I mean, it was such

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Speaker 1: a strong year of the market after the previous year,

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Speaker 1: which was another strong year. Did it surprise to just

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Speaker 1: how strong it was?

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Speaker 2: Not at all. I know it surprised you and Michael Sean,

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Speaker 2: But you know, if you go back to the interview,

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Speaker 2: you know, I said that twenty three would be a

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Speaker 2: good year and thought twenty four would be a good year.

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Speaker 2: And as long as that disinflation positive economic growth background

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Speaker 2: remains the accepted outlook. In other words, sentiment continues to

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Speaker 2: believe or investors continue to believe that that's the future,

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Speaker 2: then stocks will do well. I think I think, you know,

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Speaker 2: we'll see a broadening of the rally, and we'll see

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Speaker 2: stocks that haven't rallied as hard as some of the

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Speaker 2: leading companies catch up.

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Speaker 1: Okay, so let's jump into that. Those that rally, they

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Speaker 1: have the last twelve months, tich stocks definitely locally, the

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Speaker 1: financials have done incredibly well. Yeah, Crystal ballgazing Roger, what

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Speaker 1: do you reckon? Where are the sectors you reckon for

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Speaker 1: the next twelve months?

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Speaker 2: Well, here's a big call, and it's a different one

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Speaker 2: to many other analysts and commentators, but I think twenty

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Speaker 2: twenty five could actually be the best of the last

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Speaker 2: three years. We might even see stronger gains throughout the

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Speaker 2: year than we've seen this year. That, of course, depends

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Speaker 2: on that those preconditions that I mentioned a moment ago,

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Speaker 2: which is disinflation and city of economic growth. And as

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Speaker 2: long as long as we have that in the background,

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Speaker 2: and there's no disruption from an expectation that China annex

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Speaker 2: is Taiwan or something like that, then it could be

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Speaker 2: a very very good year resources.

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Speaker 1: I mean, I'm wondering where the growth is going to come.

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Speaker 1: Is it about going to leaving the tech stocks and

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Speaker 1: financials and heading somewhere else.

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Speaker 2: Well, I don't think investors are very convinced that the

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Speaker 2: stimulus in China is actually doing much to spur consumers

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Speaker 2: to spend, and in fact, if anything, they have a

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Speaker 2: deflation danger over there. So for us, for our resources

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Speaker 2: companies and for the Aussie dollar, I don't think there's

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Speaker 2: a lot of fuel at the moment or expectation that

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Speaker 2: that stimulus in China's going to have much impact. Otherwise

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Speaker 2: you'd see the Australian dollar much higher than where it

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Speaker 2: is at the moment. And so no, I don't think

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Speaker 2: it's going to spread out to resources in a big way.

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Speaker 2: But I do think you'll see more strength in innovative

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Speaker 2: companies with growth and pricing power in the small cap space,

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Speaker 2: and a lot of those companies will catch up, I

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Speaker 2: think to the rally in big caps. And the reason

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Speaker 2: why we saw in twenty four the rally in big

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Speaker 2: caps was primarily because there was still some I guess

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Speaker 2: latent fear of a recession, and so there was perceived

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Speaker 2: safety in those bigger companies. But I think the rally

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Speaker 2: will broaden to a lot of smaller companies.

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Speaker 1: And I mean that's kind of a reversal almost of

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Speaker 1: what we've seen the last couple of years. Then it's

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Speaker 1: small caps over big caps.

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Speaker 2: Yeah, well, it's interesting up until twenty sixteen. For many,

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Speaker 2: many years, small caps actually beat big caps. It's only

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Speaker 2: been in the last you know, in the last eight

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Speaker 2: years that small caps have been underperforming. But I think

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Speaker 2: their time is nowot I thought in twenty three they

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Speaker 2: would rally very strongly because there's a lot of innovative

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Speaker 2: companies there with growth and pricing power, but they were

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Speaker 2: left behind and with the big tech, the mega cap

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Speaker 2: tech rally, twenty four we saw them starting to catch up,

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Speaker 2: and I think twenty five we might see them start

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Speaker 2: to lead.

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Speaker 1: Roje, thanks for talking to Fear and Greed.

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Speaker 2: Always a pleasure, great to be with you, Sean.

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Speaker 1: That was Roger Montgomery, founder and chief investment officer of

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Speaker 1: Montgomery Investment Management. Remember to get your own independent advice

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Speaker 1: before making investment decisions. This is Fair and Greed Summer

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Speaker 1: thousand dollars off Advance dot com slash fear and greed.

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Speaker 1: I'm Sean Elmer. Enjoy your day,