by | Dec 14, 2023

Hi All

We’re into the last push for the year, and what a year it’s been (yet again!).

Sentiment and Santa seem set on gliding us onwards and upwards into the year-end, as equity and bond markets had a stellar November. Notably, US stocks finished out their best month of the year, whilst US bonds had their strongest month since the 1980’s. Prompting the question; “will the momentum hold through December?”. Monthly return statistics for the S&P500 from 1964 to 2022 (shown below) imply that December has historically been a good month for equity markets. But again, there are always exceptions to the seasonal rule; Whilst 71% of past equity returns were positive in December, 29% were negative.

Staying invested takes some of the guess work out of it. The key to success for the late and great investment sage, Charlie Munger (passed away a few weeks ago at the age of 99), was understanding the true power of compounding and the importance of patience.  He believed that money is made not through the buying or the selling, but rather in the waiting. There are no short cuts.  Nothing worth pursuing is for free.  And the price is not always money.

Reading Morgan Housel’s latest book, Same as Ever, he talks about how we, the collective, behave, and what we keep doing over and over. It’s 23 short stories about what never changes in a changing world.  Instead of focusing on predicting the future – which takes both time and energy – we should focus on what happens repeatedly.  The world’s track record on predicting the next recession, the next election, or the next technology is so poor, that it’s inspired a different way of thinking.  Circumstances change, but human behaviour stays the same.  The biggest issues are not caused by what we see coming, but by those things that we don’t see at all.  Risk is what remains after we thought of everything.

Below is a brief extract from Morgan’s book, which supports this view: 

‘I once had lunch with a guy who’s close with Warren Buffett.
This guy – we’ll call him Jim (not his real name) – was driving around Omaha, Nebraska with Buffett in late 2009. The global economy was crippled at this point, and Omaha was no exception. Stores were closed, businesses were boarded up.
Jim said to Warren, “It’s so bad right now. How does the economy ever bounce back from this?”
Warren said, “Jim, do you know what the best-selling candy bar was in 1962?”
“No.” Jim said.
“Snickers,” said Warren. “And do you know what the best-selling candy bar is today?”
“No,” said Jim.
“Snickers,” Warren said.
Then silence. That was the end of the conversation.
History is filled with surprises no one could have seen coming. But it’s also filled with so much timeless wisdom.’

Same as ever.

The more things change, the more they stay the same.  Below is a link to Morningstar’s short video on the year that was, echoing this sentiment.  It covers the following topical insights:

  • What is happening in the world and markets today
  • Reasons for the prolonged market downturn we are experiencing
  • Key drivers of markets along with asset class returns
  • It’s not all doom and gloom
  • A reminder of some of the key principles of investing

Link:  https://vimeo.com/889763861?quality=1080p

Thank you for walking this journey with us during a year filled with volatility and uncertainty.  We’re grateful for all of it, and we’re looking forward to celebrating our 20th anniversary as a business with you as the new year unfolds.

We wish you a wonderful festive season filled with abundance & adventure, time & truth.

Be safe.