By Craig McAvinue – 5 October, 2025
Quality is remembered long after price is forgotten
Quarter four started as quarter three ended – gains across the board…
Although still down for the year, the USD had a bit of a bounceback in October….
Data from Google Finance
As we now enter the twilight months of 2025, the overall returns and consistent gains in developed markets paint a very rosy picture on the face of it.
With all the above mentioned markets showing continued strength through October and year to date returns well into the double digits, one could be guilty of thinking investing this year has been an easy ride.
However this is not necessarily the case. I have mentioned on several other blogs how the gains in the markets of today are very concentrated into a small group of companies. Multi trillion dollar businesses in the Magnificent Seven and other companies with huge market caps in the AI sector have been a runaway train. Many think these valuations are going to trigger a sell off creating a market adjustment. Whilst we stay away from making predictions such as this, it’s a fact that no one gets hurt taking a profit, and there are profits to be had out there.
Staying invested for the long term undoubtedly has produced the best results historically. Following Warren Buffet’s mantras about the “time in” the market rather than “timing” and “Our favourite holding period is forever” have worked. However with the new normal of overconcentration we may need to dig a bit deeper to find those “keepers”
For years I have advocated the buying of consumer staple giants. A simple philosophy based around growing consumerism, especially in developing countries where products we all love or need become accessible. Companies with a rich history of owning these “go to” brands such as Colgate Palmolive, Proctor and Gamble and Diageo have been solid businesses. They also form part of the Dividend Aristocrats, companies who have increased their dividends every year for more than 25 years, giving even more emphasis on their quality.
So why then in 2025 when we are seeing runaway markets where people believe they can make money with the dartboard approach is Procter & Gamble down 12%, Colgate down 14% and Diageo down a whopping 30%?
Are they not good companies any more? Are Colgate toothpaste and Gillette razors no longer still the most popular buys. Is Johnnie Walker black not overtaking local cheaper whiskies amongst the middle classes in developing economies?
I’d suggest demand for these items exists but the market price suggests that the consumption levels are down. This is not a nice indicator as it indicates recession could be pending.
Whilst having good stock market exposure, good sectors, well managed is still a key part of your portfolio, picking carefully where to buy now is important. Unlike in the past where alternatives such as gold and more recently crypto have acted as a hedge, perhaps not performing so well when markets were good but gaining when we see a turn, it seems at the moment everything is going up.
So holistic planning in these times becomes so important. Opportunities to invest in fixed income or property with no immediate share market correlation must form part of your strategy as well
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