Quote of the month.
“The “market” as referred to via conventional indices, is increasingly dominated by a small group of six large US companies – Alphabet (was Google), Amazon, Apple, Meta Platforms (was Facebook), Microsoft and Tesla.
Last year, this group, which trades on an average P/E of about 36x (triple that of our portfolio) returned an average of 41%/47% (in US$/A$) and now has a combined market capitalisation of US$11.5 trillion – more than any stock market outside the US, including Shanghai, Tokyo or London (as at 31 December 2021).
Three of these companies – Apple, Microsoft and Alphabet were each individually worth more than all listed Australian businesses combined.”
Platinum monthly report, 10 January 2022.
Quote of the month 2.
“It feels a lot like the early 1970s, when we had the Nifty Fifty stocks: The broad market was being held up by around 50 large cap stocks, like IBM or Xerox. These companies were seen as the best of the best, they were not being impacted by inflation because of their pricing power, and every money manager sheltered there.
Their valuations rose to crazy levels. In the end, the rise in labor costs broke their back and the bubble burst.”
Louis Gave, of Gavkal Research, discussing current markets. This is taken from a recent interview about what might happen in markets over the next few years. It’s an excellent summary, and seems like the most likely way, in fact probably the best way, that this could all play out (with the exception of the view on Chinese debt, which we have no idea about).
The full interview is available here.
The year that was…2021.
“Science could not make up its mind about masks, especially in restaurants. Should everybody in the restaurant wear them? Should only the staff wear them? Should people who are standing up wear them, but not people who are sitting down, which would seem to suggest that the virus can also enter our bodies via our butts?
We still don’t know, and we can’t wait to find out what the Science will come up with for us next. Anyway, our point is not that 2021 was massively better than 2020. Our point is that at least it was different. A variant, so to speak. And like any year, it had both highs and lows.”
Taken from the best review of 2021 there will ever be, courtesy of Dave Barry. The whole thing, which is quite a long read, is here.
This day in (financial) history.
January 1956. The Ford Motor Company, had its IPO on 17 January 1956. The company was founded by Henry Ford in 1903. Initially, Ford was entirely owned by Henry Ford and a small group of local investors.
In 1919, Henry Ford bought out the investors and until 1956, all stock in the company was owned by members of the Ford family, the Edison Institute and the Ford Foundation. But after Henry Ford’s death in 1947, the Ford family and Ford Foundation decided to raise money by going public. We’re not sure Henry would have agreed with that move.
January 1974. Several Arab gulf nations doubled the price of their oil exports overnight, leading to recessions, inflation and the formation of OPEC. It also meant big changes, as nations moved to reduce their dependence on imported oil through various means.
January 2009. Zimbabwe unveils the 100 trillion dollar banknote. It would be the highest denomination banknote in the history of money. By the end of February 2009 it was worth 31 cents in U.S. dollars.
OK, maybe they’re not amazing. But you can still enthrall your friends at parties with these at-least-vaguely-interesting facts:
- Sphenopalatine ganglioneuralgia is the medical term for ice cream headaches.
- Alexander Graham Bell, who invented the telephone in 1876, suggested answering calls with “ahoy.”
- Scientists think that the largest blue whales probably weigh up to twice as much as the largest dinosaur that ever lived.
- Bones found at Seymour Island indicate that 37 to 40 million years ago, penguins were 6 feet tall and weighed over 100kg. But they still couldn’t walk properly.
- Citizens of the Soviet Union began celebrating the end of World War II as soon as it was announced. Less than 24 hours later, the entire country was out of vodka.
And finally…just for laughs.
The annual Australia Day lamb ad has just dropped. Here it is.