I Want More!

The all-consuming fire of greed is a telltale-sign of a raging bull market. I'm not saying it's there quite yet. But the flame is already flickering here and there. 

On the way up, a portfolio’s solid performance sometimes no longer counts. I certainly would consider a 15% to 20% return for an equity portfolio over the past 12 months to be solid. Tech-heavy equity portfolios are the positive outliers on the way up and act like a magnet with gains of over 30%. 

Outperforming the index 

In every market phase, one segment performs particularly well. And one of them finds itself at the bottom of the return ladder. Those holding a heavy concentration among the top performers pat themselves on the back with satisfaction and beat the advertising drum hard.

And who can blame them? Seeing my portfolio perform brings me joy as well. Do good and talk about it, as the saying goes. 

Over the last 12 months, the major well-known stock indices have been hard to beat anyway. The largest weights in the index also had the best performance. There is now no way around the "Magnificent Seven". If you wanted to beat the index, you needed even more of them and other high-flyers in your portfolio.

A prudent warning

I consider it bold to pull capital out of a balanced equity portfolio at this time to invest in a tech-heavy counterpart. The trend could persist, but I estimate the probability to be low. 

If only we could divine what will go particularly well in the coming 12 months, then life would be a bed of roses. And we would have invested exclusively in digitalization a year ago. Within the Gutmann Core Equities strategy, this theme has surged by an incredible 60%, after all. However, it's no wonder the financial market regulator wants us to add here: “Past performance is not indicative of future returns.”

Perhaps the theme of “demographic change” will be the driving force of the future. It rose a mere 3% last year. There is still plenty of room to run for the many healthcare companies in this area. But I have no crystal ball. Here too, a disclaimer applies: “Forecasts are not a reliable indicator of future performance.”

Our Gutmann investment strategy is well diversified across different areas, so we don't miss any key trends. If one theme shoots for the moon, we certainly won’t top the leaderboard. But more crucially, when things head south, we won’t be dead last either. Because our approach to equities is based on safety through balance.