One Hell of a Year — “Overvalued”, “too highly priced”, and of course, “bubble” were three common words and phrases used to describe the price levels of the S&P 500 and other major stock indices going into 2021. This take was often used as a scapegoat for a bearish outlook in returns for the year. Now, I won’t say that this outlook was utter stupidity on full display or the highest form of idiocy known to man or anything like that. All I’ll say is that this outlook was completely f*ckin wrong.

That is not an opinion, it is a fact. Let’s check the tapes. For only the 6th time in history, the S&P 500 came out on top of the three major U.S. indices. Returning 26.9%, the S&P handily beat the Dow’s 18.7% and the Nasdaq’s 21.4%. An evenly weighted average of the three major U.S. indices gives an investor a return of 22.3%. Even with the highest inflation reading in over 30 years, that investor did pretty well.

Of course, heading into the year, the bearish outlooks described above had merit, as they do today. Price levels are well above historical averages and 2021 marks three years in a row of +15% returns for the S&P when the historical average annual return since the early 20th century is somewhere between 7-9%, depending on if you count dividends. Arguably the most important takeaway here is the reiteration of the ridiculously famous John Maynard Keynes quote that says “the market can stay irrational longer than you can stay solvent.”

As we enter the 2022 trading year today, old wisdom like this is important to bear in mind. Place your bets apes, and tread carefully in betting against the U.S. economy.

A Falling Giant — In any group, someone’s always gotta be the worst. Unfortunately for Disney, the company was officially the worst performer of 2021 among the 30 companies in the Dow Jones Industrial Average.

Given the state of our world now compared to the pre-pandemic vibe, this is really no surprise. A torrent of troubles have left the Mouse House and its shares beleaguered, under constant duress in one form or another. For starters, closing down their world famous theme parks and limiting capacity within those as well as other iconic Disney experiences, like cruises and seats in movie theaters, certainly hurts. Meanwhile, the new-age streaming service Disney+ released in late 2019 hit a hard plateau in user growth and new content. 

As a result of these and ongoing struggles, shares are down over 12% YTD while the aforementioned index is up over 20%, meaning the Mouse House underperformed by over 32%. Absolutely disgusting. But, an unlikely hero by the name of NFTs and other crypto technology promises to carry Disney from the depths of despair. The firm’s IP and other core advantages likely create enough of a moat to weather the storm. And, as we all know of the 98 year old company, if anyone can mount the turnaround needed here, it’s Disney.