4Q Market Observations

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It’s often hard to tell the difference between relevant market information and noise. That’s why every quarter our Market Observations newsletter lets you know what articles our advisors are using to form ideas and shape opinions. Take a look at what caught our eye this quarter!

BLACKSTONE

Byron Wien and Joe Zidle Announce the Ten Surprises of 2022

Every January for more than 30 years, Byron Wien of Blackstone has published a commentary with ten “surprising” predictions for the year ahead. Wien defines his surprises as events that an average professional investor may deem unlikely, but which he thinks have a better than 50 percent probability of occurring. While he has hit on a large number of his surprises over the years, Wien’s “Ten Surprises” is less about forecasting and more about offering insight into stories that could shape the financial markets over the next 12 months, despite being off many investors’ radar. This differed approach of thinking about the year to come—looking for less anticipated, high impact events rather than the highly anticipated ones—is frequently thought-provoking and insightful. more >

MORNINGSTAR

8 Charts on 2021 Market Performance

US stocks finished 2021 near record highs, as the S&P 500 Index posted its third consecutive year of double digit gains. It was an uneven market, however, as bonds posted weaker returns and performance varied significantly by sector. Broadly, large stocks outperformed small stocks during 2021, although small value stocks actually outperformed every other category while small growth stocks posted negative returns. Sector returns also differed from last year, as some stay-at-home names benefited less while energy and real estate led all sectors. This article from Morningstar offers a concise visual summary of these and other market trends from the past year.* more >

wired

Why Zillow Couldn’t Make Algorithmic House Pricing Work

Technological advances have dramatically changed innumerable consumer-facing industries, drastically altering how we go about purchasing many of the things we buy. Residential real estate has, perhaps, lagged other industries in this regard. While apps, website, and brokers have upgraded the way we look for potential homes, the process of buying a home has mostly stayed the same—with the majority of transactions being person-to-person and completed through a broker.

Zillow, one of the companies that have changed how we look at homes for sale, attempted to change that by using data and algorithms to become a major buyer and seller of homes. This article looks at where this attempt fell short. Beyond just residential real estate, this article presents an interesting case study of the challenges that a business idea built around mathematical models can face when presented with unpredictable real world circumstances. more >

Published January 19, 2022

*Past performance is not indicative of future results

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