| Since the beginning of the pandemic, the U.S. stock market has gone through several shifts. At first, investors gave up on what looked like an accelerating economy at the beginning of 2020 and shifted interest and portfolios to growth companies that would be resilient or even thrive under the new lock-down economy. As vaccines were developed and on the verge of being deployed, market leadership again shifted back to those firms that had been hurt but would now benefit from a reopening. This was called the recovery play and included many of the same companies that had been discarded from portfolios in the initial shift to growth. Now, many of the recovery stocks are fully valued. Some are even priced higher than they were before the pandemic. Yet another shift is now taking place to sustainable growth. These are companies that will continue to grow and add value after the recovery. Some of these are the same growth stocks leading during the pandemic and value recovery stock plays, but not all. This is a more rigorous criterion. Many energy stocks, for example, would not qualify. The Bull and his partners always use sustainable growth as an important factor in equity selection. Today, the stock market is going through a messy period. There is a lot of confusion as to the near-term outlook. What effect will new taxes have, are we really going to conquer the pandemic or will it linger for years, and will inflation eat up the benefits from recovery? There is plenty more to ponder. First quarter earnings will not be reported for a few weeks yet, so real information is lacking. However, things are not falling apart, there is much more good than bad, we will get through this phase, stay steady my friends. Sincerely, Scott C. Wohlers |
