The year 2024 was an interesting one and in many ways divergent. If we ignore the facts for a moment and just look at the sentiment, we will probably get the feeling that conservative thinking is replacing liberal thinking with regard to politics, and that Artificial Intelligence is starting to take a hold in our daily lives, benefitting early-adopter companies.
During 2024 more than a hundred countries around the world held elections, and almost every incumbent party lost vote share. This was the first time this had happened since 1905. If we look at South Africa, where the voter base is predominantly based on ideology, the ANC lost so many votes that it had to form a government of national unity. In France, where the rights of illegal immigrants seemed to be more important to the government than the rights of citizens, the right-wing parties gave president Macron a black eye. But the most decisive and most important upset in the world of politics was the crushing defeat of the Democrats in the USA by Donald Trump.
As with all other things in life, politics seems to go too far in one direction before there is a turnaround and then it goes too far in the opposite direction. There will always be a tug-of-war between protecting the rights of the vulnerable, and supporting the enterprises of companies and people who make our world a better place to live in. It is clear that citizens everywhere want their governments to turn the focus back to productivity and excellence and temper their focus on philosophical and emotive causes.
This drive toward excellence will have a dramatic impact on your investments and it started with the rolling-out of Artificial Intelligence (AI). If we look at the top-performing stocks in the world last year, it is noticeable that most of them had a front-row seat when it came to AI. Look at Nvidia, Google, Amazon, Tesla, Apple, Broadcom, Oracle, Palantir and many more. The top seven companies in the S&P500 contributed around 33% of the performance of that benchmark.
With this new political mindset of how to get one step ahead of the competition, we have seen a broad-based acceptance of crypto currencies, especially Bitcoin. The price of Bitcoin in January 2024 was $43 800. It passed the $100 000 mark in December 2024 and this move was largely a result of Donald Trump’s view of crypto. We have also seen a big shake-out of the drive by companies to develop electric cars. Old-school companies like Ford and General Motors failed in their attempts to develop these cars and new-age companies like Tesla, and BYD (China) succeeded. The next big thing will be Robo-taxis and companies like Waymo are already leading the pack with over 22 million driverless miles since March 2019.
Technological development is accelerating and as investors we have to be invested in the opportunities they create. Long gone are the days where we can just choose a big holding company like Remgro or a big mining company like BHP and hope for the cycle to favour us. We have to be bolder and accept that we are entering a minefield where many of these new-generation companies will blow up, but that it is also the place where the future lies.
Looking back at 2024, we have to say thank you for the good returns. If we look at the performance chart, we see a lot of green on the screen.
Unfortunately, the rand couldn’t hold up against the strong US$ and weakened by 3% against the greenback.
What will happen in 2025? We will discuss this in more detail in the next blog, but for now I think we should just manage our expectations a little.
