After the strong financial markets of 2023, the Media will likely talk about how well many of the rich did last year. We believe most serious investors did quite well but more importantly, how so many investors can adopt their approach as well… if they desire to.

The financial markets made strong gains in 2023 Q4. Four of the five asset classes* we follow were higher in Q4; only commodities were down; and this pattern held true for the full year as well. In 2023, the big winners were Equities both US (SP500) and International (MSCI World Index); they were up double digits. For high net worth investors we believe that equities are the better choice for increasing their wealth after inflation and taxes. Hence our equity bias for our clients.

The financial news is quite upbeat (versus the same time last year); most likely due to the strong Q4 performance. We are also optimistic, but not irrationally so. Our view is for a more muted performance in 2024 versus 2023 especially in the equity markets. But we will shamelessly settle for superior performance if it comes our way.

In 2024 we will undoubtedly hear how the rich got richer, especially the Forbes 500 types. Our view is that this is driven by their high stock ownership in either public or private companies. The good news for the rest of us, is that a similar path is quite easily available for most investors if they desire it.

For our retiree clients, we plan to rely on stock dividends rather than bonds for some of their income needs. Bonds are giving some nice yields but this does not necessarily translate into total returns. Serious investors will re-call that yields are only part of the total return “performance” story, and it is total returns that help to build wealth.

And, for retirees, it becomes increasingly important to also protect their assets. Our advice is to focus on what they control. (Hint: it’s not the performance of financial markets). Things you control are things like: transitioning your portfolio for lower taxes in retirement, making sure your Will and estate paperwork is current and streamlined, simplifying your personal affairs so that they are easy to oversee and transition to heirs etc.

For investors who are still building their portfolio – we believe they should adopt a robust investment approach from the several approaches available.

Our investment philosophy for high net worth investors with a long-term horizon remains steadfast: we are not seeing any new data or concepts to warrant changes. Our approach is: diversify portfolios over the main asset classes, keep a bias towards Equities, and keep a relentless focus on managing costs. We think this is a very feasible investment strategy to build assets and to ensure a comfortable retirement.

In closing, I wish you all the best for 2024.

* Our Asset classes are: Cash, Fixed income, Equities, Real Estate, and Commodities and we think these pretty much cover the investable investment universe.

16 Jan 2024