Nicolai Tangen, the boss of the world’s largest sovereign wealth fund, worth around $1.8 trillion, is never far away from an eager investor keen for advice on how to beat the market.
While it may not be advice he is necessarily following himself, Tangen’s latest tip is to diverge from the crowd.
“The best thing to do is always to do the opposite of everybody else,” Tangen told Bloomberg in an interview at Davos.
“What will that be today? Well, if you were to do the opposite of everybody else, it would be to sell the US tech stocks, buy China, sell private credit, just buy stuff that is out of fashion.”
Tangen’s latest tidbit isn’t exactly a case of practicing what you preach. Indeed, Tangen and the Norges Investment Bank are among U.S. tech stocks’ biggest fans.
As of June last year, Norges Bank Investment Management owned 1.9 trillion Norwegian krone in the Magnificent Seven stocks, or around $173 billion. Its six largest equity investments by value are all Magnificent Seven stocks, while it also owns a sizeable $5.6 billion stake in Tesla. The oil fund opted to shed some of its stake in Meta last year.
In its half-year report for 2024, Norges Bank praised the performance of tech stocks, which grew by 27.9% in the first half of the year. In total, tech stocks account for a quarter of the company’s equity investments.
In his interview with Bloomberg, Tangen did admit that taking a contrarian approach to investing meant accepting that your investing strategy would underperform at times, leading to investors questioning your sanity.
Several investors, though, have warned about the risks of a potential tech bubble in popular U.S. stocks, including Tangen himself.
The Magnificent Seven stocks make up around a third of the S&P 500’s value, while its profits accounted for three-quarters of the index’s earnings growth in 2024.
Speaking to the Financial Times in November, Tangen warned of unprecedented concentration risks in equity markets based on microchips following the Gen AI boom. Major companies, including Nvidia, ASML, TSMC, and the Silicon Valley giants, make up this cozy ecosystem.
“The concentration is absolutely worrying. It means that there is a risk in the stock market which we have never seen before,” Tangen told the FT’s Unhedged podcast.
“So there are very few companies tied into them, and they are getting bigger and bigger and more and more important.”
As for China, the other market that Tangen namedropped, Norges has a relatively small 385 billion Norwegian krone ($34 billion) stake in the country. The bank’s biggest investments in the country include Tencent, Alibaba, and PDD. The value of its investments in China rose by $4 billion in the first half of 2024.
In September 2023, the group announced it would be closing its Shanghai office, citing operational considerations that wouldn’t affect its investments in China. The group employed eight people in the Shanghai office.
The oil fund’s latest investment is a very British affair, and could align with his advice to buy what is out of fashion. The group announced a joint partnership with the Duke of Westminster-owned Grosvenor for 175 properties in the exclusive London neighborhood of Mayfair.
The agreement marks the largest outside investment in Grosvernor’s 305-year history.
Correction, January 23, 2025: A previous version of this article misstated Norges Bank Investment Management as Norges Investment Bank.
