Ask the Investment Managers LIVE - May 2025

Have you ever wondered what's happening in the markets right now, or how you can make smarter investment decisions? Get answers directly from the people behind SAM & NOON Invest.

We've arranged a meeting with:

• Latest market updates and trends•

• Topic; Investment strategy through current changes in the global economy.

• Discussion and answers to questions

Direktesendt webinar fra Stavanger Asset Management og NOON Invest

Summary:

The main market topic discussed was the **trade war**, particularly the high tariffs imposed by the US against various countries, especially China. These tariffs were initially very high, described as being close to an embargo. However, many of these tariffs have since been reversed or postponed, or reduced to significantly lower levels (e.g., 10% or 30% compared to potentially 130%).

The market reacted to the initial tariffs with shock and panic in April but has since recovered almost all of the losses and even surpassed previous levels in some areas. Recession fears have also significantly decreased. The market seems to have adjusted to the idea that some tariffs will remain, but at much lower levels than initially feared. High interest rates make it harder to finance debt, and tariffs were seen as exacerbating this issue.

Regarding interest rates, European central banks have significantly lowered rates. While the US Federal Reserve hasn't cut rates, the market expects them to, leading to lower short-term US rates. However, long-term US interest rates have continued to rise, influencing Norwegian and European long-term rates upwards. The Norwegian Krone has strengthened recently despite falling oil prices, which could be partly attributed to Norway having higher interest rates compared to Europe.

The central question addressed was the current market situation and how investors should respond, particularly in what is expected to be a turbulent environment, especially under the current US political regime. The hosts emphasized that it is **impossible to predict future events** like wars, pandemics, trade wars, or reversals of decisions.

Given this unpredictability, the key takeaway is the importance of having a **good investment strategy** tailored to one's time horizon and goals. A crucial element of this strategy is **diversification** across different regions, sectors, and types of companies. This helps mitigate risks from unexpected events or shifting trends, citing examples like the Ukraine war's impact on Norwegian energy stocks or the rise and fall of trends like ESG or tech stocks.

They cautioned against the **FOMO (Fear Of Missing Out)** effect, where investors focus too much on assets that have performed well recently. A better approach is to build diversified portfolios based on **long-term trends**.

Currently, the global market index is considered slightly expensive historically, driven primarily by highly valued US technology stocks. However, other regions like Norway, Europe, England, Emerging Markets, and China are priced moderately to low.

The hosts believe the market is more likely to perform well over the next 3-4 years than poorly. However, market swings are expected, and potential corrections of 10-20% should not be a shock. Investors need a **plan for these swings**. This plan should include having **liquidity** available (cash, liquid bonds, or credit lines). Having liquidity allows investors to buy when the market falls, as the best buying opportunities are often on the days when the market looks the worst. The ability to be "ice cold" and stick to the plan during downturns is challenging but vital. This strategy is most suitable for investors with a long-term perspective.

Despite potential turbulence, several positive drivers for the market were highlighted: the general policy of the US administration, stimulus measures in China, and significant planned investments in Europe, particularly in defense. Overall economic conditions in the Western world are considered relatively good.

Regarding portfolio adjustments, they have reduced exposure to the US, partly due to its large index weight and perceived risks, including currency risk. They have increased exposure to Asia and Emerging Markets more broadly than just China, and increased focus on Norway and Europe due to potentially better growth prospects. Their investment style favors companies that earn money and pay dividends, seen as robust in the current environment of inflation and interest rates.

The worst-case scenario was considered to be an unpredictable "black swan" event. Escalation of the trade war or new conflicts were also mentioned as possibilities. Historically, broad stock markets can fall by 50%, and investors should be prepared for this, although it is usually temporary. Such large falls are less likely from the current moderate valuation levels compared to periods of high pricing.

Finally, they encouraged listeners to contact them to discuss their individual investment strategies, risk profiles, and financial planning.