<strong>A Year of Challenges and Resilience</strong>

A Year of Challenges and Resilience

As the year 2023 comes to a close, we look back at a year of great challenges but also of great resilience.  Our hearts are with those who are affected by conflicts and our hopes are for peace. 

The US economy in particular has weathered inflation and interest rates.  Corporate and consumer demand has remained robust and investment is taking place to harness innovation and technology to address the challenges of the future. 

We invest in companies that have great quality, that can compound their sales, earnings and cash flows over long periods of time, and that can deliver great value as they do.  We think as owners of businesses that we can hold for five to ten years or longer on behalf of our investors.  As owners we base our investment decisions on the fundamentals of the companies we invest in. 

It is simple to have strong macro-economic views about objective data like inflation, interest rates and growth, and to apply them to models to predict what should happen.  However, the real economy and real companies are not simple at all.  They are much more complex, driven by challenges and opportunities, by investment and innovation, and are more diverse and more resilient than a top down view would allow.  That is why we are not distracted by short-term newsflow or predictions, but focus on what is actually happening in the companies we look at.

The fundamentals of companies are what allow us to have conviction in our investments and to seek out the opportunities offered by globalization, digitalization and the renewal of the public and private asset base to face the challenges of the future.  We look to invest in the companies that are doing the disrupting, not the ones that are getting disrupted. 

Our fundamental conviction allowed us to maintain our portfolio throughout the year after the challenges of 2022, and to use lower prices to buy more of companies we liked.  As we summarise below, our World Stars Global Equity strategy is highly successful this year.  It was up 24.1% at the end of November in US dollar terms and is continuing to perform strongly this month.  Our investment insight this month provides a review of this year’s performance and our outlook for 2024 for the industries and companies we invest in. 

Next year will be another year of great challenges, many of which are ongoing.  It will also be a year of elections, in the United States and the United Kingdom, as well as in South Africa, Mexico and elsewhere, and we have to brace for the outcomes.  We think that we have taken the blows of inflation, interest rates and valuations, and that next year will be a positive year for our companies and their share prices. 

Our greatest belief and hope is in people, in their desire for peace and prosperity, in their innovation, ingenuity and spirit, and in their resilience. 

With these thoughts we send you our Season’s Greetings and our best wishes for a healthy, peaceful and prosperous New Year.

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