“Pessimists seldom win in the long run. Especially, don’t spend your precious time with grumpy old men talking about the long past glory days,” were the wise words given to Spy by an emerging markets specialist over sushi and far too many glasses of sake this week. “These are the facts: In 1820, only 12% of adults could read and write a short, simple statement about their everyday life. By 1920, this percentage increased to 32%. Currently, the global literacy rate stands at 87%. Despite the negative news we see every day, the world is, in fact, getting much better over time.” Spy for one is smiling, his potential audience of readers is clearly growing by the week.
Have you ever managed to get to the end of a game of Monopoly with calm and civility reigning among the family? Not for Spy either. This week, an asset manager named TEMA has introduced a new ETF that is specifically targeting monopoly or oligopoly assets. It has chosen the witty ticker, TOLL. Spy supposes, the infuriating thing about the board game Monopoly – long-term crushing of the competition – is what makes the Tema Monopolies and Oligopolies ETF an attractive idea. Anti-trust issues aside, it is a thematic Spy could warm too. It is an active, concentrated fund which currently holds only 41 stocks. Its top ten holdings include firms such as Visa, Ferrovial and Intercontinental Exchange. It might be worth taking a chance; just don’t go to directly to jail.
With the current market volatility having, no doubt, flushed out some jumpy investors, Eastspring has put out a rather good piece on the behavioural bias known as the “disposition effect”. “The disposition effect is a behavioural bias where investors tend to hold onto losing investments for too long and sell winning investments too quickly…This occurs because the psychological discomfort of realising a loss can be more painful than the joy of realising a gain. According to the study by [psychologists], Kahneman and Tversky, the pain of losses is felt approximately twice as strongly as the pleasure of equivalent gains.” The Eastspring team has been working on a set of rules, for some strategies, that would mitigate succumbing to this bias. Spy will watch with interest.
With so many fortunes being made in tech, pharmaceuticals, finance and goodness knows how many other segments, it is not much of a surprise that family offices are sprouting like mushrooms in a damp forest, their assets growing like bamboo. By the end of September 2024, globally, there were 8,030 family offices. The offices were managing a whopping $3.1trn in assets, according to Deloitte’s most recent statistics. The consultancy expects the total number of family offices to grow to 10,720 with about $5.4trn in AUM by 2030. A key challenge for the family offices is finding people they trust to run this burgeoning wealth, reckons Spy.
Can Singapore get its stock exchange out of its long-term slumber? The regulator is having yet another go. MAS has announced some new measures this week. For secondary listings, aligning disclosure requirements with baseline international disclosure standards, plus simplified requirements, would allow issuers who already have primary listings elsewhere, to use the same prospectuses with minimal adaptation for their secondary listing on SGX. Perhaps more importantly, it is proposing changes to existing legislation to allow issuers to gauge investor interest earlier in the IPO process. This will support bookbuilding efforts as well as giving investors more time to familiarise themselves with the issuers and their intended offers. The irony, of course, is that Singapore is a major wealth management centre but so little capital flows to its domestic market, which suffers from a concomitant dearth of liquidity beyond the blue-chips. Spy can but hope this improves things.
Well, that did not take long, did it? CNN’s Fear and Greed Index has bounced back to Greed. Gordon Gecko, of Wall Street fame, will be punching the air, telling us all that “greed is good”. The markets have climbed the “wall of worry” and after the Liberation Day sell-off, have found their enthusiasm again.
Spy is grateful to a regular reader who pointed out, “This has NEVER happened before: Retail investors have been buying US equities for 21 weeks straight, the longest streak ever. This significantly beats the previous record of 10 consecutive weeks before the 2022 bear market.” “Meanwhile, the US bond market has now been in a drawdown for 57 months, by far the longest in history.” If the trend is your friend, we can expect to see more of the same. Good for equities, bad for debt.
There is a sucker born every day, but even the most astute among us are going to be conned from time to time. What is truly terrifying is the current state of deep-fake, AI-driven video promoting investment scams. A deepfake video featuring former Fidelity International star fund manager Anthony Bolton has surfaced, with scammers using manipulated visuals and audio in an attempt deceive retail investors. In the 25-second Instagram clip, the fake Bolton urges viewers to join a WhatsApp group that promises daily stock tips. It is a jungle out there, folks, so buyer beware.
Spy’s quote of the week is by Paul Newman. In light of the above, it seems an apt one. “If you’re playing a poker game and you look around the table and can’t tell who the sucker is, it’s you.”
Until next week…
