Introduction - Angles & Perspectives Q4 2024

Introduction - Angles & Perspectives Q4 2024

Markets move in real time, and thus there is always some development to report on. Even under normal circumstances, this can translate into a lot of noise for investors to contend with. Currently, however, uncertainty is high and noise levels are amplified, making the investor’s task of growing wealth in the long term all the more challenging. It is little wonder then, that investors’ attention tends to be focused on what is doing well and making headlines in equal measures. This selective focus tends to get investors into trouble, though, as what is currently popular or successful does not always remain so into the future. It also masks the fact that risk and opportunity are often two sides of the same coin. With market concentration at unprecedented levels, investors may not only have higher risk exposures than they’d think, but it also means there is a vast range of opportunities that the market is potentially overlooking.

Questioning which risks the market is ignoring, can thus not only help to avoid overvalued areas, but also to identify opportunities that others are overlooking. What sets our 3M investment process apart, is that it consistently seeks to identify areas of opportunity that are trading at wide margins of safety to their intrinsic value.

In this edition, we look at the risks and opportunities that investors are ignoring.

In the first article, Head of Research Kevin Cousins highlights The risks of the US exceptionalism narrative. As US markets have continued to outperform, the ‘US exceptionalism’ narrative has surfaced as an explanation justifying the surging valuations placed on US stocks. Our analysis shows that the underpinnings to US exceptionalism are not as solid as the prevailing narrative implies. Macroeconomic vulnerabilities and massive accumulated imbalances have so far been virtually ignored by the market.

Next, Chief Investment Officer John Gilchrist asks Where SA growth surprises could originate from. South Africa’s economic recovery is unlikely to progress smoothly. There are likely to be setbacks, reversals and disappointments along the way. Despite strong performance from South African assets since the formation of the Government of National Unity (GNU), we continue to see opportunities for positive future returns, as a range of diverse factors has the potential to amplify each other’s impact.

In the final article, Head of Equities Justin Floor shares our thoughts on Addressing client needs by seeking both performance and trust. He points out that clients today are inundated with options, yet their core challenge remains unchanged: achieving real, inflation-beating returns over decades, not quarters. This demands more than technical skill – it requires a partnership forged on trust, patience, and the courage to defy consensus.

We trust that you will find these articles insightful, and their guidance valuable in these turbulent times.