Markets stocks

Gods Don’t Bleed (But Albert Edwards Isn’t So Sure)

Don't doubt the gods. That was the lesson learned over the summer of our discontent, when the pandemic exacerbated already entrenched trends favoring a wholesale digitization of the human experience. The likes of Amazon, Apple, Facebook, Netflix, and Google, benefited handsomely from lockdowns which made their services even more indispensable than they already were. But that's not all. Their shares were also buoyed by the extent to which pandemic effects reinforced the "slow-flation" macro regime and attendant duration infatuation in rates, to which the fate of secular growth stocks is tethered. As if this perpetual motion machine needed any extra fuel, a retail options frenzy and an institutional pile-on, turbocharged things, leading to a blow-off top (of sorts) in late August. Of course, part and parcel of the market's love affair with big-cap, US tech is down to revenue and profit growth -- who can grow the top- and bottom-line in a world where there's no growth? Well, big-cap, US tech, that's who. SocGen's Albert Edwards revisits this in his latest, out Thursday. "Although equities have not de-rated in absolute terms in the US, the aversion to earnings cyclicality in fav
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4 comments on “Gods Don’t Bleed (But Albert Edwards Isn’t So Sure)

  1. Vlad is Mad says:

    That was super interesting tail risk to consider. Growth stocks are not growth stocks, they are cyclical stocks, because clearly one thing is clear that these are Pandemic stocks, they are rewarded for that, but they are also assumed to benefit in growth challenged world, but if that is a big fat lie, then maybe not, that would shock for sure, excellent idea to ponder for a resident contrarian.

  2. Mr. Lucky says:

    As Neil Gaiman pointed out in American Gods (and you implied in your linked piece above) humans invent their gods and like Tinkerbell, they only live as long as people believe in them. Thor and Baal are gone. Our investment and money gods are believed in for now but things can change. After COVID becomes less of an influence in two or three years what will happen to Amazon and other gods? Up? Down? Stay the same?

  3. Ria says:

    Investors latch onto themes. They will keep buying into the themes until they no longer work in the real world. Then they sell. Today’s theme is that tech stocks are secular growth vehicles and don’t hit rough patches like any other sector. In the long run, tech really is a growth sector- but prices have outrun reality in my view, and tech hits slow or no growth patches just as any sector does. And competition or regulation will also be a limiting factor. Caveat emptor.

  4. os72 says:

    FANAMA reads much better than FAAANM 🙂

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