- We are in the deceleration phase of the market after the recession. Although the market is hitting all-time highs, we have seen substantial corrections in underlying sectors and investors should avoid companies that have weak revenues, low earnings/profits
- Key to longer term outlook for Noah is based on earnings growth
- Growth stocks and interest rates are positively correlated
- Ridiculous YoY growth rates due to the pandemic are beginning to narrow
- Nordstrom and GAP are recent examples of punishing earnings misses
- Inflation continues to be a risk, but the message of the bond market is that longer term inflation will be less of a problem
- Keep an eye on the yield curve inverting if the FED goes too far and spooks the market
- Keep an eye on the yield curve inverting if the FED goes too far and spooks the market
- The globe is in a worldwide debt trap, where we will need inflation to retire some of the outstanding debt
- Handouts from the government was not regular money printing but rather bond issues that exist in the market (this has resulted in more debt outstanding than ever before)
- Handouts from the government was not regular money printing but rather bond issues that exist in the market (this has resulted in more debt outstanding than ever before)
- 2021 was a tricky year for markets and 2022 will be even trickier
- Asset class return expectations are going to be lower than average – turn to alternative funds
- The pandemic accelerated trends into deglobalization and the move out of China
- The US is incentivized to build locally, none of Noah’s holdings are building in China
- The US is incentivized to build locally, none of Noah’s holdings are building in China
- Noah was an investor in China since 2005 as one of the few international managers at the time
- 2021 got out of all Chinese exposure after the wipeout of online education companies
- No plans on investing in risking investors money in China until we see real changes
- Bottom-up analysis, an optimistic point of view, and sticking to process - all remain crucial
- Leverage in the markets has changed the market structure where we see worldwide deleveraging events and unwinding taking place
- This deleverage is quant driven and they are forced to sell everything as a basket
- These result in tremendous opportunities to add to winning positions
- Stick with a manager that has a proven process and help when markets whip investors around
- Investment themes for Noah within the technology sector:
- Companies that are helping enterprises go digital and towards cloud-based applications
- Medical device markets that allow patient takes control of their monitoring processes
- Fintech and the move towards digital wallets, something that regulators are pro towards
- Hedging in Noah’s Alpha portfolio is to lower volatility but has been difficult over the past 18 months due to distressed names gapping up so drastically/quickly
- There are completely worthless companies that are trading at multi-billion-dollar valuations that managers are terrified of shorting
- Do not expect the short side drag to continue and expect to see a golden age of shorts
- Opportunities to short names on the other side of SPAC financing & MEME financing
- Stocks and bonds have become more correlated, which is a concern with continued volatility in the bond market (not protecting as well as it did in equity market sell offs)
- Watch the yield curve going in 2022; Noah’s Alpha Performance will go neutral/short if it inverts
- Noah is excited to see how his growth portfolios will positively position for tomorrow’s market