January 2024
Dear Investors,
Yet another year in the bag, and this one has been one for the books, with a rollercoaster feel but with a happy ending. Our investment strategy has once again proved its worth, and all our funds ended the year with excellent performances.
The FFM European Selection fund - Jan 2024 ended the year (29.12.2022 - 28.12.2023) up +22.15%, well ahead of the Eurostoxx 50, which posted +17.25%, over the same period. The fund has recorded an average annual increase of +13.97% over the past five years, which represents +92% since 01.01.2019!
FFM American Growth closed the year (12.28.2022 - 12.27.2023) up +25.30%, slightly behind the S&P 500 index, up +26.39%, and well ahead of the Dow Jones Industrials, up +14.54%, over the same period. The fund has recorded an average annual performance of +12.72% over the past five years, which represents +82% since 01.01.2019!
The FFM Global Quality Portfolio certificate rose by +27.01% this year, clearly outperforming the MSCI World index, which rose by +17.64%.
Finally, the FFM Swiss & Nordics certificate rose by +7.56%, doubling the SMIM index, which rose by +3.57% over the year 2023.
It may look quaint to quote Warren Buffett these days, but after 2022-2023, it only seems appropriate: “But, when I was eleven, I picked stocks. I had the whole wrong idea. I was interested in watching stocks and I thought stocks were things that went up and down. I charted them. I read books on technical analysis. […] I rejiggered my mind when I read the book, The Intelligent Investor. And, from that point, I never bought another stock — I bought businesses that happened to be publicly traded. I became an owner of a business and I did not care whether a stock went up or down the next day or the next week or the next month or the next year. I didn’t have any idea what it would do. I didn’t know what the stock market would do. But I knew businesses. I knew some businesses.”
Have a look at most banks’ forecasts for the coming year. What do you see? Mostly predictions about the geopolitical situation, future elections, the price of oil, how many times will central banks raise or lower rates, etc. How many times have you read a paragraph about a company? Almost never. That is because most financial institutions invest in the market via funds, or complex structured products, and they invest based on their forecasts.
Conversely, although we remain extremely attentive to geopolitical and macro-economic developments, our investment strategy does not derive from forecasts on hypothetical future major events and their theoretical impact on stock markets. Indeed, who could have predicted with any certainty the outcome of last health crisis? For the tiny proportion of analysts who had incorporated this eventuality into their scenario, how many were able to predict that the markets would kick back even before the end of March, when the world was entering a state of confinement with no real view on any end?... The few investors who liquidated their positions at the end of 2019 or the beginning of 2020 did not, for the vast majority, reinvest before the end of the year, which was nevertheless largely profitable for all indices. Markets, like the events of history, are unpredictable.
Like Warren Buffett said, we know some businesses. Namely, the great ones that will adapt, change and survive through pretty much everything that might be thrown at them. Some are so good we shouldn’t even be able to hold them, because they are only listed in the stock market because of some fortuitous accident (to liquify family members in the case of Hermès, to allow a founding company to get some cash at a time of need, in the case of ASML, Visa and Mastercard). And we have no idea what their stock price will do in any given year (as you saw in 2022), but we do know that after a certain time horizon, value creation and accumulated profits will eventually be reflected in their share price (as in 2023), irrespective of the geopolitical situation, interest rate levels or oil price trends.
Our strategy is based on fundamental analysis and a thorough understanding of the companies in which we invest, in order to deliver long-term performance in line with the growth of their economic assets. So, without making any predictions about interest-rate and geopolitical developments in 2024, we wish you and your loved ones all the best for this new year!
Best regards,
Your CaridaB Group Team
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