Market & Topical Perspectives

4Q21 Market Overview: Even an End Has a Start

4Q21 Market Overview: Even an End Has a Start

Though robust fourth quarter gains capped off what was another banner year for developed equities, markets grew a bit choppy into year-end as monetary policy normalization loomed.

Key Takeaways

  • Key-Takeaway

    Developed stock markets pressed forward in the fourth quarter despite the emergence of the Omicron variant and a hawkish turn from the Federal Reserve. Elevated equity valuations, especially in the US, suggest little room for error as policymakers seek to tame decades-high inflation without waylaying economic growth.

  • Key-Takeaway

    One major consequence of the easy-money environment of recent years has been significant concentrations of certain stocks, sectors and markets within indexes—and correspondingly high risks to portfolios benchmarked to them.

  • Key-Takeaway

    Current distortions in relative performance— between US and non-US stocks and between growth and value names—may represent greater potential to benefit from normalization trends, especially if the underlying drivers of US outperformance begin to fade, as it seems they may.

  • Key-Takeaway

    First Eagle seeks to invest in companies that combine sound business positions—or, even better, an engine to improve their current positions—with modest market expectations as reflected by valuation multiples, ultimately striving to construct vibrant, all-weather portfolios that position our clients for the long term.