Here is an interesting quote from Noah Blackstein, one of the managers in our Elevate Enhanced Global Equity Pool…

“In 2006, Google bought YouTube, the leader in on-line video with tiny advertising revenue, for $1.65 billion.  At the time, people thought they were nuts and nearly 100% of the opinions on the acquisition were negative. Currently YouTube grosses more ad dollars than any TV network and this week we heard an analyst forecast potential revenues for YouTube of $100 billion in 2026. What would it cost to build YouTube today? What would it cost to buy YouTube today? Understanding that there are businesses out there today that can go from 1 to a 100 billion over time is at the heart of how we look at things on the long side. Finding them at the right price relative to the future opportunity, is what we try to do everyday.”

On the surface, 2021 was a great year for stocks. Most clients should have achieved solid gains for the year.  

For many investors, however, 2021 was a challenging year. Although a few large cap stocks pushed US indices to new all-time highs, for many stocks and sectors, it was a year of stops and starts as we lurched from reopening to locking down to reopening. There was also a tug of war for leadership between growth stocks and value stocks.

By early November it seemed the stars were aligning for a new broad-based uptrend for indices, including breakouts by the Russell 2000 and Dow Transports, but along came Omicron in late November to upset the apple cart, and knock indices back into their range bound ways.  

And more recently, hints the Fed could become more hawkish in 2022 sent stocks and commodities into another tailspin.

At the end of the day, much of this is just noise. Financial conditions remain favorable, and earnings have remained fairly strong despite higher input costs. This is the first recession we’ve ever been through where you see a strengthening of the consumer balance sheet, as opposed to weakening. Corporations have strong balance sheets and are signaling stock buybacks.  

Despite the recent pullback in equity markets, we believe the economy is in a positive environment that looks like it will continue through 2022.

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