Don’t you love January? - Ranmore

Don’t you love January?

D

Time for a fresh chance to do the things you know make sense

And aren’t January sales great?

Who doesn’t think buying goods on sale makes sense?

If you like your purchase, you have money left over

And if you change your mind, you can sell on Vinted and not lose too much

BUT

If you get no discount and change your mind

Then you take a hit

Like investing

If you paid full price for Diageo at £40 when it was 28x forward earnings in December 2021 because it’s, “a great business”

And then did nothing..

You’ve lost 38% of your money, including dividends!

Even worse – now that “dry January” is “dry all year” for many

maybe it’s still not “on-sale” at 16x forward earnings today

After the hit

But if you’d bought Natwest on “January sales” back in 2022, when some were saying Banks are “bad businesses”

You’re up 94%

And at 7x forward earnings today, that’s a BIG discount to Diageo…

And maybe AI will help banks more than liquor companies grow earnings…

So where are today’s “January sales”?

Not large-cap US equities with the likes of Apple / Walmart at over 30x forward earnings

Europe, emerging markets, and Asia look like “bargains” to us

But no-one wants to invest there!

Yes, that’s why they’re “on sale”

Remember no one wanted Natwest 3 years ago and everyone wanted Diageo

Look how that turned out… you pay a price for buying what’s popular

So if you think it makes sense to look for a deal when buying: a house, car, holiday, clothes,

why aren’t you applying that to investing?

“Because Value hasn’t been the winning strategy for the past 15 years…”

ahh

But most of those 15 years were during QE when inflation & interest rates were close to zero

When times were tough for banks

And buying dividend payers like Diageo made relative sense

And a few large tech companies grew fast for an unusually long time

But nothing lasts forever

And at 5% bond yields, those days are over

So don’t take too long to do the “sensible thing” this January

“Markdowns” of today’s popular items can happen quickly

hashtag#valueinvesting
hashtag#investing
hashtag#numbersnotnarrative
hashtag#marketingcommunication

Disclosure

Ranmore Global Equity Fund has no position in any of the securities mentioned

This is not advice, do your own work

The content of this marketing material is provided for information purposes only. It does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe or purchase, shares, units of other interests in investments referred to herein. Past performance does not predict future returns. Capital is at risk. Ranmore Global Equity Fund plc has not been registered under any United States securities laws and may not be directly or indirectly offered or sold in the USA or any of its territories or possessions or areas subject to its jurisdiction or to or for the benefit of a US Person.