Transcription
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All right, my name is Andrew Stoson. I want to welcome you to this all-weather strategy session where we're going to talk about the all-weather strategy, the performance and questions that you may have and and to discuss the performance of the strategy. So, my name is Andrew Stoz, and I'm going to move my desk down a little bit there. There we go. And I just want to welcome you. I've uh just gotten my coffee, so time for an espresso. What are you drinking? What have you had today? It's 1 p.m. in beautiful Bangkok, Thailand, and I always take a nap every day. In fact, I already had my nap. I took my nap at about 11:30 this morning. Uh but I started work about 4 or 5 a.m. So I usually start pretty early.
Today we're going to be talking about the performance of the all-weather strategy. And so I'm going to get started in just a moment. But for those people who have arrived, welcome. Feel free to ask any questions. I love questions. And also uh if you just want to say hi, just type in the comments. I see them right as they're coming up and I'll say hi back. So, why don't we get started? I'm going to go into my presentation. One second. Here we go. I'm going to bring it up on the screen there and let me tell you a little bit about today. We're going to be talking about the past performance of the past month and this is the 19th of May 2025. And remember to ask questions in the chat. I love your questions and I'll do my best to answer them.
By the way, let's meet in person in Bangkok tomorrow if you are available. Come and join us for the create a long-term sales strategy in three hours event that I'll be teaching and sharing about. Um, and all you have to do is say you're from Phenomena and you'll get a discount. Woo.
So, remember that our strategies are global. We invest globally, not only in Thailand. Long-term gains from long-term equity return while trying to reduce the damage during equity market downturns. Diversified globally across asset classes, regions, sectors, and companies. So, when you think long-term, think decades, not years. Warren Buffett said, "Our favorite holding period is forever." And he also said, "If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes." Long term. Remember why we're here, to build wealth over the long term.
There's six pillars of investing as I see it. Number one is invest in stocks. Stocks have generally outperformed bonds and gold, offering a share in the value created by a company's management. Number two is reduce risk. Diversify your portfolio across companies, sectors, countries, factors, and asset classes to minimize overexposure to any one area. Contribute regularly. Use disciplined dollar cost averaging to reduce the emotional risk of investing. Number four, stay invested. Think long-term. Be patient. Remember, the benefits of compounding happen over decades. Number five, maintain discipline. Follow your investment plan to avoid acting based on emotion and continue learning. Enhance your skills, your investing skills by staying informed and learning from successes and failures.
Now, we create our strategies for many decades. However, not even a decade is long-term. This is me when I was a young boy and this is me when I moved to Thailand. And this is me at 100. By the way, I had someone come to my house to apply for the job to take care of my mother. She's 87 years old. And the lady said when she when I told her I was 60, she said, "No, I thought you were 40." Okay, that was very nice. Our aim is to create strategies that perform over many many decades.
In fact, last week I met one of our AWS followers, Dr. Patana Teng Amnu. And what did he say? He said, "What I like about your approach is that you're thinking in decades. That's uncommon and it matters." I appreciate meeting all of my followers and hearing what you have to say. Remember that uh my book, How to Start Building Your Wealth: Investing in the Stomp Market, is available in English, in Thai at a range of book sellers in Thailand, and it's also available as an online course.
So our target is to deliver steady returns over the long run. AWS, the red line, launched in February of 2019 and we target 6% per annum. All-weather alpha focus launched in October 2021 and we target 8% per annum and all-weather inflation guard launched in July 2022 and we target 4% per annum. Now, from when we started all-weather inflation guard in July of 2022, the strategies are performing almost as expected. Recent rankings show the moderate risk all-weather strategy slightly outperforming higher risk all-weather alpha focus while low volatility all-weather inflation guard delivered the lowest return. But of course that's the plan. That is a very low risk and hence low return. Look at how flat that green line is.
Now since that time all strategies have had lower volatility than world equity. World equity is that brown line there. And of course what it means when we mix asset classes we reduce equity downturns or drawdowns, though this also limits the gains during the market booms and so what you see is we miss the tops but we also miss the bottoms.
So I want to welcome everybody here. We're talking about the performance of the strategies. But before we get into the performance, just let me talk to you directly. Uh I appreciate you taking the time. Today's Monday. It's a little bit after 1 and I want to welcome you to this session. Today we've got a chance for you to answer any questions or ask any questions that I can answer about the strategy, about gold, about crypto, about the US, about Trump, about tariffs. Goodness, there's so many things out there and I'm looking forward to your questions. So feel free to type your questions in or just type in what it is that you are drinking. Tea, coffee, what? All right, let's go back in and I'm going to talk a little bit more. Let's look at the performance now.
All-weather strategy gained 2.2%. All-weather alpha focus lost 1.3% and all-weather inflation guard gained 0.3%. Remember last time it was all-weather alpha focus that was doing really well and all-weather strategy was doing poorly. So things flip at times. So here we can see all-weather strategy has 65% in equity, 25% in bonds and 5% in gold and commodities and you can see also here that our exposure is mainly developed Europe. US exposure is only 5%, China exposure is 25% and global bonds is 25%. So we are in a relatively defensive stance with all-weather strategy.
Now since inception the strategy was up 51.3%, and 20.4% above a 60/40 portfolio. In the past month the strategy was up 2.2%, which was on par with the 60/40 portfolio. Our 25% allocation to developed Europe did well while China underperformed relative to world equity. And our 25% allocations to global bonds did poorly in the past 30 days but not as poorly as if we were significantly overweight gold at this moment in all-weather strategy. We're not. As I said, if we go back and look at it, we can see right now we're 5% exposure in gold. And so it was a tough uh fall in the past month for gold and therefore we have uh less losses because we had a low position in gold. Now the strategy has added 0.6% value compared to a 60/40 portfolio in 2025. As you can see all W AWS was up 3.1% and the 60/40 was up 2.5%. The key thing here is this is also after our best estimate of fees. The strategy beat that by 7% but beat the 60/40 by 7% in 2024. Again after our best estimate of fees.
Now all-weather alpha focus on the other hand had a tough month. Here we can see that equity was at 68%, so a little bit more aggressive but still that's pretty defensive for uh for in for alpha focus but we did have this 19% in gold which was painful for the month. Since inception the strategy was up 6.4%, 4%, and that's about 8% above a 60/40 portfolio over that period now and that's 2.2% below world equity but with a lot less volatility. So it's been a tough time for equity over the period since we launched alpha focus, seeing that equity world equity markets if it started at 100 it went all the way down to 75 and then came back up to about 110 and as you can see it's been extremely volatile. In the past month the strategy was down 1.3%, which was 3.9% below the 60/40 uh portfolio so it really suffered. All our big tilts: infrastructure, global bonds, gold and healthcare underperformed world equity in the past month. It was tough. It was a tough month for our stock picking. Our small tilts to financials, China's small caps and energy rebounded.
Now, of course, when I see this performance, you may ask, what are you going to do about it? And the answer is I know that the way performance works is that you win some and you lose some. And if you panic, if you panic when you are not winning, then you end up causing more damage. And that's the reason why I think about decades rather than just months. The strategy has still added 2.6% value compared to a 60/40 portfolio in 2025. Again, this is after our best estimates of fees. and the strategy beat a 60/40 portfolio by 3.5% in 2024.
Finally, let's look at all-weather inflation guard which gained about 0.3%. So here we can see it's a lower risk portfolio and so our equity allocation is 30% and our bond allocation is a very large 60% and of course gold is at 10%. Now it's interesting you can see all-weather strategy was uh lower on gold at 5% versus alpha focus and inflation guard and you remember the questions that you asked me when we first started. This allocation is you know basically implying that all-weather strategy was going to suffer because it had only 5% in gold. We can see that it hasn't been easy for the portions uh the portfolios that own the gold. Now, since inception, the strategy was up 10.7% for inflation guard. That's 8.6% above a 40/60 portfolio. The strategy also has less volatility. In other words, the the squiggliness of the red line is much less than the squigglininess of the 40% equity 60% bond portfolio. This is the benchmark that we've been using uh since basically since inception.
Now I'd like to highlight that you know some this strategy uh came from the suggestion of one of the advisors at Phenomena and they said I have clients that have a huge amount of money in deposits. They do not want to take a lot of risk but they also don't want to sit on those deposits with such a huge uh such a tiny large amount of money but a tiny amount of return or uh beia right interest. And what we came up with was this strategy so that it would try to give some positive return higher than the deposit rate and yet be low risk. And I would say it's done what we planned. In the past month, the all-weather inflation guard strategy was up 0.3%, which was 0.9% below the 40/60. Our 5% allocations to financials and infoch rebounded. Our money market and tips uh money market and tips allocations outperformed global bonds. And our 10% allocation to gold dropped by 4%. So it was it was tough. The damage came mainly from gold. Now, the strategy has added about 1% value compared to a 40/60 portfolio in 2025. And the strategy beat a 40/60 portfolio by 1% in 2024. If we look at the years uh since we've had this strategy going, what you can see is that after fees, we've been able to produce a higher amount of return than if if someone had had that money at the bank, let's say. So we can see a cumulative amount of 10.7% over that period of time. Let's say three and a half years roughly. And that's a higher return than what you would expect if you just had your money on deposit. Of course, it has more risks involved. So talk to your financial advisors about that.
So I'm going to talk next about the concept of diversification and then I'll talk about some um fundamentals of global business right now. But let me just uh open up for any questions that you may have here. So just give me a chance to see your what you guys have written. Uh okay. Pony Taro said, "I was about to ask why AWS is slower in recovery this month." Okay, you you could see it, right? Uh here's another question. This is from Ganun Gan Longun. "Why is AWS better performance than Alpha Focus and less risk?" Yeah, it's it's a bit strange. You know, sometimes our allocations. So, the one of the big differences between all-weather uh strategy and Alpha Focus is that with Alpha Focus, we're doing a little bit more market timing. And so, basically, when we see the market looking attractive, we get more aggressive on equity. And so I think some of our market timing has not worked very well. And so the result is we haven't caught the wave yet with Alpha Focus the way we have with all-weather strategy. Now also Alpha Focus is invested in more narrow instruments. It can be into uh smaller like with all-weather strategy we have US, China, Japan uh you know those types of big things and stocks and and commodities and gold and bonds but with Alpha Focus we're into a lot more and varied uh strategies or ETFs or funds and so sometimes those can be um underperforming and sometimes they can be outperforming. So, it's just been a difficult time. Also remember that we started all-weather strategy when the market was, you know, rising and we started Alpha Focus at a time that the market was, you know, it's a tough market. So, that's some stuff on uh alpha focus. Generally, Alpha Focus is going to be higher risk also.
Let's look at another question from Sukan Sawat. "How about the impact of Asian stock markets which Moody's just did a downgrade on US?" Yeah, I mean the downgrade on the US is is good news in the sense that uh let's hope that the Republicans wake up and stop spending like crazy. Both Democrats and Republicans are spending like crazy. And I don't think there's any indication to say that uh that Donald Trump is not a big spender. I think he's a big spender. In fact, he wants to use the power of the federal government to get what he wants with other countries and within America. So, I don't have any expectation that the US is going to cut spending. Now, we're already in in the US in major deficits, spending deficits for the government budget. Thailand is so lucky that politicians and particularly bureaucrats passed a law that said that Thailand could not have debt levels exceeding a certain percentage of GDP. Let's hope that the politicians never um removed that because if they did, Thailand could end up in a situation where the government is borrowing a lot of money because politicians love to borrow money. Now the benefit of the Americans borrowing money is that they have the power of the US dollar. If Thailand was to borrow a lot of money and spend that money, the problem would happen is that the Thai baht would devalue and that would be the the free market impact. And that's the reason why also Thai government officials and bureaucrats don't spend a lot. But in America, they're spending a lot. And this downgrade should be helpful to force the Republicans to start waking up that they need to start cutting. But as far as markets in Asia, you know, definitely there's a shift to Asia and there should be a shift to Asia and I would say over the next three years we should see an allocation to Asia. But Asia has one big problem. You know what that problem is? The problem Asia has is that the returns on invested capital are terrible. Just terrible. Look at Thailand. We have almost a thousand companies listed in the stock market and look at our returns on asset, our return on equity, our return on invested capital. It's terrible. So countries, companies in Asia need to get much more efficient and generate more returns and then I think we'll see a really big impact of funds flowing into Asia.
So uh Rapunzel says, "Hi, Master Andrew. Good to see you." Good to see you. Okay, let's see. "Is it possible for BTC to go up further?" Oh yeah. I think people are excited about it and um if the U if the US government keeps spending as they're doing, I suspect that you know both gold and Bitcoin could continue to go up. But remember when it comes to Bitcoin, be very careful about the allocation that you use for Bitcoin. I would advise that people have somewhere between a zero and a 5% allocation to their wealth, particularly if they want to retire and they're trying to protect their wealth. Be very careful about a heavy allocation in Bitcoin.
"When will we rebalance?" That's a good question, John Penn. And the answer to that is the first week of June. So here we are mid-May. I guess the next time I talk to you, we'll be rebalancing. So about the first week of June. All right. Peter says, "Thank you for all your knowledge that you're sharing." You're welcome. I love uh this knowledge. In fact, Peter, if you really want to learn more uh knowledge, I had a lot of people ask me the question, what are your what what books on investing would you recommend? And I decided to identify those books. And I believe I came up with about seven books that I would recommend. And then given that I'm a teacher, I created seven courses and one course on each of those books to explain what it is, how to understand it, how to apply it, and what it meant to me over the years. And I do have actually a course on that which I can share a link to that. You can check it out and keep learning. I'm getting close to 60 years old now and I continue to read and learn and study and read academic research and the like. So, keep on keeping on. Uh, Chiwat says, "Do you think world healthcare already passed the lowest point?" You know, it's interesting. I was just looking at global um the global sector performance not of the share price but of the of the net profit margin. And I was sad to see that world healthcare really has seen returns fall over the last let's say 5 to 7 years. Hopefully they've reached a bottom and then they will come back up. So definitely they've fallen. The question is can they recover? And I would say generally yes. Remember that these are some of the most profitable companies in the stock market. So eventually I think they will come back. Uh John Penn says, "What's your view about gold? Should you invest more?" Uh I wouldn't invest more in gold right now just because uh it's already had a huge run. Now, one of the things you'll notice about my investment style is I never go to zero and I never go to let's say 50% into one narrow asset or asset class. And so the result of that is that I have 5% gold in all-weather strategy. And when I'm at my highest point, I'll have 25%. But maybe I'll go back to 25%. I don't know what's going to happen for the first week of June, but I would suspect that I probably won't go back to that, but having some exposure to that is generally good. Ben, good to see you. Welcome. Uh, all right. Now, by the way, I've got a link right there in the comments. The course that I wrote is called Invest Like a Pro and it's just an online course and there's a link to it right there. You can go check it out and that will give you a little bit more knowledge that I put that up because Peter mentioned it about it.
Now, I'd like to go back to my presentation and talk to you about some concepts that I've been thinking about and I want to walk you through them so that you can think about them for your own application. Uh, so let me do that. Here we go. All right. So, diversification helps you weather the storm. Now, when Trump imposed tariffs, markets crashed. And when there was a pause on Chinese tariffs, stocks rocketed. This is a hilarious meme of JD Vance. I happen to like JD Vance because he comes from Ohio where I grew up. So, I like that. And I read his book, The Hillbilly Elegy, and I think it was a really well-written book. And, you know, he had a tragic life and he came out of it. And so, I appreciate that. Now, it certainly has a huge impact on a stock portfolio. I don't think that Donald Trump said that, but I think somebody who doesn't like Donald Trump made that. Now, last month, I showed you that panic selling is common and can be costly. Due to the concept of clustering, your losses could grow as you risk being out of the market on the best days as well. But how to create a portfolio where you can stomach the volatility and weather these storms? Well, I'm going to show you some of the secrets of the all-weather strategy and how we get there. Diversification is one way and all our allocation strategies are diversified globally across asset classes, regions, sectors, factors, and companies.
Now, an asset class is a group of investments with similar financial characteristics, behavior under market conditions, and risk/return profile. They've got to be different from others. Now there's six major asset classes: equities, fixed income, cash, real estate, and I would exclude REITs from those because REITs are already listed in the stock market. So I wouldn't think about real estate being REITs, but I would think if you own a house, so you own land, you own a condo, something like that, I would think about that being a property. And there are uh mutual funds and ETFs that have for instance uh land as an asset class. And then there's commodities which are physical goods like gold as an example and alternatives like crypto or private equity or private credit. These are what I would consider to be the six major asset classes. Now Nobel laureate Harry Markowitz said diversification is the only free lunch in investing.
Now, during my PhD studies, I published a paper on diversification together with my professor. The title of the paper was called 10 Stocks Are Enough in Asia. I can't believe that was back in 2014. Uh, incredible. And the abstract, I'll just read what it says. In fact, I'll zoom in on the abstract so you could read it if you're if you're reading it. It says, "This paper looks across 13,000 stocks in Asia, excluding Japan, over 10 years to determine on the optimum number an active manager should hold to reduce unsystematic risk. We randomly select stocks for inclusion in equally weighted portfolios that are held for one year and then are reselected based on the new year's universe. We find that 10 stocks remove 64% of unsystematic risk and after this, the marginal impact reduced significantly. An additional 10 stocks will only take this number to 74% but will drive the active fund's performance closer to that of a passive fund."
So let's look at what the key chart in that research was. Basically the red line is what you would consider an active portfolio and the dotted line is what you would consider a passive portfolio. And what we could see is that by the time in this research what I showed is that by the time we got to 10 stocks what you can see is that most of the risk let's say roughly eight versus 16 most of that risk was gone. So you really don't need more than about 10 stocks to reduce most of the risk. Now you could go to 50 and reduce almost all but even at 50 what's going to happen is that you're going to have performance that's much like the uh the passive uh or market performance. So therefore if you're thinking about beating the market or you're looking at someone to beat the market generally what you want to look for is somebody who has a number of stocks of maybe 10 to 20 stocks then they have a chance of beating the market. While not an entirely free lunch, diversification can significantly reduce risk while maintaining a high expected return. So, we aim to re to keep risk as low as possible for our target return and use diversified mutual funds. Now, but adding more assets doesn't always give a lot of diversification benefits. If two assets are highly correlated, diversification benefits are slim to none. So, we prefer to add uncorrelated assets to get the most diversification benefits. Let's take a look at the correlation of bonds, commodities, gold, and the world world to world equity. Notice that we don't use REITs. The reason why I don't use REITs is because the correlation of REITs to world equity is very high. So, it's not it's so highly correlated. It doesn't add a lot of value. Now, here we can see a couple of things I want to show you on this chart.
The first is we're calculating a one-year rolling correlation. Is that the right number? Well, nobody can really say. It could be two years, three years, five years. But for our purposes of comparing different asset classes, it doesn't really matter which period of time you use as long as you keep it consistent.
So here what we can see is this. This is uh what we can see is that anything greater than 70—so you see this line right here, that's the 70—anything above that we would say is highly correlated, and anything below this 70 here at the bottom has low correlation. And of course, between those lines is moderate correlation, and of course, between—you can see I've also put in the positive 20 and minus 20—and you can see that that is what we would consider consider to be an uncorrelated range.
So now what we can see is that in fact, bonds only occas only occasionally hit 20%. And so these are very low correlation assets. We want them in our portfolio. Bonds diversify well, and that's the reason why we have them in the portfolio.
So now let's move on and let's look at the next one, which is gold. I should have made a gold line, huh? That's a green line. But here you can see that gold has a higher—generally has a higher correlation. It adds good diversification benefits, right? It's it's below the 70 for sure, and it's down in around 20—minus 20 to minus to positive 40.
Now what about commodities? Wo, you can see that at some points commodities correlation can be very high, at the 70% level. Now sometimes it can come down low, as we've seen in the past when the blue line was lower, or recently it's actually come down a bit for commodities diversification to a portfolio. So at times commodities adds diversification benefits to a portfolio—a portfolio of stocks, of course—but quite often the diversification benefits are low as the correlation is too high. In other words, it's moving together. When it's at 70%, it means the stock market may go down by 10%; this will go down by 70%.
But think about this one. Here's an interesting one. Let's let's look right here. Let's look at the bottom left of the chart, and what we can see is that bonds actually hit a point of about minus 70 uh on this chart, which would mean that if the stock market went down by 70, this would go by by uh by 10%, this would go up by 7%. And so or sorry, by yeah, by about 7%. It's an incredible negative correlation, and that's the value of bonds in a portfolio.
So bonds and gold add diversification benefits to an equity portfolio, and commodities do at times. So as you note, the lines are constantly moving, which means correlations are not static. So the diversification benefits of adding another asset class change over time.
Interesting and important cases are what happen when stocks are crashing. Here we can see during the COVID crash, the correlation to world equity rose for all asset classes, and we all changes were in the positive direction, which means the asset classes move more in the same direction. Gold, which is the least correlated asset, actually saw the biggest change. The green line went up the most during that period.
Now it's hard to diversify when stocks crash. Often when stocks see massive daily drops, the other asset classes drop as well, even though they're supposed to diversify diversify. Now, it happens because investors want cash. They might need cash to cover margin calls, or they get scared, and cash feels safe. Remember that this is often the case, but it typically only for a shorter period of time.
Now, let's look at the most recent period. During the most recent tariff crash, the asset classes behave slightly differently. Commodities and gold behaved the same, becoming more positively correlated, but bonds became more negatively correlated, which means they better cushion a drop in world equity.
Now, I want to highlight here for a moment when people talk about all asset classes moving together. Let's just look over at the left here. We can see that bonds did have a negative 30% correlation, and that moved up to a 20, but still it's nowhere near the one here. So we do see some big movements towards correlation—towards positive correlation—but really, when you think about it, it's not like they all go to one, and so this is an important thing. Now this is a one-year rolling correlation, so we are taking out a lot of the daily volatility. You could have some days where everything really just goes in the same direction, but generally you're in pretty good shape.
So, what's the key takeaways? Adding other assets or asset classes to your portfolio helps you diversify. The more uncorrelated the assets are, the more diversification benefits they bring. And correlations change over time, and so do the diversification benefits. When stocks crash, often other asset classes crash, too. So stay diversified and think long term.
Now before I go into the final section of today's presentation, let me just see if you have any questions. Happy to answer any questions. There I am sitting in my office at my home office with lots of books, of course. And let's see what questions do we have here. Okay, Sati says, "Good morning." Crop, "Good morning." All right, here's another one. says high and chart says now that US 500 is coming high as before. What is your view on it for the second half of the year? Um, I think that the US is going to struggle. It's going to be hard for the US this year. The tech sector has done so well, and I think profitability is starting to fall for the tech sector, and so I think that will be hard. Also remember that the underlying stocks in the US stock market—these are stocks that are midcap, small caps—the performance of them is terrible, in fact. So it's not like we're going to have some huge recovery driven by midcaps or small caps. So I'm not that optimi optimistic for the US this year. In fact, I would hope that Thai companies could do better than US companies this year, or the Thai stock market could do better than the US stock market. The Thai stock market is down. And what are Thai investors telling the companies? We want you to produce more profit. Without more profit, we're not interested in investing. We want you to produce more growth in your earnings. Without more growth, we're not investing. How do you produce growth? You get more revenue growth. You bring better products and services. You try to get better prices. You're better at cost control. If Thai companies can take the message that the market is sending them to get themselves straight, then I think we could be in good shape. Unfortunately, it's very possible that Thai companies don't get the message. In fact, we have kind of a two messages coming from Thai investors. On the one hand, they're saying make more profit. On the other hand, they're saying do more ESG. And true ESG, of course, is going to cause loss or less profit. And so by asking them to do so much ESG, it's quite possible that it's part of the seeds of the destruction.
Tanawat, good to see you. Nice to see you. Looking so good in that photo there. and next six months, which country will potentially get positive impact from current situation? Um, I'm not exactly sure of the answer to that because there's so much that's changing, but if you look at our position as of right now, we think that China's going to get some benefit. You know, China's been beaten down pretty hard by the Biden administration. Trump has come in and beat them hard right now, but I think that they'll come to a compromise, and we probably will see a rise in China. And remember, every time the US beats down China, China gets stronger because they go internally and work things out.
Let me go now to my last part of today's presentation. I think you're going to find this interesting. So going to pull it up on the screen there, and then I'm going to go to that presentation. One moment. All right. So let's look at this. Another thing you can do is try to filter out all the noise and look at fundamentals. At Atos Investment Research, we have a massive data set where we can look at company fundamentals from 1995 until today. This data set includes more than 9,000 companies on average. And when we look at the fundamentals on a global level, we exclude financials and real estate as these sectors are very different. Here we can see revenue growth recovered in 2024 but stayed below average. So globally revenue growth looks pretty bad. While better than 2023, the revenue growth could signal a slowdown in the economy. The next thing is to look at operating margin, or what we call EBIT margin. Companies remain highly profitable on the operating level. You want to understand why Thai companies and the Thai stock markets underperforming? It's this chart. Look at this chart. What this chart says is that the last 10 or 15 years has seen very strong operating profit of about 11% for global companies. But if you look at this number for Thai companies, it's down down down. So that's the reason why the Thai market has been suffering over the years. While the operating margin has come down from a peak of 11.6 in 2022, it remains in the double digits. Very good profitability. Companies keep a strong operating performance even as sales growth slows. This is driven mainly by US companies. US companies have been able—particularly the large ones—have been able to maintain super strong margins, and that's allowed the US market to perform well without going into an extreme bubble.
Now let's look at net margin. Profitability is still strong. Here we can see net profit margin. It's dropped from 8.2 in 2021 and 2022, but remains high at about 7.5. What's the net profit margin of Thailand? It's a disaster. In fact, if you were to chart Thailand on here, which we could have, it's going to go down and down until it's at maybe 4%. And that's the reason why the Thai stock market has been collapsing. As long as companies cannot produce strong profitability and strong growth, the market and investors—that's you and me—are going to punish them. So that's helps us understand what's happening in the world, but also in Thailand. Based on the high profitability, companies should be able to handle a slowdown in sales. I think what you can see from this is that the world is not in an emergency. If you thought there was going to be a huge collapse in markets, I don't think so because the underlying profitability has been strong.
So the key takeaways: revenue growth recovered in 2024 but stayed below average. Companies remain highly profitable, and businesses should be able to handle a slowdown in sales.
Now, before we get into the Q&A, I studied with the father of the quality movement when I was when he was 92 and I was 24. And what drove Dr. Deming was his mission to help us firms improve quality. He inspired me to pursue my mission over the remaining 30 years of my career. That means from today forward to help midsize family businesses double profit in 12 months, guaranteed. The next cohort of the profit boot camp starts on June 2nd. So, you can scan this QR code to see if you're eligible if you have a midsize family business that wants to double profit. All right, it's Q&A time. Let's go into any final questions that you may have. Hold on. Let's see. That's not a question, but that's abb saying kung crew Andrew. Yes, that's me teaching. So, this is uh more information about the profit boot camp. You can just go to the profit bootcamp.com for those people who have a midsize family business that wants to double profit. I dare you to contact that.
All right, let's look at question from Tanowat. Should be a good question. Do you think gold is more correlated to world equity more and more every day than the past? No. No. No. No. Remember, gold has its seasons. We're just in a season of political turmoil. And when you're in a season of political or economic turmoil, gold performs well. So once the turmoil and uncertainty has been resolved, then there's no reason for gold to go up. In fact, I think gold could come down at that point. Remember that gold doesn't have intrinsic value that it's generating. It's just the price that somebody else is willing to pay. So don't get confused and think that gold is going to always perform like this. Take advantage of it when there's political uncertainty, for sure. Nothing wrong with that. But the point is is that you have to understand that it is a different type of asset class. It's part of the commodities asset class, which means there's no underlying intrinsic value to it unlike a business. Tanowat, does that help answer your question? Hopefully.
Rhysa said as Moody downgrade us, should US bonds investment allocation change? Well, remember that we change every three months, and so I'm sitting and watching right now. We're doing okay. Uh, but on the first week of June, you're going to get an answer to that, Risa. And the answer to that is going to see whether or not we change our allocation to US bonds. But I think that it probably turns out to be not such a big thing. In fact, I just saw some charts recently that showed uh what was that? I I saw some charts—someone sent me some charts—that showed the last two downgrades that happened many years ago in the US uh treasury market. Basically, the US stock market did really well after that. So, what's going to happen? I'm not exactly sure, but I would I'm not particularly worried about it.
Yeah, Tanawat, you're welcome for the answer. Well, I think that that's all the questions that we got today. Uh, it's great to be here to update the portfolio, the performance. I want to thank each of you. Hopefully, I'll see you guys at the in three hours series. I do it at the Landmark Hotel every other Tuesday. So stop by and learn a little bit. Those are all about your how to maximize the returns of your family business or your career as an executive. But in the meantime, I hope that you have a great month, rest of the month, and I look forward to making our next changes and presenting those to you. But for the last thing I would say is remember that our goal is to invest over the long term. And long-term means decades, not years. We'll see you next time.