TEN GLOBAL MACRO INVESTING RULES TAUGHT BY COUNTRY STOCK MARKETS IN 2023

Each year, stock markets teach investors lessons that can help us improve our future performance. Some lessons are new, while many are repeated often or even every year. The year of 2023 was not an exception. Below are ten lessons that stock markets taught investors in 2023. I refer to these lessons as rules. Some rules are absolute or near absolute because they work all or most of the time. Other rules work only sometimes.
 
Nevertheless, all rules are important and may help experienced global macro portfolio managers – investors who build and run their portfolios based on their views on various countries – operate in the future. The managers need some experience to know when to use each rule. They need the same experience as captains of seafaring ships who understand that some instruments are always or almost always valuable. In contrast, others would help them survive only in extreme situations. The latter instruments are not less useful than the former. After all, it only takes one time for a ship to sink, and the probability of this happening increases during the bad weather.

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TEN GLOBAL MACRO INVESTING RULES TAUGHT BY COUNTRY STOCK MARKETS IN 2023

1. In investing, country selection matters a lot, and those who ignore it often pay a hefty price.
2. Even if others do not do it, limiting country weights in investment portfolios is important.
3. A country’s stock market performance is mainly determined by developments in the country or related to it rather than the country’s membership in an investment universe. 
4. A country’s exclusion from the Developed, Emerging, and Frontier Market investment universes may damage its stock market performance, but it is not automatic. 
5. The election of a business-friendly leader can make stock market winners out of countries with huge macroeconomic, political, and other problems.
6. Even a country in the grips of a recession can have a phenomenal investment performance.
7. Last year’s losers sometimes – not always – become next year’s winners.
8. Last year’s winners sometimes – not always – become next year’s losers.
9. The “Sell in May and Go Away” rule has worked in the global context – with one exception – over longer periods but may not work every year.
10. Investing in a country at war can earn strong returns if the country is well-managed.

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Thank you!
 
Best regards,

Vitaly
 
Vitaly Veksler, CFA
CEO & Portfolio Manager
Beyond Borders Investment Strategies, LLC
vveksler@bbistrategies.com
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TEN GLOBAL MACRO INVESTING RULES TAUGHT BY COUNTRY STOCK MARKETS IN 2023

PERFORMANCE TABLES
TOTAL RETURNS = PRICE APPRECIATION + DIVIDEND YIELD

Sources: Refinitiv, Beyond Borders Investment Strategies (BBIS). Used MSCI country index performance for 48 countries - all but the US. The US performance is represented by MSCI USA and S&P 500 indices. All performance series measure total returns of US Dollar-denominated indices.
 
Disclaimer: Opinions expressed in this report are of BBIS and are for information purposes only. This report does not represent investment advice. BBIS holds investment positions in single-country equity ETFs of some or all countries mentioned in the report. Past performance is no guarantee of future results.