A Dip Worth Buying (Apparently)

A Dip Worth Buying (Apparently)

I'm not sure I'd call it a "dip," but everything is relative in a world where, barring pandemics and self-inflicted wounds (e.g., pushing US real rates beyond 1% and then saying the words "long," "way," "from," and "neutral" in that order, out loud, around people with working ears), benchmarks only go up. But proper "dip" or not, consider it bought. Whatever "it" was. US equities had their best week since November, just a week on from their worst week since October. To say small-caps had a
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3 thoughts on “A Dip Worth Buying (Apparently)

  1. It was an interesting week. The Russell 2K Growth did a little better than the R2K Growth, R2K did much better than SP500. Obvious “pandemic recovery” names (the ones often cited in media, e.g. airlines) did very well, less obvious pandemic recovery names (equally direct fundamental exposure to pandemic ending, but seldom mentioned in media) were mixed, while “economic recovery” names (exposure to broad economic recovery beyond the short term pandemic) were just okay. Nasdaq (NDX) and tech were strong, with good earnings were treated like good earnings (over-generalizing, “tech” and “good earnings” are sort of synonymous right now.)

    I guess this is what it looks like when you get oversold chart rebound, hedge fund re-grossing, short squeeze prospecting, vol target fund increasing equity, positive news on Covid/vaccines, “reflation” talk, earnings reports and fiscal stimulus progress ALL IN ONE WEEK.

    Hot damn – wait, shouldn’t all that set up a positive market environment for more than just one week?

    The easiest way to sound smart, wise, and insightful about the markets is to be some flavor of bearish. That’s natural, I think, because all the bullish broker blather that gets shoved down investors’ collective throats begets a contrarian reaction among critical thinkers.

    All that said, I have a hard time not being bullish right now. Not so much on the broad indices (the SP500 type), but it feels like there are so many opportunities for stockpickers that, if that’s what you like doing, you’re going to be having fun.

    2020 and 2021 are going to be the most opportunity-rich environment for stockpicking that we’ve had since, well, 2009 and 2010.

    I fear that in 2022 we will revert to the numbing correlated large cap-led markets of much of the twenty-teens. Maybe that would be a blessing, because the likely alternative is a soul sapping generational bear market. I just added that last sentence to sound smart, wise, and insightful.

  2. Russell at start of Friday RTH ws up 14% YTD- That’s pretty good for one whole year! Wait, it ended higher on the day. Taking YTD total ~16%. Pain trade been short bonds, long small caps. If you pairs traded that since Nov election, you could be up handsomely.

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