Stock market strategies

GreenWood Investors Q4 2021 Letter

In a piece called The Acceleration of Time, hedge fund GreenWood Investors looks at the issues facing markets at the end of the year, and into the start of 2022.

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  • The fund first noted that the worldwide decline in markets since November led to a number of growth stocks losing more than half their value. At one point, even more than 50 percent of NASDAQ-listed stocks had been cut in half (or worse).

    Overall, the fund reported a poor quarter, but a solid year. And years matter more than quarters when investing. The fund has noted that the past few years have most mimicked the period from the first World War to the Spanish Flu, to the Roaring 20s thanks to generous stimulus programs.

    While the recent pullback may not be the start of a new Great Depression, it does indicate that high volatility and rapidly-changing trader attitudes are here to stay.

    The fund also notes that large, mega-cap tech companies are starting to turn on each other as they relentlessly focus on their own growth at any cost. One such example is Apple (AAPL), which made privacy changes that adversely impacted Meta Platforms (FB) to its own benefit. Further moves in that direction could harm investors in unexpected ways.

    The letter concludes with the challenges of looking at both the short-term and the long-term, an issue that every investor or trader has to contend with, whether they like it or not. Staying humble and looking carefully ahead can mitigate much financial pain.

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  • Those interested in reading the full 8-page letter can do so here.