As the year 2024 comes to a close, we look back at a year of dramatic events. Not all of them have turned out as we expected but others have. For example, we said last year that this would be a positive year for our companies and their share prices. We have delivered another year of strong performance as we say below, driven by our investments in global technology, digital and industrial companies. It’s the consumer companies that have done less well this year after a strong start, which now make us optimistic for next year…
Our greatest anticipation, however, was Disney’s release of Moana 2. Warren Buffett has said that no one has made money betting against the United States, and we wholeheartedly agree. We would argue that betting against Wayne ‘The Rock’ Johnson is equally foolish. We have had to wait eight years since Moana was released. It has been the most streamed movie in the world since Disney+ launched with it in 2019 and we have to confess that a couple of those are ours.
Moana 2 is a different movie for an older audience. We liked it, and we were not the only ones: Moana 2 had the best Thanksgiving opening of any movie ever and it could help push Disney’s revenues from animated movies to above USD 5 billion for the year. Mufasa, the prequel to The Lion King is not even out yet. Moana’s signature song is Beyond, a soaring piece in which Moana asks what lies beyond and summons the courage to face uncertain seas. She says that she knows who she is and promises that this is who she will always be.
We are not Moana, but we can make a similar promise: we know who we are and we promise that this is who we will also be. We invest in companies that have great quality, that can compound their sales, earnings and cash flows over long periods, 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 and base our investment decisions on the fundamentals of the companies we invest in.
Our World Stars Global Equity strategy has had a highly successful year. It was up 19.2% at the end of November in US dollar terms. Our investment insight this month provides a review of this year’s performance and our outlook for 2025 for the industries and companies we invest in.
In the short term, markets can be driven by investor positioning, profit taking, algorithms and mean reversion. In the long run, it is about the fundamentals of companies and their valuation. Our fundamental conviction allowed us to maintain our portfolio throughout the year and to use lower prices to buy more of the companies we liked. We are not distracted by short-term news flow or predictions, but focused on what is actually happening in the companies we look at.
Elections are an opportunity for people to express a verdict on what matters most to them. The outcome of the US elections did not turn out like many thought but it could not have been clearer. Last year we wrote that 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, investment and innovation, and are more diverse and more resilient than a top-down view would allow. We should have added people to that. Real people are not economists. What matters to them is their jobs and income, their communities, hospitals and schools, and their sense of fairness and opportunity.
