Global Opportunities Beyond the Radar

End of Year Portfolio Update: December 2023 — Freedom and Opportunity Ahead

 

Monthly, we update our wholesale investors on what’s happening in the market. Running what’s probably the only late-night trading desk from New Zealand, we’re well-positioned to feel the pulse of the market’s direction.

It’s possible to live in a bubble. And travel in one.

The world is one of extremes. Especially when it comes to wealth and poverty.

I’m writing this dispatch from Seoul, South Korea. Overlooking the Lotte World Tower, the sixth-tallest building in the world. It’s just started to snow…

 

Source: Supplied / Simon Angelo

 

In the shopping malls below, I enjoy barista coffee. The world’s high-end brands are here, from Prada to Gucci. The streets are lined with Bentleys and Mercedes dusted with snowflakes.

South Korea, with a population of 52 milllion, has a GDP per capita of around US$35,000. Around 70% of New Zealand’s. 50% of the US. It is modern and prosperous. It outshines in technology. The internet is lightning-fast. It would be a great place to run a trading desk.

Around 60km to the north of here is the border. There lies North Korea. One of the world’s most desperately poor countries, with GDP per capita estimated at around $800.

 

A view from South Korea towards North Korea in the Joint Security Area at Panmunjom. Source: Wikimedia Commons

 

Last June, the BBC reported that ‘normal middle-class’ North Koreans were seeing starvation in their neighbourhoods. One Pyongyang woman reported that she knew a family of three who had starved to death at home.

The country cannot produce enough food for its 26 million people. Despite this, in 2022, 63 ballistic missiles were tested by the regime at a cost of $500 million — more than enough to make up for the annual grain shortfall.

According to reports made to the BBC, the government has used the last three years of pandemic restrictions to increase its control over people’s lives, strengthening punishments, and adding new laws.

 

Freedom vs. Tyranny

 

South Korea scores high on The Heritage Foundation’s Index of Economic Freedom at No. 15.

North Korea is at the very bottom of the ranking at No. 176.

There’s a very clear link between economic freedom, prosperity per person, and investment opportunity. A complete lack of freedom can lead to starvation and death.

Although New Zealand fell 2 points from 2022 to 2023, it is ranked at a very promising No. 5.

The rapid erosion of freedom under the previous government has possibly been averted with the new government elected last year.

As The Telegraph reported in November: ‘New Zealand is back, and it’s leaving woke Britain in its wake.’

 

The markets are also back

 

After one of the longest bear markets since World War II, stocks are now coming back.

The 2022-2023 bear market ran for 248 trading days.

An average bear market is 142.

The pandemic of 2020 saw lockdowns and mass loss of economic freedom. That damage will take years to repair (with good government in place).

2021 saw recovery, but inflation also ran out of control. That paved the way for a long sell-off.

Those with money in the market in 2021 will now see recovery. And be looking for further growth.

Those who deployed in the dark days of 2022 and 2023 (as we asked) will already see strong returns.

This likely remains a very good time to fund accounts.

January may see some profit-taking after a very strong December. Before a bull market and FOMO looks set to get underway beyond Q1 as interest rates come down.

The final taming of interest rates should be the expected story in 2024. Then the prospect of lowering interest rates fuelling further investment in stocks.

As Jerome Powell has noted, this time, inflation has come more from a supply-side shock as opposed to the boiling over of demand-led growth. That would imply an eventual return to looser monetary policy.

Opportunities don’t shout. They whisper. But right now, it looks like a pretty loud whisper.

 

Managed Account performance*

 

For the month of December 2023, we were up 6.72% across the composite portfolio (total aggregate return across all portfolios following the strategy).

Our MSCI EAFE benchmark was up 2.96%.

This brings our total return for last year (2023) to 19.91%.

Our average annualised return since inception is 15.41% p.a.

Please see our performance chart for more details.

 

Q1 2024 could be a great time to deploy now

 

For existing clients, we encourage you to add funds to your account.

For new Wholesale or Eligible Investors, we would like to offer you a free consultation, available during the month of January.

Please request your free consultation today.

Happy New Year!

 

Regards,

Simon Angelo

Editor, Wealth Morning 

*Past performance is not an indicator for future performance. Your actual portfolio will differ from the composite portfolio mentioned. The information contained in this document does not constitute an offer to sell or a solicitation to buy an investment, nor should it be construed as investment advice. Wealth Morning Managed Accounts are available to Eligible Investors and Wholesale Investors (not to Retail Investors) as defined in the Financial Markets Conduct Act (2013).

 


 

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