Narrow Markets, Wide Risks

+ Jason Zweig, Farm Fraud, Cyan Banister, Brad Setser Healthcare & More

Author

The Idea Farm
February 09, 2025

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“Amateurs think about how much money they can make. Professionals think about how much money they could lose.”

— Jack Schwager

Research

RBA highlights the increasing concentration risk in equity markets, noting 2023/24 was the narrowest market since 1998/99. As narrow market leadership has historically led to higher volatility and weaker long-term performance, RBA advises that investors ensure they are adequately diversified.

Vanguard examines the push and pull between artificial intelligence and demographic-driven deficits, exploring their impact on U.S. economic growth in the decade ahead.

Man Group - 10 for 10: Themes for the Next Decade (9 pages)

Henry Neville runs through 10 investment ideas that may benefit from a ‘new world.’

  • Part I covers Gold, Japanese corporate governance, oil, defense and infrastructure.

  • Part II covers demographic shifts, uranium, India, automation, and electrification.

Source: Bloomberg, Man Group for the period as at 31 December 2024. P/E Percentile is calculated based on a trailing 10Y lookback. 2020’s relative performance is against MSCI World TR. Performance analysis has been conducted on representative baskets we selected across the 10 themes: Ageing Demographics, Automation, Electrification, Nuclear, Defence, India, Infrastructure, Gold Miners, Japan Corp Gov Reform Beneficiaries, Oil & Gas Services. This analysis is based on our research and is intended for illustrative use based on considerations listed in this paper and should not be construed as a recommendation and should not be relied on.

Bonus Content

Jason Zweig explains why investors gaining access to ‘private markets’ may mean higher fees, greater risk and more conflicts of interest. Link

While active fund managers criticize index funds for their concentration in top holdings, many active funds exhibit similar or greater concentration levels. Link

Brad Setser looks at whether or not China will take over the global auto industry. Link

Doug Shapiro's "28 Days of Media Slides" covers the US media industry, including trends in streaming services, advertising, and consumer behavior. Link

In the early 19th century, Gregor MacGregor deceived hundreds of farmers into investing their life savings in a fictitious Central American country called Poyais. Link

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Podcasts

12/2/24 - 153 minutes

Sutaria gives a primer on the US healthcare system, covering the choices, costs and challenges that both individuals and providers face.

11/28/24 - 172 minutes

Banister recounts her journey from homelessness to rising as a leading angel investor and investing in more than 100 companies, including Uber, SpaceX, DeepMind, Flexport, and Affirm.

12/5/24 - 75 minutes

Meyer shares the story of the Arena Magazine, which aims to “make it okay to dream in public again” and cover technology, capitalism and civilization.

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