As the head of the world's largest sovereign wealth fund (valued at approximately 1.8 trillion USD), Nicolai Tangen is always eager to provide investors with advice on how to beat the market, and his latest suggestion is to do something different.
"The best way is always to go against the tide," Tangen said in an interview with Bloomberg in Davos.
"What does this mean for the current situation? Well, if you want to be different from others, it means selling US tech stocks, buying Chinese stocks, selling private credit, and purchasing outdated items," he added.
Regarding his latest advice, Tangen does not fully commit. In fact, the CEO of the Norwegian Investment Management Company, responsible for the operations of the Norwegian sovereign wealth fund, is the biggest fan of US tech stocks.
As of June last year, the company held stocks of the 'Seven Giants' in the US worth 1.9 trillion Norwegian kroner, approximately 173 billion USD. By value, its six largest equity investments are all in the US 'Seven Giants', while it also holds shares in Tesla worth 5.6 billion USD. Last year, the company chose to reduce its holdings in Meta.
In its 2024 semi-annual report, the Norwegian Investment Management Company praised the performance of US tech stocks (which rose by 27.9% in the first half). Overall, US tech stocks account for a quarter of the company’s stock investments.
In an interview with Bloomberg, Tangen did admit that adopting a contrarian investment strategy means accepting that one's investment strategy may sometimes underperform the market, leading to external scrutiny.
However, several investors, including Tangen himself, have raised warnings about the potential bubble risks of the popular US tech stocks.
The market capitalization of the 'Seven Giants' in the US accounts for about one-third of the S&P 500 index, while their profits make up three-quarters of the index's earnings growth in 2024.
In an interview with the Financial Times last November, Tangen warned that after the AI boom, there is unprecedented concentration risk in the microchip-based stock market. Major companies, including Nvidia (NVDA), ASML, TSMC, and Silicon Valley giants, form this comfortable ecosystem.
"This level of concentration is definitely concerning. It represents risks in the stock market that we have never seen before," Tangen said in an interview for the Financial Times' Unhedged podcast. "Therefore, very few companies are associated with them, and they are becoming larger and more significant."
As for another market mentioned by Tangen, China, Norway's exposure in that country is relatively small, amounting to 385 billion Norwegian kroner (34 billion USD). The Norwegian Investment Management Company’s largest investments in China include Tencent, Alibaba, and Pinduoduo. In the first half of 2024, the value of the company's investments in China grew by 4 billion USD.
The latest investments from the Norwegian Investment Management Company align with Tangen’s advice to purchase outdated items. The company announced a partnership with the Duke of Westminster's Grosvenor to develop 175 properties in the affluent London neighborhood of Mayfair. This marks Grosvenor's largest external investment in its 305-year history.
Article shared from: Jin Shi Data