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 looks at how U.S. markets performed in early 2023, when a few banks like Silicon Valley Bank failed and caused panic. Despite that, stocks bounced back, but the rally was driven mostly by a handful of big tech stocks, while financial stocks fell. For regular investors, this means the market may not be as strong as it looks, and those hot stocks could be risky. The report also notes that long-term government bonds and gold rose, oil fell, and Bitcoin surged. Worth a read because it warns against being fooled by the overall market gain and reminds you to check if your own investments are too concentrated in a few popular stocks.
The first quarter of 2023 saw strong market performance, but panic triggered by the collapse of Silicon Valley Bank and Signature Bank in early March caused the market to give back most of its gains. The U.S. government acted swiftly to guarantee all deposits at these two banks, though it did not pr
This chapter reviews the overall performance of the U.S. financial markets in the first quarter of 2023, with a focus on the divergence among various asset classes (stocks, bonds, commodities, cryptocurrencies) amid the banking panic triggered by the failures of Silicon Valley Bank and Signature Bank. The report notes that despite widespread expectations of a recession in the fall and the banking crisis potentially ending hopes for a "soft landing," the stock market showed resilience at the end of the quarter.
The author's core judgment is that the market rebound in the first quarter of 2023 was highly concentrated and fragile, driven primarily by the sectors that fell the most in 2022 (such as information technology and telecommunications) and growth stocks, while the financial sector experienced a sharp decline due to the banking crisis. The author implicitly argues that the sustainability of this rebound, led by a handful of mega-cap growth stocks, is questionable given recession expectations and the risk of a credit crunch.
Comparative Data Table:
| Asset/Index | 2023 Q1 Return | Notes |
|---|---|---|
| Nasdaq Composite Index | +17.0% | Significantly outperformed |
| S&P 500 Index | +7.5% | Benchmark |
| Dow Jones Industrial Average | +0.9% | Worst-performing major index |
| Russell 1000 Growth Index | +14.4% | Representative of growth stocks |
| Russell 1000 Value Index | +1.0% | Representative of value stocks |
| Russell 2000 Small-Cap Index | +2.7% | Representative of small-cap stocks |
| Information Technology Sector | +21.8% | Strongest sector |
| Financial Sector | -5.6% | Weakest sector |
| Long-Term U.S. Treasuries | +6.6% | Bond rebound |
| WTI Crude Oil | -5.7% | Energy weakness |
| Bitcoin | +71.3% | Strong cryptocurrency rebound |
This chapter does not mention specific companies, focusing instead on indices and sectors. The asset classes involved include:
1. Beware of Market Concentration Risk: Gains in the first quarter were highly concentrated in a few mega-cap growth stocks in information technology and telecommunications, while the decline in the financial sector suggests systemic risks have not been eliminated. Investors should monitor portfolio concentration and avoid overexposure to sectors that may be experiencing a "dead cat bounce" after their 2022 plunge.
2. Balance Defense and Offense Amid Recession Expectations: The report implies that recession expectations (in the fall) and banking credit tightening (second-order effects) are key risks. In this context, the rebound in long-term U.S. Treasuries offers a safe-haven opportunity, while persistent weakness in the financial sector may signal broader economic slowdown.
3. Style Rotation May Not Yet Be Imminent: Growth stocks have significantly outperformed value stocks, but if a recession materializes, value stocks and defensive sectors (such as utilities and healthcare) could regain relative advantage. Investors should assess whether current growth stock valuations have already priced in future earnings expectations.