The other day, Tom Lee noted in a Macro Minute video that Granny Shots is our core stock portfolio -- the best of the best. Since its inception in 2019, the list has outperformed the benchmark S&P 500 by a wide margin, and it’s outperforming again in 2023 as technology stocks continue to drive major averages higher. Consider Granny Shots performance:
- +8,320 bps vs. S&P 500 since inception
- +266 bps vs. S&P 500 YTD
- Up 17% YTD on an absolute basis
This year is “on track to be one of the best years for Grannies, ever, looking to be even better than 2021,” Lee noted last week. He wasn’t mincing words, as the Granny Shots have centered on innovation and artificial intelligence to deliver superior returns to our members for more than four years. Notice AI as one of our inaugural themes back in May 2019:
The bulk of the outperformance has come from a sliver of the market — all large tech companies that generate cash, own a competitive advantage in their space, and innovate in extraordinary ways. The group of gunslingers dominating the tech rally since last October’s lows have been dubbed as the “Magnificent Seven” -- Nvidia (NVDA 0.47% ), Tesla (TSLA -3.78% ), Meta (META 3.17% ), Apple (AAPL -0.21% ), Amazon (AMZN 0.79% ), Microsoft (MSFT 0.19% ), and Alphabet (GOOG 1.10% ). All seven are Granny Shots, and Lee has been recommending nearly all of them for years, well before “artificial intelligence” became the buzzword it is today. Our macro work has always focused on the “long game,” trends and themes that could play out over multiple years.
As you’ll see below, many of those names are up more than four-fold since Lee added them to the portfolio, despite sizable drawdowns in 2022. Today, Lee notes that many recent college graduates still aspire to work at the big tech companies, which employ some of the country’s brightest minds in computer science, engineering, and software. And while some onlookers argue their valuations are now stretched, Lee reminded investors of one of famed Fidelity manager Peter Lynch’s core investment principles: You have to pay up for quality.
“As Peter Lynch would say, you don't want to be valuation-sensitive when you buy great companies,” Lee said this month. “There isn't really another Apple out there or another Nvidia. As long as they're central to what's happening, especially AI or the consumer, I don't know if you want to say rate hikes will kill their stories.”
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