OTW #44: Cash outperforms the S&P, Copper demand, Investment themes across the decades, and more
Important financial stories to check out over the weekend
Hi Antagonist readers,
It’s time for another edition of “Over the Weekend.” If you enjoy these brief posts, please invite others to subscribe. When your referrals sign up, you’ll receive credits that reward you with a free premium membership!
1. Investments of the ultra-wealthy.
This Visual Capitalist chart shows how ultra-high net worth individuals (UHNWI) allocate their wealth. An UHNWI is a person with a net worth of over $30 million (including primary residence).
Antagonist’s take
I always find it interesting when passions become investments. In the case of art, passions really do pay. Last year, the art market rose 29%. (For more details, check out this article.)
The market doesn’t appear to be slowing down either. Nearly 6 in 10 UHNWIs planned to purchase art in 2023, according to Knight Frank’s 2023 Wealth Report.
2. Investment themes across the decades.
This graphic shows how investment themes have shifted over the last 70 years, based on analysis from Ruchir Sharma of Morgan Stanley Investment Management via NS Capital (credit: Valérie Noël).
Antagonist’s take
What will the 2020s look like?
As of this year, FAANG stocks have given way to the “Magnificent 7” and AI hype.
My guess—and it’s purely a guess—is that AI will continue to stay at the forefront of investors’ minds for the rest of the decade.
But I also believe we’ll see uranium and copper reach new heights along with a spike in oil. The latter will eventually fall but not before a melt up. Again, this is just my estimation. It’s impossible to know what’s coming.
3. Cloud computing and the Internet of Things (IoT) will drive copper demand.
Earlier this year, I published “Invest in Copper Stocks: Green Tech’s Hidden Gem.” I described how projected demand for copper far outpaces supply, which makes the metal an excellent investment opportunity for years to come.
This infographic from Visual Capitalist and The Copper Development Association illustrates how vital copper is to the rise of cloud computing and the Internet of Things (IoT).
Antagonist’s take
In addition to my article, premium members received a list of top copper stocks to consider. You can read about them here:
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4. Stock performance after final rate cut.
Many investors are convinced that the Fed is done hiking interest rates. They also assume that this will catapult us into another bull market.
Historical data isn’t that clear-cut, however. This table shows the 6- and 12-month performance of the S&P 500 after the Fed’s final rate hike.
Antagonist’s take
For stocks to get back on track, it’s not as simple as the Fed abandoning its hikes or even cutting rates. The market is far more complex than that.
, editor of the excellent Lead-Lag Report, has even shown how stocks tend to fall after a Fed pivot (see this article for more details).Regardless of whether the Fed is done cutting rates, I believe over the next few years, we’ll see more of a sideways market for equites than a sustained bear or bull trend. Time will tell, however.
5. Cash pays a higher yield than the S&P 500.
“For the first time this century, cash pays a higher yield in interest than the S&P 500 does in earnings” (source: Oktay Kavrak).
Antagonist’s take
While this specific data point surprised me, I’m not shocked at all that we’re seeing so many “For the first time since…” type of stats.
The Fed hiked interest rates at the fastest pace in history. You can’t do something so extreme and NOT shock the system.
Also, the effects of rate hikes are notoriously slow. Therefore, we are just now feeling the consequences of the decisions that the Fed made several months ago.
While I don’t know exactly what the next surprising data point will be, I fully expect that we’ll see plenty more financial shocks in the foreseeable future.
Last thing...
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Thank you for reading, and have a great weekend!
Jason Milton
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