Key Points:

• The average stock in major indexes has seen much more selling pressure than the broad indexes themselves (see chart)
  • The numbers are skewed in the index by larger names and bond proxies
  • Example: NASDAQ is 17.3% off the high, but the average stock is down -46.6%
• Certain indices are in a correction; but the average stock is in a deep bear market
• Investors in the last month have been selling stocks at the fastest pace since March 2020
  • Noah attributes this to a hawkish stance from the FED on inflation
• He is confident the FED will not be able to be as aggressive as investors anticipate
• Half of the rise in inflation is attributed to outlying factors (used cars) and will fade over time
  • Supply chains are starting to resolve themselves and are coming back online
• We have seen three rounds of stimulus, debt forbearance, increases in tax credits for children and a ton of cheques sent out
  • This is slowly being pulled away and companies will need to stand on their own two feet
• Speculative technology has been hit hard - Noah does not invest in companies that do not have real cash flows or earnings
  • On that note, selling has been broad based and strong companies are getting hit as well
• Despite the narrative, it is not just tech getting hit
• seeing a lot of volatility in retail & biotech stocks that are down 50% and back to 2015 levels
• There is no evidence that the economy is grinding to a halt
• Noah is bullish in his holdings, the companies continue to do well, driving incredible earnings growth & revenue growth, despite what the market does day to day
• Macro investors are trading factors and baskets of stocks
• The first week of 2022 was the best week of relative performance for value in history looking back over the last 70 years
  • Value factors (low PE) are working so far in 2022
• Noah is not looking for a catalyst to bring growth factors back, he looks for growth and that in turn drives the stock price over long periods of time
• Opportunity for growth as multiples are suppressing and earnings are rising this year
• No valuation discount in value factors versus growth factors anymore
• There is a reason Noah looks for growth – take Ford as an example
  • The stock is 40% off it’s highs from 2000; 20 years later the company has not delivered
• Companies that make new all time highs deliver on growth & execute well
• Process leads to Noah’s long-term success and he does not waver in it during tough markets
• E-commerce firms have been hit hard, after having tough YoY comparisons
  • This is creating an entry point & they should do well in the back half of 2022
  • On a two year stack basis – these companies are growing at a 40% annualized rate
• There have been no changes to Noah’s Funds – only price, not fundamentals
• The flow of liquidity has propped up certain stocks and it will be difficult for these names when this liquidity is reduced or removed
• Opportunity for secular growth is incredible, Noah is not momentum trader and remains one of the top growth investors available for Canadians
  • He sticks with growth when momentum factors leave the space & when they come back
  • Momentum factors are in value right now – primarily Energy
• At the end of the day, Noah owns incredible companies with real growth & cash flows - He has been through several large corrections and rotations in his 25-year career
• How does he get through them? By sticking to his process