Last year began with the outbreak of War in Ukraine and continued with abnormally high inflation and efforts by central banks around the world to bring it down. It was a difficult and unprecedented year.
The stock market recovery we had been looking for occurred in the Fourth Quarter. Earnings were generally better than expected and inflation came down in many sectors of the economy. Our stocks outperformed the market averages for the quarter by over fifty percent and beat our benchmark return for the year, although absolute returns were still negative.
We have commented previously about our thoughts on a Federal Reserve “pause.” The evidence is building in that direction, witness media coverage in recent days. Of equal importance, from an investment perspective, is the ongoing market “rotation." Leadership has been changing from the former “glamour”, growth names [FANG, Microsoft, Tesla, et. al.] to value stocks and less exploited growth stocks. We continue to benefit in early January from the regime change, as “stock picking” is favored over momentum investing.
