Executive Summary

  • A 7.5% YoY US Consumer Price Index (CPI) print (vs 7.2% expected) on Feb 10, 2022, heightened the risk that a recession in the US might be increasingly difficult to avoid.

  • An increase in interest rates, quantitative tightening, inflation getting out of control, and continued deterioration of liquidity all happening in one year, in 2022 – the worst possible scenario for equity markets.

  • Near-record high valuations, extreme leverage, and broad deterioration in market technicals are all signaling a warning.

  • Our main assumption is that the main equity markets (except China) have entered a bear market, which will last at least during 2022- 2023. Please read inside for more details.

  • On January 19, 2022, Belgium biopharma giant UCB acquired the Zogenix Inc. for USD 1.9 Bil. (72% premium to Zogenix shares closing price). The company was the largest biotech holding in the Technology of the Future Fund with a 5.3% weight. Searching for acquisition targets in biotech space has been one of the most profitable tactics of the Technology of the Future Fund.

  • Technology stocks might underperform the major equity indexes in 2022 – 2023. We plan to move forward focusing on the following segments in the technology stocks universe: a) disruptive innovators b) compounders c) acquisition targets d) out of favor deeply discounted strategic tech companies.

  • The Technology of the Future Fund had a -9.37% return in January 2022, in line with our closest benchmarks Nasdaq 100 (-7.47%) and Nasdaq Biotech (-13.02%).