Our investment professionals share and challenge each other’s views, creating a diverse marketplace of ideas for the Wellington Blog.
As we begin 2022, the weakness in the consumer technology sector continues. Two-thirds of internet stocks currently trade 30% lower than their 52-week highs, with many down more than 50%.1 Amid this sell-off, our conviction in the long-term outlook for tech in general and consumer tech in particular remains strong. The key question is whether this market presents an opportunity to buy the dip or if investors should remain patient as the pullback could persist.
In our 2022 Outlook, we noted that valuations, tough year-over-year comparisons, and decelerating growth are among the issues that make it difficult to have much conviction on this question. Adding the Omicron variant to the mix further complicates the outlook for the consumer technology sector.
However, we think technology’s long-term secular tailwinds signal that the recent sell-off could be a significant opportunity to…
In my opinion, the answer to the question above is “less than most people expect.” I think life will return to “normal” in ways that may be hard to imagine amid worries about the Delta variant. Early in the pandemic, my colleague Eunhak Bae wrote the following about living through 9/11 in New York City: “In the immediate aftermath, it seemed like no one would ever fly on a plane again. That obviously turned out not to be true. Today, it may feel like the world has changed for good. But I believe humans are blessed with selective memories and a desire to revert to what they know, so people will once more buy things, go see things, and congregate to share experiences.” When I first read those words, I thought the reversion to normal would happen much more quickly than it did, but I still think that’s our destination, perhaps within the next six – 12 months.
The big change I foresee is in inflation, which has been unusually low for an extended time (1.4% over the decade ended December 2021 and 1.6% for the trailing 15 years). We have seen in past crises that economic stimulus tends to be harder to…
I believe that regional differences in COVID vaccination rates, government policy goals, and the ensuing trade-offs have led to a global economy that can now broadly (and imperfectly) be divided into three distinct ”blocks,” each moving at very different speeds and via very different catalysts: 1) the ”boosters”; 2) the COVID “racers”; and 3) the ”reformers” (Figure 1).
In my view, investors should track the dynamics of each block separately in order to successfully navigate the current phase of the global economic recovery. All three will also affect the markets to varying degrees and with varying effects.
The countries in this group have made substantial progress on vaccine provision, which has increasingly allowed them to…
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