Teladoc, DraftKings, Penn National Gaming, Zillow, and Zoom were up 139%, 335%, 238%, 183% and 396%, respectively in 2020. And all of these stocks were up anywhere from 30-60% in the early months of 2021 as well. The current drawdowns for these stocks are all now in the range of -58% to -68% from their highs in 2021.
Every year there are stocks that get massacred but these names are notable because they became so beloved by so many investors the higher they went.
Yet the massive moves in these growth stocks pales in comparison to what went on with the meme stocks this year. GameStop and AMC are a sight to behold:
These stocks are both down well over 50% from their highs yet are still up nearly 700% and 1200% respectively in 2021.
Here were their market caps at beginning of the year:
GameStop: $1.2 billion
AMC: $475 million
And the market caps now:
GameStop: $14.8 billion
AMC: $11.3 billion
I count myself in the camp that assumed this whole ordeal would be over in a matter of weeks or months. Instead, the herd continues to keep these stocks elevated. I don’t think we’ve ever seen anything like this go on for this long.
On the macro side of things, inflation has dominated everything in the back half of the year:
It’s been a while since we’ve been this much higher over the really long-term average inflation rate of 3.2%. My one big takeaway from this chart is inflation is always moving and rarely stable from one 12 month period to the next.
The craziest inflation piece is the massive spike in used car prices:
There are plenty of reasons rates have remained low but this year was probably the best scenario in 50 years for yields on government debt to rise substantially and it just didn’t happen.
If you would have told someone this year would include hundreds of thousands dead in a prolonged pandemic, an attack on the U.S. Capitol, massive government spending and the highest inflation in almost 40 years, buying gold would seem like a reasonable conclusion.
Instead, gold has underperformed the U.S. bond market:
The Bloomberg Aggregate Bond Market Index goes back to 1976. This year’s -1.6% return (should it hold over the next few days) would be the third-worst year ever for this benchmark in that time. In fact, the Agg has only ever had 3 down years out of the previous 45. The losses are -0.8%, -2.0% and -2.9%.
This is a good reminder that a bad year in the bond market is a bad afternoon in the stock market.
Any look back at 2021 has to include something about the scalding hot housing market:
It’s hard to wrap your head around the fact this is a good thing on aggregate. Most people only quit their job when they have better opportunities elsewhere. Workers finally have some negotiating power.
Finally, I would be remiss if I didn’t at least mention crypto. Bitcoin had another strong year even in the face of multiple gut-wrenching drawdowns: