January 2022 Wasn’t All Bad

Welcome to 2022! The first month of the New Year, and what a month it was. It began with a whirlwind of ‘fear porn’ by the mainstream media with headlines of Omicron, imminent conflict between Russia and Ukraine, and impending interest rate hikes from both the Federal Reserve and the Bank of Canada. Investors reacted with heightened selling resulting in what looks like a textbook correction. Prior to the calendar year roll over it was the tech sector that displayed the most weakness, but as the days progressed in January every sector was feeling the pain, save the energy sector. When the selling subsided the S&P/TSX was off approximately -5% and the S&P 500 was down approximately -11%. The NASDAQ, which was hit the hardest, down -20% from peak to trough (Nov 19, 2021 – Jan 27, 2022), faired quite well when compared to the average stock, which was down a whopping -46% over the same time frame. 
 
It wasn’t all doom and gloom. The video gaming industry was hot with corporate purchases. Microsoft announced their intention to purchase gaming giant Activision Blizzard for $68.7 billion in an all-cash deal, or $95 per share. Activision has been a long time holding in our portfolio, as we recognized early on the incredible growth opportunities in this unique sector. The stock jumped more than $20 on the news of the deal. Another stock we’ve owned for a few years is Sony, who were quick to get involved by purchasing world renowned video game developer Bungie, for $3.6 billion. These acquisitions highlight Tech companies increasing interest in gaming as they look to expand audiences and prepare for future iterations of virtual-and augmented-reality devices; a trend we’ve been predicting over the past decade and now we’re beginning to see the pieces fall into place.

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