Webinar recording (in Norwegian)
The webinar discusses the impact of Trump's presidency on the market, and then how index funds compare to actively managed funds.
The webinar begins with a discussion of interest rates. Long-term interest rates have stabilized around 4.5% in the US and 4% in Norway, which is relatively good for the economy and investments.
The stock market has started surprisingly well this year, with the Oslo Stock Exchange up almost 5% and the world index up 2.7%.
The market rally in recent years has been very narrow and concentrated, with 8 US technology companies accounting for over half of the gains in the global index.
The valuation of these 8 companies has increased significantly, and they now make up 25% of the world index, compared to 8% 10 years ago.
The price level on the stock market as a whole is above the historical average, mainly due to high valuations in the US, driven by the largest technology companies. The rest of the world, including Europe, emerging markets, and China, is at or below the historical average valuation.
The webinar then discusses Trump's policies and their potential effects on the market. Some of Trump's key issues, such as lower taxes, streamlining government, and cutting international aid, could potentially lead to higher growth and stock prices in the US.
However, there are also concerns that Trump's policies could lead to trade wars, higher inflation, lower growth, and higher unemployment globally.
The webinar concludes that, based on Trump's previous term, NOON Invest expects that much of his rhetoric and actions will be negotiating tactics. They are positive about the financial market going forward, especially considering the pricing of the broad market.
The webinar then moves on to discuss the difference between index funds and active funds. Index funds have consistently outperformed actively managed funds in recent years.
92% of actively managed funds globally underperformed the index in the last three years, and last year active funds achieved a return that was almost 7% lower than the index globally.
Higher costs, lack of ownership in winning stocks, and size disadvantages are some of the reasons active funds struggle.
Index funds have an advantage in that they always own the winners, as the indices are updated and the losers fall out.
The webinar also discusses why there are so many different index funds. NOON Invest believes that it is important to balance risk and exploit differences in stock valuations.
We present our own portfolio, "The Brave Portfolio," which has delivered an annual return of just under 13% over the past six years.
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