It’s a cycle-To The Moon - Tiger Brokers Online Investing Community - To The Moon

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ChrisAng
2021-03-23

It’s a cycle

What investors have learned one year since the stock market bottomed

It’s the anniversary of the big drop: What’s changed? Federal Reserve Chair Jerome Powell and Treasu

What investors have learned one year since the stock market bottomed

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ChrisAng
·2021-03-26
Cycle?
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We will not let the corporate bond market implode.’ And that had a huge effect on confidence.”\nChris Murphy, co-head of derivative strategy at Susquehanna, also credited science, which is not usually a factor in stock rallies: “The other good news is that this felt like a temporary thing, depending on getting a vaccine, whereas no one was sure how long the Financial Crisis was going to last.”\nThe Fed’s largess shows up in stocks\nWhile all 11 sectors of the S&P are well off that March 23 low, the biggest movers are those sectors that were the most direct beneficiaries of the Fed and Congressional largess: small caps, commodities, and cyclicals like Transports and Industrials, what has come to be known as the “reflation trade.”\nMajor sectors since the bottom: reflation rules (since March 23, 2020)\n\nRussell 2000 up 126%\nTransports     up 108%\nBanks            up 107%\nMaterials          up 93%\nEnergy            up 91%\nIndustrials       up 90%\n\nWhile Technology has also done well (up 85%), consumer sectors have greatly lagged the reflation trade because those stocks benefit less from the “reopening” of the economy.\nDefensive sectors lag the recovery (from 3/23/20 low)\n\nHealth Care         up 47%\nConsumer Staples up 32%\nUtilities                   up 30%\n\nWhat investors are really invested in: Rapid change\nStill, looking at returns since the bottom shows an even bigger trade than reflation: call it the “rapid change trade.”\nInvestments in clean energy, online retail, lithium/batter, 3D printing, cyber security, have all exploded in the last year.\nThe “rapid change” trade? (from 3/23/20 low)\n\nClean Energy (PBW)   up 324%\nOnline Retail (IBUY)     up 303%\nARK Innovation (ARKK)  up 231%\nLithium/Battery (LIT)        up 217%\n3D Printing (PRNT)          up 166%\n\n“Investors are betting that Covid is speeding up a tech transformation of the home and the workplace...so investing in change is definitely a theme,” said Murphy.\nStill, it seems a bit strange. You have the old school energy, brick and mortar, and industrials all rallying, and at the same time you have the high-tech, more speculative “rapid change trade.”\nCan you have both? “Over time, one will prevail over the other, but right now, circumstances are such that there is room for both,” Steve Sosnick from Interactive Brokers told me. “Think of all the new investors that have come into the market in the last year. The new money has gone into that thematic tech.  That’s what happened in the late 1990s: a whole new crop of investors came in and were interested in tech.  The old school investors aren’t comfortable chasing that trend.”\nStill, betting on everything speeding up also seems a safe bet for Jim Besaw, chief investment officer at GenTrust, who is one of many observers noting that the pace of change, the pace of trading, the pact of everything seems to have sped up in the last year: “Everything we previously believed would take months to happen now was going to happen in a matter of days/hours.”\nYellen and Powell\nWhat will Powell and Yellen say about the lessons learned from managing the Covid crisis?\nWhile Sosnick expects a wide discussion about inequality and the K-shaped recovery, he also expects a vociferous defense of going big with stimulus: “The Republicans I think will argue going big was right in the beginning, but did we really need to ‘go big’ now, with this latest stimulus, when we are more likely closer to the end than the beginning?”\nCecchini, who is writing a book about the fiscal and monetary policy response to the pandemic, hopes Congress will push back on the increasingly aggressive behavior of the Fed during these crises.\n“There are situations where a coordinated fiscal and monetary response is warranted,” he said.\n“But if you are going to have these kinds of coordinated efforts in the future, there needs to be a more explicit involvement of Congress. There should be more oversight of the Fed when they resort to these kinds of big, broad programs.”","news_type":1},"isVote":1,"tweetType":1,"viewCount":648,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":10,"xxTargetLangEnum":"ORIG"},"commentList":[{"id":3891196,"commentId":"3891196","gmtCreate":1616758534531,"gmtModify":1680781843205,"authorId":3560411692170753,"author":{"id":3560411692170753,"idStr":"3560411692170753","authorId":3560411692170753,"name":"ChrisAng","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":353527061,"objectIdStr":"353527061","type":1,"supId":0,"supIdStr":"0","prevId":0,"prevIdStr":"0","content":"Cycle?","text":"Cycle?","html":"Cycle?","likeSize":0,"commentSize":0,"subComments":[],"verified":10,"allocateAmount":0,"commentType":"invalid","coins":0,"score":0}],"hasMoreComment":true,"orderType":2}