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Leading into 2021, the big questions facing investors were about how quickly economies would recover from COVID, with the assumption that the virus would fade during the year, and the pressures that the resulting growth would put on inflation.
Inflation numbers have been coming in high now, for more than a year, but for much of the early part of 2021, bankers, investors and politicians seemed to be either in denial or casually dismissive of its potential for damage.
To start the year, I returned to a ritual that I have practiced for thirty years, and that is to take a look at not just market changes over the last year, but also to get measures of the financial standing and practices of companies around the world. It is also why I report only aggregated data on industries, rather than company-level data.
In 2021, looking at the company, I feel more convinced than I was a few years that it is, at its core, an automobile company, and while it will continue to derive revenues from batteries and perhaps even software, its pathway to becoming a trillion dollar market cap company still runs through the "car company" story.
The first quarter of 2021 has been, for the most part, a good time for equity markets, but there have been surprises. The first has been the steep rise in treasury rates in the last twelve weeks, as investors reassess expected economic growth over the rest of the year and worry about inflation. for 2021 and inflation of 2.2%
It is the nature of stocks that you have good years and bad ones, and much as we like to forget about the latter during market booms, they recur at regular intervals, if for no other reason than to remind us that risk is not an abstraction, and that stocks don't always win, even in the long term. Stocks: The What Next?
Since I am lucky enough to have access to databases that carry data on all publicly traded stocks, I choose all publicly traded companies, with a market price that exceeds zero, as my universe, for computing all statistics. will reflect the most recent quarterly accounting filing.
A few of you did take issue with the fact that the growth rate that I used for the first five years dropped from 35%, in my November 2021 valuation , to 24%, in my most recent one. Put simply, there are very, very few companies that generate big revenues and earn high margins at the same time. It was the reason that I argued at a $1.2
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