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Speaker 1: Heather Dukeles L Bendebraders of US in just about ten

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Speaker 1: minutes time, we're thereabouts. Now we're almost halfway at the

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Speaker 1: at the halfway point for the year. Of course, question

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Speaker 1: is how different is the investing environment now versus the

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Speaker 1: start of the year. And to answer that question we

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Speaker 1: have Sam Dickey, Officier Funds with US.

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Speaker 2: Ay, Sam, Heather, now are you so very well?

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Speaker 1: Thank you so remind us of the economic backdrop and

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Speaker 1: the investing environment as we started the year.

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Speaker 2: Yes, So if we look at it through growth the

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Speaker 2: lenses of growth, inflation, interest rates, and equities to set

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Speaker 2: up on January one was the market was still pretty

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Speaker 2: cautious about US economic growth, for example, so they were

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Speaker 2: only forecasting a poultry one percent growth for the year.

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Speaker 2: Inflation had been tamed, but not completely conquered. So global inflation,

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Speaker 2: you remember back in the day it was at a

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Speaker 2: high of ten percent, and it was at about five

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Speaker 2: and a half percent of the start of the year.

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Speaker 2: Bond investors had a slightly bitter year in twenty twenty three,

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Speaker 2: so they were feeling a little bit less grim after

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Speaker 2: the worst year in one hundred and fifty years the

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Speaker 2: year before, but still nothing to write home about men. Finally,

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Speaker 2: on the share market, those investors were feeling pretty good

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Speaker 2: about life as they entered twenty twenty four. Remember the

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Speaker 2: strong rebound in equity markets in twenty twenty three and

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Speaker 2: within that, remember the twenty twenty three stock market performance

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Speaker 2: was driven by a narrow bunch of stocks. And I'm

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Speaker 2: sure you remember the magnificent seven Heather.

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Speaker 1: Yeah, totally. What does the backdrop look like now, though.

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Speaker 2: It's shifted a bit so through those shame the same lenses.

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Speaker 2: The US economy has just surprised positively all year, so

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Speaker 2: economists are now expecting two and a half percent growth

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Speaker 2: for that all important economy, up from that one percent

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Speaker 2: initial forecast. Global inflation has fallen a little bit further,

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Speaker 2: but still not fully wrestled to the ground. Bond investors

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Speaker 2: are still waiting for their day in the sun, and

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Speaker 2: returns are approximately flat and shar market investors are enjoying

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Speaker 2: another solid six months. So global equities are up twelve percent,

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Speaker 2: But there is one little wrinkle heater. So you and

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Speaker 2: I took back in March and April about the nice

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Speaker 2: broadening out of the stock market rally after that very

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Speaker 2: narrow rally in twenty twenty three, which was funny enough,

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Speaker 2: correlated with that nice continuous positive surprise in the US

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Speaker 2: economic growth. Well right now that US economic growth is

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Speaker 2: still solid, but it's no longer accelerating, and the stock

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Speaker 2: market rally is again really really narrow, so it's only

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Speaker 2: been driven by less than a handful of stocks now,

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Speaker 2: so Google, Apple, and n Video.

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Speaker 1: That's interesting. Remind us of the themes we've seen. What

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Speaker 1: are the investments that are working and what are the

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Speaker 1: ones that are not?

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Speaker 2: You and I have talked about it most of them,

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Speaker 2: but if we just picked three over the last six

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Speaker 2: months we've talked about so you and I talked about

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Speaker 2: how Google and Apple were considered AI laggards or losers,

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Speaker 2: which seemed absurd, and the lesson there is when high

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Speaker 2: quality companies are called losers, investors should basically pay attention.

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Speaker 2: The second thing is we talked about how commodity prices

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Speaker 2: and doctor copper in particular is a really good barometer

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Speaker 2: of the health of the economy, and incidentally that price

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Speaker 2: has fallen a bit lately after a very strong run earlier.

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Speaker 2: And the other thing we talked about was how geopolitics

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Speaker 2: are of course sad and elections garner a heck of

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Speaker 2: a lot of headlines. They typically don't derail long term

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Speaker 2: stock market investors.

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Speaker 1: Why I mean, Sam, is it normal for a backdrop

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Speaker 1: to change so much?

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Speaker 2: It's not, It's not normal. And if you look back

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Speaker 2: over say the last twenty years or so, and if

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Speaker 2: we used analyst forecasts of US GDP for the year ahead,

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Speaker 2: normally those forecasts will move around by maybe half a percent,

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Speaker 2: maybe a percent until they land on the final actual number.

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Speaker 2: So that sort of think about that as forecasting era.

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Speaker 2: Since COVID analysts are having a nightmare forecasting US and

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Speaker 2: global GDP growth, so the difference between the initial forecast

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Speaker 2: and that final number can be as wide as two

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Speaker 2: two and a half percent, so three to four times

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Speaker 2: the normal forecasting era.

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Speaker 1: What does that mean for investors?

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Speaker 2: I think it means you stick to your knittings, so

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Speaker 2: you take a really long term view, and you invest

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Speaker 2: in high quality, long term growth companies, and you shouldn't

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Speaker 2: normally be swayed by macroeconomic forecasts because they're normally wrong,

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Speaker 2: but especially so now in a post COVID world.

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Speaker 1: Yeah, brilliant advice. Thank you very much, Sam, Appreciate it

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Speaker 1: as always talked again next week that Sam Dickey official funds.

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