The Hubris Bear Market Has Arrived
US equities skirted what could have been another sizable weekly loss thanks to a manic Friday afternoon rebound, but for anyone who piled into last year's winners on the assumption they'd keep winning, the bear market is here.
The rotation in favor of pandemic laggards is unmistakable. The most obvious manifestation is the outperformance of energy shares and bank stocks. The juxtaposition with the big-cap tech is stark.
The simple figure (below) speaks volumes about the shifting zeitgeist. Cat
I understand selling hubris but I am a little puzzled buying humiliation.
And so the pendulum swings. The last three weeks have been more orderly then may have been.
Tech fire sale in August?
Won’t bother me much.
I remember looking at the charts of TSLA, ARKK and other high valuation uber growth equities at the start of the year and thinking “this is not sustainable.” I made the mistake of placing a put spread on TSLA only to see my premium vanish and it continued to climb, once I closed the spread the stock declined precipitously towards the strike that would have made my trade quite the winner. Anyway, some of the bank and oil company charts are starting to look similarly stratospheric and unsustainable, but I would not dare short anything in this market, I rather risk buying the dip in mega cap, they might underperform for a while but in the end Amazon will still take over the world…
Most Ark and a lot of solar and EV ETFs have Tsla. There’s a nice little daily fixed, 3x leveraged bear etf that’s done very well over the last 10 days. Once all this new margined cash has been rinsed there should be some babies swimming in the old bath water. Tsla is deeply ingrained in the etf world and still has a pe of 961
I prefer tech such as aapl, avgo, msft, googl and even amzn- which can grow in wealthy and also less wealthy areas of the world. Wealthy economies have considerably less inherent population growth than less wealthy nations, so a business than can do well in both arenas is more appealing- especially against the backdrop of a long term trend of a rising global middle class.
When the term “Tech” is used, I am never sure what specifically is meant as it encompasses too broad of a group – including both stocks and stonks.
Why are rising rates good for DVY?