Zevenbergen Capital
4Q22 Equity Review & Perspective
2022 was a difficult and humbling year for investors. A litany of macroeconomic factors, namely Federal Reserve policy and inflation, bred dour sentiment which compelled significant re-pricing of long duration assets (companies with anticipated future earnings growth). Earnings expectations also came under scrutiny, as business leaders issued mostly conservative outlooks reflecting recession concerns. The resets to forward looking estimates, though painful for shareholders, allow management teams to navigate highly uncertain operating conditions with reduced pressures of surpassing lofty Wall Street targets and may increase the likelihood of future upside surprises.
Fear and negativity are no strangers to markets. From the dot-com bubble to the Global Financial Crisis, investors must occasionally greet these nemeses of long-term wealth creation as the necessary counterparties of unchecked euphoria and greed. We encourage our clients to embrace volatility as opportunity and ask, “What could go right?” rather than succumb to pessimism’s persuasive allure. For it is long-term optimism, entrepreneurialism, and discipline, we believe, that will be financially rewarded over time. While the details change from one bear market to the next, the story remains the same: “It’s always darkest before the dawn” and innovative businesses and management teams will thrive in the long run.
