Today it's being reported that in the 2nd quarter top European companies are lagging behind their S&P 500 counterparts (zero growth year on year compared with +9%). Many more S&P companies than Stoxx Europe 600 companies have beaten analysts forecasts. Inevitably, this has created a rush amongst analysts to suggest that the shift from America to Europe will come to a crashing halt, and at least based on this quarter, it is hard to present an opposite case.
I personally have been making that shift. Should I stop it ? should I reverse it?. Even if I decide that these second-quarter figures are a clear signal, there's a snag. I invest primarily in funds. These funds (including those holding US equities) are denominated in £s and kept on a UK platform. So I am affected by currency movement, and the problem is, the dollar is weak, and the consensus is, there is more weakness to come. So my European funds may start to lag, but US funds will not make up for it even if the S&P continues to move upwards, because further dollar weakness will impact on the fund price.
What's a mug punter (and pensioner) to do? Maybe a bit more UK based funds? Actually one good thing about @FSLN1 posts is that he's alerted me to some more UK based income paying opportunities. I will explore that possibility (aka doing my own research😉)
Your call, but I'd look at the US economy and the effect that Trump's tariff wars are having/will have (another round of which have kicked off) and wonder what that's going to do for the US GDP. Moreover they'll be inflationary and remember, it's all those US consumers who'll be paying higher prices for imported stuff, they might not realise it yet, but they are ultimately paying for the trade wars, therefore they'll have less money for other stuff. From here I can see the Cable maybe favouring Sterling, that is if we can get some growth going. We now have a settled trade deal with the US, plus India and the EU. Much of the rest of the western world seems to be arguing with Trump so we might just be seen as a reasonably safe country to invest in...
And anyway, how are things looking if you take some of the big US tech stocks out of the equation? Companies like NVIDIA might just be dragging up a lot of dross. Tesla too, they have a ridiculous market cap which I can't justify when you consider that sales in Europe have plunged and are unlikely to be good in the US. Elon Musk has somehow managed to annoy both liberal minded folk, just by being himself, while conservatives hate him because he had a tiff with Trump, and yet their shares are changing hands at $320 a pop, the valuation of the company is nearly $1tn. That's lunacy, right now I Cannot Recommend A Purchase.
So, I'd be wary about what happens in the States, unfortunately what happens there hits the rest of the world.
But you might want to look at the defence sector...
Nato for example is clearly following the Nathan Jones model of defence first. The EU has just raised a pot of 600m Euros to spend on defending Europe while Nato members will collectively spend 4.6bn Euros this year and 5.3bn Euros in 2026. The plan is for Nato member states to continually increase spending to 5% of their national GDP by 2035. Most are way, way, way off that, some will have to more than double spending based on 2024 numbers.
That's a lot of drones...
I also noticed from Rolls-Royce's interim results last week that they have an order book worth £18.8bn just for defence sector work. Many investment funds in this sector tend to be multi-national/trans-Atlantic. UK based aerospace and defence sales are zero rated for tariffs as far as exporting to the US goes - that works for the EU too and the money is spent mostly by nation states and a few organisations like Nato, the UN etc, they tend not to look at the purse strings too closely.
And if you are looking at the suggestions I made earlier, your research will show that NextEnergy Solar is currently trading at a 30% discount to NAV while paying out over 10% PA in dividends, it's like they are giving money away. Being your environmentally friendly Charlton fan I believe in putting my money where my mouth is....and I have. As a bonus solar farms also piss off the Nimby brigade.
The viewpoint you set out in the first part of your post is actually the one that has been guiding my investment choices in the last few months. And the point is that the news I highlighted in my last post has caused me to think twice. in essence, the big European stocks may not be delivering the expected profits. And if that really turns out to be the case global investors are going to turn away from them. I hope it’s a blip but I fear it isn’t, not least since I hold a pretty large slug of Novo Nordisk shares and I don’t need to tell you what kind of rollercoaster ride that has been.I am holding, but bloody hell.
Your individual tips may actually be quite useful for me, but the reason why you’re getting such stick is that I am in a very different situation to @Webby and people like him, who probably form the majority of readers of this thread. I think you should be very circumspect about individual share tips if you mean well, which I’m sure you do. Round about three years ago I asked for suggestions good dividend stocks. Of those I chose from the suggestions some have worked really well for me, others less so. A certain prominent contributor to this thread will now once again wince as I mention “Direct Line” but I believe he knows that I regard him as a friend who among other things gave me valuable advice when my Mum passed away- and he also knows that I took sole responsibility for acting on that and all the other suggestions I took up. Clearly in the case of Direct Line my “own research” failed to uncover the reckless decisions being taken by that company’s leadership.
So I’d recommend you to read the article I linked to regarding second quarter earnings, and separately to take on board my remarks about the constituents of this thread. And if I take up one of your suggestions, I will definitely owe you a pint, as I do to whichever Lifer mentioned Legal&General, and TR Property ( I know who that was, cheers, Ian).
This thread has been running for ages with people offering sound advice to those less engaged financially but even so I think anyone listening to that advice doesn't take it at face value and would consult someone appropriate despite the advice on here being given in good faith.
I don't think @FSLN1 posts have been particularly helpful and the suggestions made whilst maybe being ok for some who are prepared to take a massive risk are not helpful to those who find investments, SIPP's, pensions etc a minefield to navigate and seeing as these products are going to shape their futures financially there is a need to be very circumspect with any advice posted.
Don’t get me wrong, I dabble in all sorts, individual shares and crypto (been known to make the occasional 50% profit within an hour trading Bitcoin for example) etc. but the idea that isolated, anecdotal evidence of non repeatable success is in anyway scalable to 400k is ridiculous. There’s a reason why the super rich’s financial planning would be seen to you and me as unnecessarily risk averse.
OK. Not asking for recommendations, but certainly informed viewpoints.
HSBC. Thinking of buying, as an income stock. As a retail customer I definitely have the feeling they have got their act together, although the app remains disappointingly limited. But retail is just one part of their biz. Currently they are trading at 931p. I missed the chance to get in at 875p. a few weeks back when I first thought of it.
How do those who know the banking sector well (e.g @TelMc32) see their prospects?
OK. Not asking for recommendations, but certainly informed viewpoints.
HSBC. Thinking of buying, as an income stock. As a retail customer I definitely have the feeling they have got their act together, although the app remains disappointingly limited. But retail is just one part of their biz. Currently they are trading at 931p. I missed the chance to get in at 875p. a few weeks back when I first thought of it.
How do those who know the banking sector well (e.g @TelMc32) see their prospects?
I’m surprised hsbc haven’t completely dropped their retail banking, it’s chickens feed to them compared to what they make on the investing side.
Comments
I don't think @FSLN1 posts have been particularly helpful and the suggestions made whilst maybe being ok for some who are prepared to take a massive risk are not helpful to those who find investments, SIPP's, pensions etc a minefield to navigate and seeing as these products are going to shape their futures financially there is a need to be very circumspect with any advice posted.
HSBC. Thinking of buying, as an income stock. As a retail customer I definitely have the feeling they have got their act together, although the app remains disappointingly limited. But retail is just one part of their biz. Currently they are trading at 931p. I missed the chance to get in at 875p. a few weeks back when I first thought of it.
How do those who know the banking sector well (e.g @TelMc32) see their prospects?