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Only 3 Hedge Funds Outperformed…

Quick Hits From GRIT
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Only 3 Hedge Funds Outperformed…

Quick Hits From GRIT

Happy Friday Everyone đź‘‹

SIX things you need to know this week in 60 seconds.

  1. Top stocks & sectors of 2021

  2. Keep your powder dry

  3. Actively underperforming

  4. Cooking meals at home in 2022 like

  5. Record crypto trading volume in 2021

  6. A virtual reality Christmas

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1. MACRO

Top stocks & sectors of 2021

The S&P 500 returned 29% to investors this year (as of 12/30), with 88% of companies showing positive returns. Here’s a look at the year’s leaders:

Top 5 Stocks

  • Devon Energy 197% – Energy

  • Marathon Oil 152% – Energy

  • Fortinet 147% – Technology

  • Signature Bank 139% – Financials

  • Moderna 137% – Health Care

Top 5 Sectors (SPDR ETFs)

  • Energy 54%

  • Real Estate 45%

  • Technology 36%

  • Financials 35%

  • Consumer Discretionary 29%

So how does 2021 compare to recent years? The average return over the previous 10 years has been 14.44% and this is only the 6th time the index tops 20% since 1999.

GRIT’S TAKE: The S&P closed at an all-time high 70 times this year, as pointed out by Charlie above. That’s second only to 1995!

GRIT’S ACTION: Still no better place for my capital than stocks.

Under the Radar

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SECURE, RESILIENT, SCALABLE, SIMPLE. The crypto markets are known for their extreme volatility. But Liquid Meta, a DeFi infrastructure & tech company that’s powering the next generation of open-access protocols, has been posting consistent revenues since inception in June 2020, and has exposed its investors to the emerging DeFi sector of crypto that has grown from $1.7 B to +$250 B in Total Value Locked (TVL) at present*!

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2. DEALS

Keep your powder dry

In 2021, there was nearly 1 new unicorn for every day on the calendar with a total of 338 companies raising at >$1B valuations. That’s TRIPLE last year’s number!

According to Preqin, there’s a total of ~$750B in dry powder (cash committed but not yet spent) between venture capital (VC) and growth-focused private equity (PE) firms right now. Neither VCs nor PE firms are known for their sensitivity to valuations, so this cash should have no problem finding a home quickly in 2022.

The money is already starting to show up in the SPAC market (again) despite the fact that ~75% of this year’s nearly 200 SPACs are trading below their list price. In each October and November, SPACs raised $12B, which is roughly double each of the previous 3 months.

GRIT’S TAKE: With so much capital chasing lofty valuations, analysts are expecting the gap between the winners and losers will boom.

GRIT’S ACTION: I hate SPACS.

3. STOCK MARKET

Actively underperforming

Image

As of today, the S&P is up 29%.

Guess how many of those hedge funds above outperformed it?

THREE! You’d honestly have a better chance of finding a profitable portfolio at Robinhood!

Rich people just love paying 2&20 fees to have their money lost in fancy ways. Especially the last guy…

GRIT’S TAKE: Top hedge fund was long $GME. Bottom was short $GME. Remember, nobody builds generational wealth shorting meme stocks with massive short interest during one of the most bull markets in history” -GRD

GRIT’S ACTION: Most people better off just buying S&P ETF.

4. COMMODITIES

Cooking meals at home in 2022 like

Over the last 12 months, the food-at-home index rose 6.4%, while meats, poultry, fish, and eggs (aka the good stuff) increased 12.8%. This is to say: your grocery bill went up in 2021 even though you didn’t buy any more food.

Food manufacturers are already warning that 2022 will bring more of the same. Mondelez, General Mills, Campbell Soup, and Kraft Heinz are among the companies that have recently announced price increases across virtually all products, including coffee (RIP @dougboneparth), mayo, mustard, juice, vegetables, wine, beer, liquor, bread, and samosas (T’s & P’s @parikpatelCFA).

GRIT’S TAKE: According to IRI, prices will rise 5% in the first half of 2022, though some items could see price hikes of 20% or more.

GRIT’S ACTION: Stocks and crypto help me hedge my grocery bill.

5. CRYPTO

Record crypto trading volume in 2021

In 2020, centralized crypto exchanges facilitated over $1.8T in trading volume, which seemed like an outrageous amount at the time given how little was known about the market. In 2021 though, everyone who put a dollar in then is wishing they’d have put in two (or more)! Hindsight is 20/20.

With crypto hitting the mainstream this year, trading volume on centralized exchanges has exploded 689% to over $14T! And that number is only going to get bigger!

Decentralized exchanges (DEXs) also saw massive growth in trading volume, surging 858% to more than $1T. Unlike their centralized counterparts, DEXs do not hold their user’s private keys — those remain in control of the customer.

GRIT’S TAKE: DEXs are seen as the future because, well…they’re decentralized, but they remain riskier and less user-friendly than centralized exchanges right now.

GRIT’S ACTION: Hiring a crypto expert and launching a crypto dedicated newsletter. Let’s make some crypto money together!

6. ENTERTAINMENT

A virtual reality Christmas

Facebook Meta had one of the holiday season’s most popular gifts this year: their Oculus virtual reality (VR) headset. The Oculus VR app was the most popular app in Apple’s App Store on Christmas Day, meaning many are getting their first taste of the metaverse right now.

Zuckerberg has already said that the company will spend at least $10B next year on building out his vision for the metaverse. That metaverse will require hardware much more powerful than the current Oculus headset, but onboarding customers now means Meta will have a ton of data about the user experience which will inform the company on how best to allocate those $10B.

GRIT’S TAKE: Global metaverse-focused ETF assets have grown to $2.2 billion… expect more to launch soon!

GRIT’S ACTION: Long NVDA (bought on the dip). Making the metaverse feel anything close to the real world will require a massive amount of graphic computing power. 

*SOURCES
2. WSJ
3. WSJ, FT
4. WSJ
6. CNBC

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Disclaimer:The publisher does not guarantee the accuracy or completeness of the information provided in this page.  All statements and expressions herein are the sole opinion of the author or paid advertiser.

Grit Capital Corporation is a publisher of financial information, not an investment advisor.  We do not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient.  

THE INFORMATION CONTAINED ON THIS WEBSITE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF ANY COMPANY MAY TRADE AT ANY TIME.  THE INFORMATION AND OPINIONS PROVIDED HEREIN SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION.  INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND DECISIONS REGARDING THE PROSPECTS OF ANY COMPANY DISCUSSED HEREIN BASED ON SUCH INVESTORS’ OWN REVIEW OF PUBLICLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED HEREIN.

No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned.  

Any projections, market outlooks or estimates herein are forward looking statements and are inherently unreliable.  They are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.  Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities discussed herein.  The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and the publisher undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material.

The publisher, its affiliates, and clients of the a publisher or its affiliates may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities).  To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.

Neither the publisher nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein.

By using the Site or any affiliated social media account, you are indicating your consent and agreement to this disclaimer and our terms of use. Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile or any other means is illegal and punishable by law.

For Full Terms of Use Click HERE. For the Privacy Policy Click HERE.

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