Investment Matters: November Edition

This week’s blog reflects on some of the key developments in the financial services and investment world, drawing insights from major recent events. From the PFS National Conference in Manchester to the impact of the US election and the resilience of the Magnificent Seven stocks, the focus is on understanding trends and their implications for advisers and investors alike. Written by Paul Kenworthy , this post highlights both technological advancements and market dynamics shaping our industry.

Timeline and Platform 3.0

On 12th November 2024, Amy North Nicola Porter , and I attended the Personal Finance Society National Conference in Manchester. This event brought together industry professionals, providers, and innovators to share insights and shape the future of financial services. Among the standout speakers was Abraham Okusanya , Founder and CEO of Timeline, whose insightful session focused on “Maximising Client Success: Building a Future-Ready Tech Stack for Financial Advisers.”

Using efficient and integrated technological solutions not only enhances operational efficiency for advisers but also significantly improves the overall client experience. The ultimate goal, he emphasised, is to achieve better client outcomes through streamlined, innovative systems.

A key highlight of his presentation was the discussion around Timeline 's new Platform 3.0. This innovative system is designed to work seamlessly with Timeline’s existing suite of tools, including letters of authority, fact-finding, cash flow modeling, and fund analysis. Abraham described how Platform 3.0 represents a state-of-the-art approach to managing the entire advice process, ensuring that advisers can deliver a more efficient and effective service to their clients.

US Election

As regular readers of this blog will know, we have been following the US election closely over the last few months to see how the outcome might affect the markets.

Donald Trump was elected the 47th President of the United States, securing a majority of 312 electoral votes compared to Kamala Harris’s 226.

It appears that President Trump’s victory will bring positive news for stocks and shares, while government bonds are expected to fall (at least in the short term).

In their latest market update, M&G Wealth made the following predictions:

• Stocks: US equities are likely to perform well over the long term, due to potential reductions in corporation tax.
• Government Bonds: These are expected to perform poorly in the short term because of higher levels of unfunded borrowing by the new government, which will push up bond yields and reduce prices.
• The US Dollar: The dollar is expected to strengthen against other currencies, which could lead to reduced performance for emerging market stocks and bonds. However, it might improve the performance of US stocks for UK investors due to sterling-dollar movements.

Summing up their views, M&G Wealth stated the following:

“We think the outlook for government bonds is negative with Trump in the White House. Trump will continue to borrow, and the debt trajectory will worsen compared to Vice President Kamala Harris’s policies. If Congress is divided, spending plans may be more limited.

While elections and policy matter, the economy and business cycle are more important to market performance in the long run. With the election concluded, we expect attention to return to assessing the outlook for company profits, the global economy, and inflation.”

Source: M&G Wealth

Magnificent Seven

The Magnificent Seven stocks (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) experienced a fall of around 17% in August due to concerns about the sustainability of their spending on AI. This led to a significant sell-off.

However, these stocks have quickly recovered and are once again achieving positive performance.

In his recent market update, Guy Monson from Sarasin & Partners stated: “An index of MAG7 stocks tumbled 17% from its peak in August, following an impressive 37% gain earlier in the year, while US equity volatility nearly quadrupled.

Yet, just six weeks later, these same stocks had clawed back roughly three-quarters of their losses, and volatility had eased. The rebound was driven by the realisation that, despite their towering valuations – MAG7 stocks now account for 28% of the S&P 500’s capitalisation – these companies deliver profits, cash flow, and R&D spending in nearly equal measure. Unlike the dot-com bubble of 1999-2002, today’s AI-linked stocks are underpinned by robust earnings and extraordinary cash flow.”

Source: Sarasin & Partners

It appears that the Magnificent Seven will continue to dominate the markets for years to come. We will keep a close eye on these developments and provide regular updates.

As we look back on a week filled with valuable insights and market-shifting events, it’s clear that innovation and adaptability remain critical for success in financial services. Whether through embracing cutting-edge technology like Timeline’s Platform 3.0 or navigating the ever-changing global markets, staying informed and proactive is key. We’ll continue to monitor these developments and bring you regular updates to support informed decision-making in this fast-evolving landscape.