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Bespoke Newsletter July 2024


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The Stock Markets

(updated 30 June 2024)

The key benchmark you should care about is achieving all of your financial and life goals, and not running out of money.


The Unimportant Numbers - 1 Month

Monthly figures are a distraction from your long term goals.


The Important Numbers - 30 Years

Investing in the Great Companies of the World has produced life-changing returns for the disciplined and patient investor over the last 30 years, the average length of a two-person retirement.


Source: FE Analytics, Humans Under Management. Returns are based on the total return of the respective indices, which assures all dividends are re-invested. Country returns are in local currencies, global returns in USD. Past performance may not be indicative of future results.





Inflation - The Real Enemy (updated June 2024)


The number one enemy of the long-term investor is the financial dragon called inflation (the silent but steady increase of prices over time). An investment in the South African share market has consistently provided protection from this enemy. To earn this return, you had to be willing to see your investment value temporarily decline by about -15% on average every year without being panicked into selling.



Watch

Inside the Mind of a Master Procrastinator






Listen

Smart Spending vs. Not Spending

[12 minutes].

Is there a negative impact of delayed gratification?



You’ll Always Own The Beasts


If you don’t follow investment news, you would have missed a rather staggering story in 2024. In June, a relatively unknown company, NVIDIA, became the biggest listed company in the world. Yes, that’s right, it overtook both Apple and Microsoft to claim the top slot.


Started in 1993, the company’s main product is the graphics processing units (GPUs) traditionally used in gaming computers. In 2001, its steady growth resulted in it entering the S&P 500 by replacing Enron. The real growth, however, only started in the last few years when its products became sought after for mining cryptocurrency and, more recently, for powering the new wave of Artificial Intelligence (AI) engines.


Its growth over the last five years has been staggering. In 2019, it traded at $4 per share. At one point in June 2024, the share price was $126. Naturally, much media coverage has fixated on the remarkable wealth investors could have made by picking this stock before its rise in popularity. However, smart investors know that predicting which companies will become these market leaders is incredibly difficult. With hindsight, it seems obvious—how could Amazon not be huge, how could Tesla not be a beast?


A Better Way


Stock-picking can be risky, often leading to missed opportunities and heightened anxiety. If you didn’t own NVIDIA directly, there’s likely no need to despair. If you are invested in a global equity fund, you likely already own NVIDIA shares.


As an investor, nothing could be better news: Owning a global equity fund that tracks an index like the S&P 500 (or other large index) means you’ll always own the shares of the biggest companies. As companies like NVIDIA rise to dominance, they are promptly included in these indices, guaranteeing their presence in your investment portfolio. NVIDIA, for example, would have been held since 2001.


Companies that make the news for exponential growth almost always experience periods where they lose more than half of their value over short periods of time. For example, in 2022, Amazon lost close to 60% of its market value while the market as a whole only declined 25%.


A global fund gives you the growth exposure of the stocks that fly while also giving you the protection of a diversified portfolio. As a result, you won’t need to worry about missing out on the next big thing. Whether it’s an emerging tech giant or a company revolutionising an industry, being part of a diversified global equity fund ensures you’re always in the mix.


Ignore The Noise


While the above good news seems common sense, you’ll seldom read about it in the financial media. Growing wealth slowly over time does not make for exciting headlines. A story about the latest stock to explode makes for a better story, which is why you will always wonder if you’re losing out to others.


There are numerous reasons to own index funds, and the data shows that they tend to outperform actively managed funds over meaningful periods. One key advantage of index funds is that they always include the market’s dominant companies. It’s impossible to predict which sector will dominate the top 10 spots. But the good news is, you don’t need to guess because you’ll own a small slice of it regardless.


Some stocks die, some stocks fly, and some stocks really soar. Trying to pick these winners in advance is a fool’s errand. By owning a broad global equity fund, you’ll be a part-owner in the market’s dominant companies, even those no one could predict with foresight. This approach allows us to benefit from the growth of these giants without the stress and uncertainty of trying to pick individual winners.


Read

Wealth and Money Are Two Different Things

[3 minutes].

The importance of creating meaningful

memories and experiences.



Lessons From Another ‘Faux-tirement’

[4 minutes].

Valuable insights from a personal experiment on retirement

and life.


Quiet Compounding

[4 minutes].

How real wealth is made.


Why Success Doesn’t Lead to Satisfaction The Psychology of Inevitable Envy

[10 minutes]. [6 minutes].

Discover why success doesn’t lead to Can envy be used as inspiration for

long-lasting satisfaction. personal growth?


This Is How To Spend Your Money To Maximise Happiness

[10 minutes].

Eight ideas for spending money in ways that maximise happiness.


Rational Optimism

Human rights have improved in all world regions over the last century

Human rights are much better protected in all world regions than a century ago, according to data by Varieties of Democracy. This recently updated chart shows an index that captures human rights. The index ranges from 0 (least rights) to 1 (most). As you can see, every world region scored significantly higher in 2023 than 100 years ago.


Waymo says its driverless cars are 200% safer than you

Three weeks after one of Waymo’s autonomous vehicles drove itself into a telephone pole for no apparent reason whatsoever (prompting 672 cars recalled), Waymo has released a statement saying its AVs are still 200 to 350% better at avoiding crashes than humans.


Causes of death in London in 1632


Be glad you live now!






Visuals


All of the World’s Trillion-Dollar Companies in One Chart



Chipmaker Nvidia is now the world’s most valuable company, which means its time for an update to our frequent “trillion-dollar club” post. In this graphic, we’ve visualized the market capitalizations of the world’s trillion-dollar companies, as of June 18, 2024.




The Death of Cash Transactions Around the World

As credit cards and digital wallets (e.g. Apple Pay, Paytm, Alipay) see increasing adoption around the world, the share of cash being used in transactions is plummeting. The chart above looks at cash as a share of transaction value in selected countries.


Key Elections in 2024: Winners, Losers, Upcoming Polls


Over 60 countries were expected to go to polls at the start of this year, amounting to nearly half of the world’s population.


This graphic lists the key elections that have taken place in 2024, its winners, and the three big upcoming elections slated for the second half of this year.


In the six big elections to start 2024, four incumbents held on to power. This list includes: Sheikh Hasina (Bangladesh), Shehbaz Sharif (Pakistan), Narendra Modi (India) and Vladimir Putin (Russia). However, the Russian and Bangladeshi elections had little to no opposition candidates, casting a shadow on the electoral process.


We hope that you enjoyed this month’s newsletter. Please let us know what you enjoyed or write back with any of your own news. Please forward to a friend, relative, or colleague. As always, we’re here for you. See you next month.

Created By Humans Under Management On Behalf Of Bespoke Financial Services.

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