March 3, 2022
By Scott Wohlers
This cynical curse, probably incorrectly attributed to the Chinese, captures our moment. This is not just about world affairs, and our moral and economic lives, but also true in the world of investing. Investors are having a difficult time. Volatility has spiked and will probably stay elevated for a long time. It reflects a lack of confidence about any future scenario. One day the outlook may indicate one direction and within days, perhaps just the opposite.
Since last fall, investors were making a shift from growth at any price to value stocks. This was in response to the realization that interest rates would soon be rising. Higher rates usually compress stock value multiples. Then the fear emerged that perhaps higher rates could be too much for our economy and it would stall business or even bring about a recession. The war in Ukraine exacerbated those concerns. So, value stocks that depend upon good economic growth were sold off, and investors returned to growth stocks that do well during challenging environments; back and forth, sometimes more than once in a week!
So, what is an investor to do? Look through the current uncertainty. Make quality investments in firms that are becoming more valuable by being successful, growing companies. Keep eyes on a future beyond the confusion of the present. Balance portfolios so that both growth and value can succeed, and stay steady, my friends.
The Lonely Bull
