2021 again was a year of mega-cap tech stocks showing some of the best return. Slowly, then suddenly in January, things changed.
Big Tech started to crack. Value stocks started to wake up after a few years of underperformance and Energy stocks, after being mostly abandoned, lit up and ran into the new year. The no-earnings, full-of-promise tech stocks, which had explosive gains in the last few years, suddenly collapsed. Not much of this was widely forecasted in conventional wisdom.
Markets change quickly in unanticipated ways making overweighting in today’s hottest sector a dangerous game.
We at WST have long held that owning a diversified portfolio of established mutual funds that hold a basket of stocks and bonds is what works best over the long run. Finding and monitoring these funds is not easy and has its challenges but we believe it works.
Now, at January’s end, Tech stocks are in the doghouse, and Value stocks and Energy stocks are the darling. How long will this last? When will this change? These are the questions not many investors get right.
We believe it is best to be balanced, diversified, and patient.
As always, know what you own, do no overinvest, and stick with quality.
-Cliff Jarvis