1 00:00:00,120 --> 00:00:02,239 Speaker 1: So it's been a wild ride for global equity markets 2 00:00:02,240 --> 00:00:04,520 Speaker 1: this year. We all know that here Donald Trump wasn't 3 00:00:04,519 --> 00:00:07,400 Speaker 1: even president on the first of January. Can you believe 4 00:00:07,440 --> 00:00:10,480 Speaker 1: that despite all the volatility, we're not a whisker off 5 00:00:10,520 --> 00:00:13,560 Speaker 1: all time highs now as we end the year. Sam 6 00:00:13,600 --> 00:00:16,400 Speaker 1: Dickie is with Fisher Funds and is with me tonight, Sam, 7 00:00:16,400 --> 00:00:19,920 Speaker 1: Good evening, Good evening, Ryan. What are the key lessons 8 00:00:19,960 --> 00:00:22,279 Speaker 1: do you reckon that we should take away from this year? 9 00:00:23,280 --> 00:00:27,120 Speaker 2: Yeah, roller coaster. So there's three things. We were reminded again, 10 00:00:27,240 --> 00:00:30,640 Speaker 2: when everyone in the market has the same view, it's 11 00:00:30,640 --> 00:00:32,560 Speaker 2: on the front page of all the newspapers, it often 12 00:00:32,560 --> 00:00:35,360 Speaker 2: pays to disagree and take the other side. So you 13 00:00:35,440 --> 00:00:37,880 Speaker 2: mentioned it. On April eighth, a few days after President 14 00:00:37,920 --> 00:00:41,479 Speaker 2: Trump's Liberation Day, economists were very very ars saying the 15 00:00:41,560 --> 00:00:45,400 Speaker 2: risk of recession was spiking, and if you read the newspaper, 16 00:00:45,440 --> 00:00:47,720 Speaker 2: you would have sold everything that put in time. Headlines 17 00:00:47,720 --> 00:00:51,240 Speaker 2: were comparing the looming trade war to remember the Smoot 18 00:00:51,320 --> 00:00:53,840 Speaker 2: Hawley Act in nineteen thirty, which raised duties on twenty 19 00:00:53,840 --> 00:00:56,680 Speaker 2: thousand goods and arguably turned a recession into the Great Depression. 20 00:00:57,320 --> 00:00:59,680 Speaker 2: As it turned out, Trump's bark was worse than as 21 00:00:59,720 --> 00:01:02,600 Speaker 2: by Global equity markets are up forty percent in eight 22 00:01:02,640 --> 00:01:05,240 Speaker 2: months since then, which is actually one of the fastest 23 00:01:05,280 --> 00:01:09,120 Speaker 2: rallies on record in two hundred years. Second thing is 24 00:01:09,160 --> 00:01:11,360 Speaker 2: we were reminded that there are other places to make 25 00:01:11,400 --> 00:01:15,640 Speaker 2: money outside of the US, So barring disaster in the 26 00:01:15,680 --> 00:01:17,840 Speaker 2: next few days, it's only the third time in fifteen 27 00:01:17,959 --> 00:01:21,759 Speaker 2: years that non US equities outperform US equities. So Japan 28 00:01:21,880 --> 00:01:24,920 Speaker 2: is up almost twenty five percent as the stock exchange 29 00:01:24,959 --> 00:01:27,760 Speaker 2: is forcing investors to be more shareholder friendly, paid more dividends. 30 00:01:28,080 --> 00:01:30,560 Speaker 2: Countries like China and the UK have just gotten too 31 00:01:30,680 --> 00:01:33,560 Speaker 2: cheap and are up significantly more than the US. And 32 00:01:33,600 --> 00:01:37,640 Speaker 2: the final thing is we've learned again that the equity 33 00:01:37,720 --> 00:01:41,360 Speaker 2: market is now extremely concentrated in the US. So the 34 00:01:41,400 --> 00:01:44,520 Speaker 2: top ten stocks in the SMP five hundred of five 35 00:01:44,600 --> 00:01:47,680 Speaker 2: hundred stock index make up forty percent of the index. 36 00:01:47,680 --> 00:01:49,600 Speaker 2: So it's ten stocks out of five hundred making up 37 00:01:49,640 --> 00:01:52,880 Speaker 2: forty percent. That is the most concentrated ever and has 38 00:01:52,960 --> 00:01:58,440 Speaker 2: really interesting future implications for you know, those fund managers 39 00:01:58,440 --> 00:02:01,040 Speaker 2: that are passive investors or index huggers. 40 00:02:02,080 --> 00:02:04,040 Speaker 1: Sam, can you give us a sneak peek into twenty 41 00:02:04,080 --> 00:02:04,640 Speaker 1: twenty six. 42 00:02:06,520 --> 00:02:09,880 Speaker 2: So we talked you and I ran and you and 43 00:02:09,960 --> 00:02:11,800 Speaker 2: Heather and I back in October about the risks of 44 00:02:11,800 --> 00:02:14,160 Speaker 2: the AI bubble popping. Now, the really good news is 45 00:02:14,720 --> 00:02:17,440 Speaker 2: we've had a really healthy correction and some of those 46 00:02:18,280 --> 00:02:21,440 Speaker 2: perceived AI winners, especially at the risky A end of town. 47 00:02:21,520 --> 00:02:24,720 Speaker 2: So companies that were using tons of debt to fund 48 00:02:24,760 --> 00:02:28,239 Speaker 2: this AI capex bonanza are down to lots of Oracles 49 00:02:28,240 --> 00:02:31,760 Speaker 2: down fifty percent, core weaves down sixty five percent. So 50 00:02:31,800 --> 00:02:33,920 Speaker 2: the point there is it's good news that investors are 51 00:02:33,919 --> 00:02:37,840 Speaker 2: becoming more discerning. So with that in mind, as we 52 00:02:37,919 --> 00:02:40,880 Speaker 2: sort of peak into twenty twenty six, the market is 53 00:02:40,919 --> 00:02:43,640 Speaker 2: shifted from buy AI at any price to show me 54 00:02:43,680 --> 00:02:46,440 Speaker 2: the return, show me the return on the massive amounts 55 00:02:46,480 --> 00:02:49,280 Speaker 2: of capital you're investing. So it's going to be fascinating 56 00:02:49,320 --> 00:02:52,800 Speaker 2: to watch whether those huge spenders like Google have gotten 57 00:02:52,800 --> 00:02:55,840 Speaker 2: that message yet from the market. Now, if we take 58 00:02:55,880 --> 00:02:59,560 Speaker 2: a step back, the headline price to earnings ratio, that 59 00:02:59,639 --> 00:03:03,040 Speaker 2: the untest sort of valuation ratio for the market and 60 00:03:03,120 --> 00:03:07,040 Speaker 2: the US is really really high, extremely high historically. So 61 00:03:07,160 --> 00:03:09,520 Speaker 2: equity markets look expensive on the face of it, but 62 00:03:09,600 --> 00:03:12,400 Speaker 2: that's really reflective of what we talked about four rhine. 63 00:03:12,960 --> 00:03:16,440 Speaker 2: Some of those top ten companies are really fully valued, 64 00:03:16,480 --> 00:03:19,720 Speaker 2: so companies like Tesla on two hundred and fifty times 65 00:03:19,760 --> 00:03:22,760 Speaker 2: price to earnings look pretty ritzy. So the good news 66 00:03:22,880 --> 00:03:26,360 Speaker 2: is that blue chip companies, quality companies are the most 67 00:03:26,400 --> 00:03:28,440 Speaker 2: out of favor in thirty years, and that's boats really 68 00:03:28,480 --> 00:03:31,880 Speaker 2: well for focused investors and spells risk for passive index 69 00:03:31,919 --> 00:03:33,079 Speaker 2: hugging investors. 70 00:03:33,480 --> 00:03:36,320 Speaker 1: So lots to look forward to. Absolutely, Sam appreciate that update. 71 00:03:36,360 --> 00:03:38,040 Speaker 1: Thank you, Sam Dicky from Fisher Funds. 72 00:03:38,640 --> 00:03:41,800 Speaker 2: For more from Heather Duplessy Allen Drive, listen live to 73 00:03:41,920 --> 00:03:44,960 Speaker 2: news talks. It'd be from four pm weekdays, or follow 74 00:03:45,000 --> 00:03:46,760 Speaker 2: the podcast on iHeartRadio