February Client Letter

“The trading favorites of 1928 were high-priced, untried, and unseasoned stocks that made one wonder whether the public did not think that the higher the price the better the stock.” -Edwin Lefevre

This month, I chose to write about the theme of speculation versus investment for our February client letter. Since 2020, speculation has reigned supreme with Robinhood, meme stocks, SPACs, and crypto-bros galore. And yet it feels like true investing is making a comeback, doesn’t it?

As of January 28th, 2022, the below companies have declined by the following amounts year-to-date:

• GameStop: -34.02%

• Peloton: -28.3%

• Zoom: -21.8%

• AMC: -44.63%

In fact, according to Callum Thomas of Top Down Charts, over 1600 stocks in the Nasdaq have declined by at least 50% versus their 52-week high.

And yet, the unwinding of speculative fervors need not overly harm sound investment. The Dow Jones Composite Index, that most unengaging of indices, has hardly budged, declining only -4.44% in 2022. Even the Nasdaq as a whole, anchored by the mega-cap tech companies, is only down -11.98% on the year.

Three cheers for diversification! And yet more for maintaining a steady, sound, and rationale investment plan for your clients.

Sound investment, you’ll note, is refreshingly dull. It is doing nothing when everything and everyone is screaming to do something.  

Helping your clients sort through what is investing and what is speculation is just one of the incredible services you provide.

Your cause is righteous. Keep up the amazing work.

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Your white-labeled monthly client newsletter is linked below. Just click on the Dropbox link and download it from there. A whole bunch of disclosures are included at the bottom of this email, but I urge you to follow these simple guardrails: