By
Borsgade
In their latest quarterly letter to investors, Thomas Shrager and the team at Tweedy Brown give their assessment of the market. Their International Value Fund, which we follow here on Børsgade, celebrates its 30th anniversary this year and they take the opportunity to look at the development over the long term.
In the short term – that is, here in 2023 – the headlines and the US market (S&P 500) are very much dominated by the big tech companies Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. No less than 73% of the S&P 500’s 16.9% return in 2023 is due to their price increases. According to Tweedy, the primary factors are “recent declines in the headline consumer price index, the resilience of our banking sector post the March crisis, evidence of continued economic strength particularly in the labor market and service sector, and enthusiasm about the prospects for AI (artificial intelligence) related technologies.”
About it they write:
All of these factors and others appear to be fueling investor hopes for a soft economic landing and the avoidance of the long expected inflation and interest rate driven recession. With valuations, particularly in more speculative parts of the market, soaring, and financial conditions tightening in many, if not most parts of the world, the sustainability of this advance may very well hinge on those hopes being fulfilled.
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