15 January 2025
Focus on Fundamentals Instead of Forecasting the Future
As we close the books on 2024, it is a good time to reflect on the past year and carry key lessons into 2025. The end of each year often brings an influx of market predictions from Wall Street analysts and economists. While these forecasts can sound interesting, the events of 2024 remind us that predicting the future is far from an exact science.
In late 2023 and early 2024, economists quoted in several reputable sources, including Barron’s, The Wall Street Journal, and Bloomberg, forecasted a potential U.S. recession, persistent inflation, and a market downturn. For example, in November 2023, Barron’s reported that Deutsche Bank analysts anticipated a mild U.S. recession in the first half of 2024, citing the delayed effects of interest rate hikes and predicting unemployment to peak at 4.6% by the third quarter. Similarly, a December 2023 U.S. market outlook by a Reuters poll projected a 1.2% GDP (gross domestic product) growth for 2024, with a 48% probability of a recession. The Federal Reserve (Fed), considered a highly respected source for economic forecasts, projected a 1.4% GDP growth rate.
Contrary to these forecasts, the U.S. economy demonstrated remarkable resilience throughout 2024. GDP growth is now projected to reach 2.7%, surpassing economists’ initial expectations. This performance was fueled by strong consumer spending, business investments, and cooling inflation – a concern that also moderated faster than anticipated. As of today, the inflation rate has declined to 2.7%, the lowest since March 2021.
The stock market also exceeded expectations. The S&P 500 delivered a return of more than 23% in 2024, marking consecutive annual gains above 20% for the first time since the late 1990s. Meanwhile, the MSCI World Index posted an annual return of 17%.
Currency markets defied predictions as well. Financial experts anticipated a modest depreciation of the U.S. dollar in 2024, with a corresponding slight appreciation of the euro. Instead, the opposite happened. The U.S. dollar index posted an annual gain of 7.1% by year-end, buoyed by rising Treasury Yields and the U.S. economy’s outperformance. Conversely, the euro depreciated by 6.2% against the dollar.
Even job market forecasts missed the mark. On January 10, 2025, the Bureau of Labor Statistics reported that 256,000 jobs were added in December, far exceeding the expectation of 153,000.
These examples highlight a crucial point: even the most informed so-called experts are often wrong. As Warren Buffett aptly stated, “Forecasts usually tell us more about the forecaster than of the future.” At Noesis, we believe that instead of reacting to speculative forecasts, we should focus on fundamentals—the tangible aspects of a business that can be analyzed today.
Case Study: Sea Limited (SE) – Navigating Volatility with Strong Fundamentals
One of our core holdings is Sea Limited (SE), a consumer internet company operating primarily in Southeast Asia, Taiwan, and Latin America. Sea operates through three main segments: e-commerce (Shopee), digital financial services (SeaMoney), and digital entertainment (Garena).
We believe that Sea’s strong fundamentals make it a compelling investment, despite the volatility it has faced. The company’s geographical focus on emerging markets provides exposure to regions with attractive demographic and economic growth rates. For example, Indonesia’s GDP growth has been over 5% for most of the past three decades, driven by a rising middle class and increased digitalization. Southeast Asia alone has a population of over 690 million, with a third between the ages of 15 and 34 – one of the world’s largest youth demographics with a significant proportion of tech-savvy consumers.
Additionally, e-commerce and fintech are fast-growing industries, especially in developing regions. For instance, e-commerce penetration in the Association of Southeast Asian Nations (ASEAN) region remains low at about 17% in 2024 compared to China’s 47%, presenting significant growth potential. From 2019 to 2024, e-commerce in ASEAN grew at a compound annual growth rate (CAGR) of 32%, with a projected annual growth of 15% through 2026 (see chart below).

Digital payments and lending are two other areas expanding rapidly in Southeast Asia. It is estimated that 50-70% of the population remains unbanked or underbanked, providing ample opportunity for Sea’s fintech segments to grow. Similarly in Brazil, e-commerce penetration is only 14% (see first chart), and growth is expected to remain strong in the coming years as it gains market share from Mercado Libre, the dominant player in Latin America (see second chart).


Sea’s revenue has seen a 60% compounded annual growth rate (CAGR) over the past eight years. After years of investing in growth, the company achieved profitability last year by increasing the fees it charges sellers for using its platform. Despite this, Sea’s fees remain lower than those of more established global e-commerce players, providing further room for profit growth.
Why We Invest in Sea Limited:
- E-Commerce Leadership: Shopee is the leading e-commerce platform in Southeast Asia, holding approximately 48% market share in terms of Gross Merchandise Value (GMV), according to Momentum Works. The region’s e-commerce penetration rate remains relatively low, indicating significant room for growth.
- Digital Financial Services Growth: Sea’s digital financial services division, SeaMoney, is gaining traction in a region where a large portion of the population remains unbanked or underbanked. The demand for digital payments and lending services is expected to grow exponentially as more consumers embrace financial technology.
- Strong Execution: Sea has shown its ability to adapt and invest strategically. The company’s logistics system, Shopee Express (SPX), improved delivery speed and reduced costs. Today, 50% of SPX orders in Asia are delivered within two days, with costs per order declining.
Sea’s journey, however, has not been without challenges. In 2023, the company faced increased competition from TikTok, Temu, and Alibaba-backed Lazada. Instead of retreating, Sea doubled down on its investments, strengthening its competitive position. This strategy paid off, with strong growth in both sales and profits as shown in the chart below.

Lessons from Sea Limited
Sea’s story reinforces our core investment philosophy at Noesis: focus on companies with strong fundamentals that can weather volatility and take advantage of long-term opportunities. The company’s ability to pivot and invest in its future, despite market challenges, highlights the importance of not being swayed by short-term noise or negative investor sentiment, but to reassess whether we remain convinced in the investment idea.
Conclusion: Invest in What You Know
A key takeaway from 2024 is that the future is uncertain and predictions, even from the most credible sources, often miss the mark. As investors, our job is not to predict economic cycles or market downturns, but to identify companies with solid fundamentals, capable management, and long-term growth potential.
As Warren Buffett once said, “We don’t buy and sell stocks based upon what other people think the stock market is going to do, but rather upon what we think the company is going to do.” At Noesis, that’s precisely our approach—focus on businesses that can navigate inevitable surprises and volatility.
Thank you for your continued trust in Noesis. We look forward to our shared success in 2025 and beyond.

Laleeta Hill, CFA

Jaclyn Letschert-Boschetti