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10 Stats that Matter

No one knows the future, so we like to prepare for a range of outcomes in times of uncertainty rather than forecast the unknowable. Here are 10 stats that are useful when considering the next 12-18 months and how it might impact investors.

Hugh Selby-Smith | Talaria Capital

 

Back in May 2021 the US Federal Reserve’s narrative on inflation was that it would be transitory, while only a year ago it estimated the funds rate would peak at 1.75%. Back then we put together a list of 8 stats that we thought were important for investors to consider when thinking about the possibility of the opposite: the chance of persistent and high levels of inflation. 

Fast forward to today and there’s no doubt inflation and interest rates are still on the rise, with the Fed expecting the peak to be over 4.5%, and so the debate is now about how high and for how long. 

No one knows the future, so we like to prepare for a range of outcomes in times of uncertainty rather than forecast the unknowable. As a result, we’ve put together another list – this time 10 stats that we think are useful when considering the next 12-18 months and how it might impact investors. 

  • 45%: Meta has seen revenues grow from $5bn to $117bn since listing in 2012 but had underperformed the S&P500 by 45% to December 31 2022 for an investor who bought into the IPO. (Price matters) (Has recovered in Jan 2023)
  • $8.5 trillion: The S&P lost $8.5tn in market capitalization in 2022. This is nearly the entire market cap of the S&P 500 in 2011. (What goes up often comes down)
  • Up 9%, down 6%: Since June 2022 until 31 Jan 2023, earnings forecasts for the US market are down 6% despite the market going up 9% over that period. (There is a disconnect in the market) 
  • $700 billion: Tesla remains the 5th largest stock in the S&P index after losing $700bn in market capitalization in 2022 – for perspective the bottom 71 in the S&P could be bought in February 2023 with $700bn, which have a combined revenue over $640bn. (The index is not diversified) 
  • 11.2%: As at the third quarter of 2022, US Corporate net margins reached 11.2% - one of the highest readings since records began. (The downside risk to margins is high.) 
  • Third largest: Amazon is estimated to generate $40bn of advertising sales in 2022 – 27.5bn more than in 2019 leaving it as the third largest advertising company in the world with a 5% market share. (Alphabet and FB with 45% global advertising market share are set to move from offence to defense.)
  • 5%: Over the last 2 years to 31 December 2022 – Japan’s largest telecom company has been a better share than Microsoft - 5% outperformance in USD. (There is value outside the US) 
  • Guaranteed: More than 100% of bank loans in Italy and 70% of loans in France are guaranteed by the government. (The role of central banks is diminishing)
  • 86%:  Investors are paying 86% more for every dollar of sales in the US than they are in Japan – but gross profitability is only 10% lower. (Diversify across regions)
  • ¼: The global dependency ratio is increasing so that over the next 30 years there will only be 4 working-aged people for every single retiree over 65. This compares to 7 working aged people at the end of 2021. At the same time, world Debt to GDP has grown to 256% today from 145% after WW2 (Labour shortages are only going to get more acute)

 

These stats consider valuation, earnings, diversification and the investor experience. As it stands the established relationships between interest rates, leading economic indicators, and corporate earnings all point towards falling profitability into the second half of 2023, meaning numbers, not narrative really matters. 

Want to learn more? Hugh Selby-Smith from Talaria Capital joined Gemma Dale on the Your Wealth podcast to discuss what these 10 stats mean for investors right now.

 

All prices and analysis at 7 December 2022. This content has been created by Talaria Asset Management (AFSL 333732). This material is intended to provide general advice only. It has been prepared without having regard to or taking into account any particular investor’s objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. This article does not reflect the views of WealthHub Securities Limited.