You turn if you want to

This investor’s not for turning

The US equity market has become unusually concentrated thanks to the dominance of a few mega-cap companies. I’ve said before that if you’re a global fund manager and you didn’t own stocks like Nvidia then you’ve likely underperformed your benchmark over the last few years.

There’s a lot of chatter from market commentators that this may be changing. They may be right, let’s check in a few years’ time! In the meantime, I would say calling momentum turns (indeed, any turns) in the equity market is a mug’s game, an activity that will not make you happy or successful.

This is where having a robust investment process comes into play. It will help you avoid behavioural biases (loss aversion / herding / confirmation bias / anchoring etc). It will help you understand the risks in your portfolio and judge if they are intended or unintended. It will keep you on top of valuations. But most importantly, it will mean you can ignore the noise about market turns…?

?

Alan Porter

30 July 2024