Patient Capital Management is a Baltimore asset manager founded in 2020 by Samantha McLemore, CFA — Bill Miller's long-time co-manager (working together since 2002, running the flagship Opportunity Equity strategy since 2014). Continuing the Miller-school contrarian tradition, it practices "time arbitrage": exploiting behavioral mispricing to concentrate in controversial growth names (tech, healthcare, Bitcoin-related) at deep discounts to intrinsic value. Its site preserves Bill Miller's complete 1995-2022 market letters, alongside ongoing quarterly letters and webinars.
This report reviews how global investments performed in 2021. Stocks and commodities (like oil and copper) had a great year, while bonds (loans to governments or companies) lost money. For everyday investors, this means stock buyers did well, but bond holders didn't. Big company stocks outperformed small ones, and growth stocks (like tech) beat value stocks (like banks). Interestingly, even though the US dollar strengthened, emerging market stocks (e.g., India, Russia) still rose. This is worth reading because it uses clear data to show what happened in markets, helping you understand why different investments performed differently.
Global major indices closed 2021 on a strong note, with the S&P 500 rising 28.7% for the year, the Nasdaq Composite Index gaining 22.2%, and the Dow Jones Industrial Average advancing 20.9%. All 11 sectors of the S&P 500 posted positive returns, with energy and real estate leading the gains at 54.4%
This section reviews the performance of major global asset classes for the full year and the fourth quarter of 2021. The report notes that despite negative news surrounding the Omicron variant, global equity markets performed strongly overall in 2021, while bond markets lagged behind.
The author's core judgment is that 2021 was a strong year for risk assets (particularly equities and commodities), with the market exhibiting a clear style divergence of "large-cap outperforming small-cap, and growth outperforming value." A counterintuitive observation is that despite a strong US dollar (up 6.4% for the year), emerging market equities still recorded robust returns.
The report supports the above viewpoints with extensive specific data, primarily comparing the performance of different asset classes, as well as stocks of varying market capitalizations and styles.
Comparison of Major Asset Performance for Full Year 2021:
| Asset Class / Index | Full Year 2021 Return |
|---|---|
| S&P 500 Index | +28.7% |
| Nasdaq Composite Index | +22.2% |
| Dow Jones Industrial Average | +20.9% |
| Russell 1000 Index (Large-Cap) | +26.4% |
| Russell Midcap Index | +22.6% |
| Russell 2000 Index (Small-Cap) | +14.8% |
| Russell 1000 Growth Index | +27.6% |
| Russell 1000 Value Index | +25.1% |
| Barclays Long-Term Treasury Index | -4.4% |
| Barclays U.S. Aggregate Bond Index | -1.54% |
| Bloomberg Commodity Index | +27.1% |
| U.S. Dollar Index | +6.4% |
| Gold | -4.5% |
| Bitcoin | +59.8% |
| Crude Oil | +55.0% |
Comparison of Major Asset Performance for Q4 2021:
| Asset Class / Index | Q4 2021 Return |
|---|---|
| S&P 500 Index | +0.58% |
| Nasdaq Composite Index | -0.22% |
| Dow Jones Industrial Average | -1.46% |
| Russell 1000 Index (Large-Cap) | +0.21% |
| Russell Midcap Index | -0.93% |
| Russell 2000 Index (Small-Cap) | -4.36% |
| Russell 1000 Growth Index | +1.16% |
| Russell 1000 Value Index | -0.78% |
| Long-Term U.S. Treasuries | +0.47% |
| Barclays U.S. Aggregate Bond Index | +0.05% |
| U.S. Dollar Index | +1.94% |
| Gold | -1.06% |
| Crude Oil | +2.12% |
| Bitcoin | +25.6% |
Other Key Data:
This section does not mention specific companies; it primarily analyzes market indices and asset classes.
For investors, the report data reveals the following directions:
1. Style Rotation Risk: Throughout 2021 and in the fourth quarter, growth stocks outperformed value stocks, and large-caps significantly outperformed small-caps. Investors need to be wary of whether this trend will continue or if mean reversion will occur.
2. Asset Allocation Rebalancing: Bonds underperformed in 2021 (declining for the year), while equities and commodities performed strongly. This suggests investors may need to review their equity/bond allocation ratios and consider increasing exposure to inflation-hedging assets (such as commodities).
3. U.S. Dollar and Emerging Markets: The U.S. dollar strengthened in 2021 but did not prevent emerging market equities from rising. This indicates that local currency returns in emerging markets may be more attractive, though currency risk must be noted.