So far in 2023 market performance has been the inverse of what happened in 2022. In 2022 we saw significant outperformance from quality, divided, foreign, and value stocks, as well as commodity/real return investments, while growth and technology stocks lagged by a wide margin. In 2023, the market has been led by growth and a handful of technology stocks, while other parts of the market have lagged by a wide margin. In our most recent commentary, we discussed how the current market environment is reminiscent of the tech bubble back in 1999. Mostly because we are seeing a very narrow performance of just a few stocks (about 8 stocks) that are driving the entire market higher, while other parts of the market are being ignored. Similar to the 1999 period, very good value is being created in the parts of the market that are currently being ignored. Back then the ‘ignored parts of the market' like small-cap, foreign, and value stocks as well as REITs went on to outperform the broad market by a wide margin for multiple years. We think a similar opportunity may be developing in today's market for several asset classes, and your portfolio is well-positioned to capitalize on these trends.
The challenge, as always, is to remain disciplined in our investment approach and focus on good long-term values, while resisting the temptation to chase over-valued investments that may be driven to speculative highs. For more insight into the current market environment and where we see good long-term value, please see our recent commentary. Below I've jotted some notes on a few charts and key things we are watching.
Please let me know if you have any questions regarding your investment reports and portfolio strategy, we're always happy to schedule a time to review.
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