Topic 4: GLOBAL INVESTMENTS

UPDATE ON GLOBAL INVESTMENT PORTFOLIOS

The Disruptive Innovation Portfolio (DIP) and the Megatrends Portfolio (MT) have investments in high growth/mid to smallcap tech stocks exhibiting high revenue growth but little to no net income. This group of stocks did exceedingly well during the period Jan 2020-Third quarter 2021 for multiple reasons:

The US Fed responded very aggressively to the pandemic that caused massive economic disruptions. Not only had they cut the Fed Funds rate to zero, but they were also aggressively printing money by actively purchasing bonds. At the same time, the government was aggressively doling money out to individuals and corporations, much of which ended up in the stock market. The DIP and MT group of stocks were particular beneficiaries of these fiscal and monetary actions:

  • They were growing fast
  • The discount to future earnings was small as inflation was nonexistent
  • Many of them were considered big beneficiaries of Work From Home (WFH)


Since the last quarter of 2021, these trends have reversed dramatically, and these stocks have performed very poorly. The DIP and the iShares Russell 2000 Index (smallcap index) represent these trends (chart 1).

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