“Price is what you pay, value is what you get.” – Warren Buffett
Market commentary
Global equity markets were weaker in February with the MSCI World Index down -0.7%, although there was a marked divergence between the US and European markets with the Nasdaq in particular weaker on lingering concerns over the sustainability of mega cap tech stocks exposed to the artificial intelligence theme.
The recent divergence between German equities and the US Mag7 has been so stark that the DAX has erased all the Mag7’s 56% outperformance from 2024. The German turnaround is in stark contrast to the low expectations and weak growth forecast at the start of the year and has been largely driven by economic reforms including a major rollback of the “debt brake” to massively increase defence spending. Whether or not this trend has further legs is hard to say as the Bank of America Fund Manager Survey (below) shows a record decrease in allocations to US equities with offsetting increases for the UK & Europe.