Opinion

As the asset management industry embraces wealthtech, its business model has suddenly become very scalable. That also explains the interest of private equity, writes Han Dieperink in his column for Investment Officer this week.

The two oil crises of the 1970s are notorious. In 1973, the oil price went from $3 a barrel to $12 a barrel in two weeks, and in 1979 the oil price rose from $12 a barrel to $33 a barrel. OPEC’s power was great in the 1970s. OPEC’s market share is now rising. This year, moreover, demand for oil will exceed supply for the first time.

Last year, oil prices already rose by 50 per cent. A new oil crisis is in the offing. 

So goes January, so goes the year, it is sometimes said. If so, Mr Market has decided that the Covid-19 pandemic is behind us. This has investment implications: the long duration narrative will fade into the background, and “real economy” stocks will outperform again.

The conglomerate of conglomerates, Berkshire Hathaway, has been staging a strong rally in recent weeks. Warren Buffett’s vehicle has risen sharply on the back of its substantial position in Apple, which recently passed the $3 trillion mark. But there is more to it.

“Never waste a good crisis” is an English expression that you can safely leave to the French and Italians. In the political “no man’s land of Christmas”, and moreover shortly after Angela Merkel stepped down as Chancellor and on the eve of the French Presidency of the European Council, President Emmanuel Macron and Prime Minister Mario Draghi chose their moment.

They fired a targeted flare into the dark December night over the European Union.

The nice thing about the investment profession is that creativity is more important than striving for perfection. Striving for a perfect world runs the risk of chasing the market. By selecting investments in which all the good news is discounted, a portfolio is created that structurally lags behind the market.

2021 was the third year in a row where sustainable investors outperformed non-sustainable investors. For a long time, there has been a debate as to whether sustainable investment comes at the expense of returns or actually generates additional returns. Many studies and meta-studies later, the cautious conclusion is that it probably does not cost a return and may even be good for the return.

Every year there are surprises at the trade fair, although there seem to have been more in 2021. A surprise is something that the vast majority did not expect. That is the reason why surprises can set a stock market in motion. When almost everyone is convinced of something, it is discounted in the stock prices. These were the biggest surprises of 2021.

Democratic Senator Joe Manchin wants to vote against President Joe Biden’s Build Back Better programme. Since the Democrats only have a narrow majority in the Senate, a majority that they are going to lose at the end of this year, the generosity of the American government will be over.

According to the Republican senators and Manchin, it is no longer about saving the economy, but about fighting rising inflation.

While browsing through all the predictions for next year, I noticed that hardly anyone dares to put China on the map. Until I recently saw JP Morgan’s outlook with the appealing headline  “Buy everything in China”. This was followed on Tuesday by Goldman’s statement that all the risks in China have now been factored in.

Since the 1980s, a balanced portfolio has been a great alternative to a full – highly offensive – equity portfolio. A balanced portfolio typically consists of 50 percent stocks and 50 percent bonds, although the children of the bull market have gradually stretched the stock weight to 60 or even 70 percent.