Seems like only yesterday Canadians fell in love with some company called Nortel. It was true of a CIO who gave me national hell on a conference call because I sold 50% of it at $117.625 and went against the “policy” of the major national financial firm that I was employed with back then. It paved the way for my exit from this well recognized behemoth because of that ballsy move a few months later in March just a few days short of my 20th anniversary.
He scolded me suggesting that our sister brokerage arm had placed a target of $129 (who I/we worked for) on the stock and what would I say to clients when it got there. I countered on that national call when I asked him what he would say to clients when it hit $7? That sealed my fate. He didn’t like the fact that I felt Bay Networks, a recent Nortel acquisition, was an empty shell.
These experiences and challenges keep one’s “eyes wide open”. The question that the chart above suggests to me in 2022 is that everything outside the Top 5 and 25 on a relative valuation basis remain a stock picker’s field of dreams going. The FAANG plus Microsoft grouping has obviously been the place to be but wait until the proverbial poop hits the fan. Ignored names will rotate into being new leaders in a new bull mkt. Again, experience dictates that history will repeat itself when an index gets top-heavy leadership. Moreover, if anyone ever needed an argument to quash the passive management BS, this is it.
If one needs a hint about our Canadian market, just consider the fact that 83% of the 2021 return was due to an explosive rebound in the oil and gas sector. That’s 83% of the 21.7% overall return. Keep those eyes open.
Just my first gut feeling of 2022 as I enter year 42 of this fun filled thing we call Portfolio Mgmt.
Onwards…
