Glaring Disconnects And ‘Rage Allocation’

Glaring Disconnects And ‘Rage Allocation’

I suppose we're witnessing a "selloff." Maybe folks are front-running the pullback window. The reason for the scare quotes around "selloff" should be obvious. Although US equities logged a sixth daily loss in seven sessions, record highs on the benchmarks are still within spitting distance. Barring something totally unforeseen, that'll likely remain the case. The acronyms ("TINA" and "FOMO") have quite a bit of explanatory power, despite being unpalatably meme-ish. Virtually no one seems willi
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4 thoughts on “Glaring Disconnects And ‘Rage Allocation’

  1. Buying stocks right now, to me, feels like picking up pennies in front of a steamroller. The daily up-moves are tiny. Only a relatively few names have decent performance. The market is highly concentrated in just those few names. The usual suspects Google Apple etc. All of those have big buybacks.

    So there’s at least one big buyer there that, both has access to huge capital, can issue bonds at any time at a near zero interest rate, has strong cash flows, and is not at all price sensitive. They will keep buying a certain number of billions per month, even if stock is priced at 2x or 3x or 10x it’s long-term multiple. It doesn’t matter. These buyers are not price sensitive. In a certain sense, the entire market is front running those big buybacks.

    TINA is right. This is not a healthy market. This market has been engineered by the Fed, not unlike what’s happening in Japan over the last 20 years.

    Everything is rosey until it’s not. The Fed could announce a change of policy, anytime.

    If the Fed really intends to support markets indefinitely, they should make it official. Otherwise, they risk burning people seriously, when the Fed does finally change policy.

    1. “The Fed could announce a change of policy, anytime.” That plus new taxes are the two biggest political risks facing us at this time, IMHO. The Fed may not want to make a change but they may have no choice, sooner rather than later.

      1. New taxes are a risk? corporations may pay an extra few percentages and maybe are forced to pay above zero? From what I have seen and read, I won’t be affected by any of the proposals.

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