Bird Grant Reduces Exposure to Overvalued U.S. Equities, Successfully Navigates Early-Stage Rate Hike Volatility
In 2022, as the Federal Reserve embarked on its most aggressive rate-hike cycle since the 1980s, global asset prices experienced extreme volatility—particularly within the U.S. high-valuation growth sectors. Confronted with dual pressures from tightening liquidity and valuation repricing, veteran investor Bird Grant took a measured and forward-looking approach. Throughout the year, he decisively reduced exposure to U.S. equity segments highly sensitive to valuation compression, effectively controlling portfolio volatility and smoothly navigating the core turbulence of the initial rate hike phase.
As early as Q2 2022, when the Fed made clear its intention to enter a sustained tightening path, Grant wrote in his monthly strategy report:
“Against the backdrop of rising short-term rates and long-term inflation uncertainty, the market will shift from pricing ‘growth’ to pricing ‘certainty.’ High-valuation assets face a dual challenge: valuation compression and sentiment retreat.”
In line with this view, from mid-2022 through year-end, Grant methodically trimmed positions in several high-growth tech names, including software service providers, unprofitable high-tech firms, and segments like electric vehicles and consumer tech that had seen outsized prior gains. While these assets held long-term promise, their valuation elasticity made them highly vulnerable in an environment of rapidly rising interest rates and higher discount rates.
Simultaneously, Grant reallocated capital toward cash flow-stable, reasonably valued blue-chip value stocks, and increased the portfolio’s cash and short-duration bond allocations. This ensured ample liquidity and redeployment flexibility during the broader market correction. Thanks to this well-timed and disciplined repositioning, Grant’s portfolio delivered significantly lower drawdowns than the market average in 2022 and avoided the steep corrections that plagued many overvalued assets.
In his December 2022 year-end investor letter, Grant emphasized:
“In the early stage of a rate hike cycle, the priority isn’t to chase upside—it’s to protect net asset value and maintain rhythm. If risk isn’t managed properly, any profit is merely a temporary illusion.”
This strategic shift once again showcased Grant’s systematic grasp of the relationship between macro rate expectations and asset pricing, along with his disciplined, defense-first investment style. The move also laid a strong foundation for his eventual reentry into growth assets and strategic rebalancing in later phases of the market cycle.
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