Earlier this year in his 2022 Annual Report, Prem Watsa warns investors to be careful (caveat emptor), and to remember that human nature has not changed at all over all these years. Here’s an excerpt from the report:
I have mentioned to you that the renaissance of value investing may have begun in 2021: it has carried forward
through 2022 and now into 2023.
Tech stocks, cryptocurrency and other speculations have come down significantly from their highs – in spite of the rebound in the last few months.
The table below shows you that even the FAANG stocks and Microsoft have come down significantly from their highs. Companies like Zoom and Shopify that hardly make any earnings have come down very significantly.
The crash in the dot.com bubble in 2000 may be a guide: the NASDAQ dropped 50% from its high in 2000 and then dropped another 50% in the next two years.
Companies that had no earnings mostly disappeared (a major exception being Amazon) and even Microsoft did not reach its 2000 high price of $60 for another 16 years. Caveat emptor! As Ben Graham said years ago, human nature has not changed at all over all these years.
| Company | Market Cap
(March 3, 2023) |
2021 High Stock Price | Stock Price at
(March 3, 2023) |
% Decline from High |
| ($ billions) | $ | $ | ||
| Alphabet | 1,202 | 151 | 94 | -38% |
| Amazon | 972 | 189 | 95 | -50% |
| Apple | 2,390 | 182 | 151 | -17% |
| Meta | 480 | 384 | 185 | -52% |
| Netflix | 140 | 701 | 315 | -55% |
| Microsoft | 1,900 | 350 | 255 | -27% |
| Zoom | 21 | 452 | 71 | -84% |
| Shopify | 61 | 176 | 43 | -75% |
| 18 | 90 | 26 | -71% | |
| Tesla | 626 | 414 | 198 | -52% |
| Ark Innovation | 8 | 160 | 40 | -75% |
| Lemonade | 1 | 188 | 16 | -92% |
| Palantir | 18 | 45 | 8 | -82% |
| Bitcoin | 68,992 | 22,241 | -68% |
You can read the entire report here:
Fairfax Financial Annual Report 2022
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