FINSUM + Magnifi: This Major Bank Just Warned Investors to Dump Big Tech Stocks
(September 2020)
With the decline in big tech stocks a month ago and increasing breadth across indexes in the last couple of weeks, there has been increasing concern about the risks associated with tech megacaps. Worries about holding FAAMG have lost some of their potency with investors. That is a mistake, according to Societe Generale, who has just warned investors it is time to cash in their chips on those stocks. SocGen reminds investors that by the end of August, technology comprised 64% of the S&P 500, close to the 70% reached in the early 2000s tech bubble. They argue that with the economy healing and potential increases for regulation in the sector, it is time to look elsewhere.
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FINSUM + Magnifi: Why Gold is a Good Bet Right Now
(October 2020)
Gold is looking like a good bet right now. The metal has had a very strong year after almost a decade of lagging, and it is no surprise—global calamities are the perfect environment for gold appreciation. But we are clearly past the initial panic of the pandemic, so what is the current case for the shiny metal? The answer is that the roadmap looks very positive. Two tailwinds appear to be in place, one in the short-term, the other in the medium- to long-term. Firstly, the election is likely to cause a great deal of uncertainty and volatility which gold will probably benefit from. Secondly, as a new stimulus package draws nearer, the credit quality of US Treasuries is causing some anxiety. Gold has been rising alongside this fear, with a 1.8% gain yesterday as investors increasingly believed a stimulus package would be passed.
FINSUM + Magnifi: Morgan Stanley Says Now is the Time to Go All-in on Stocks
(October 2020)
In an unusually bullish opinion, one of Morgan Stanley’s best-known and most bearish strategists—Andrew Sheets—has just released a very bullish outlook. The bank’s chief cross-asset strategist is telling investors to dump their defensive positioning in large tech and long-dated Treasuries and switch to risk-on asset like small caps. Sheets contends—in contrast to many other analysts—that growth will continue unabated, saying “The glass half-full view of stimulus talks is if you don’t get it today you’ll get it tomorrow from whomever wins the election”. He points to the recent outperformance of cyclical and value stocks as evidence that investors are getting more bullish.
FINSUM + Magnifi: Why the Volatility Isn’t Going Anywhere
(September 2020)
For the last several weeks the market has been mired in a rut of high volatility, mostly to the downside. Investors seem to have the impression that it will abate at any moment, but the reality is that a calming seems unlikely. This is for two reasons. Firstly, we are nearing the end of the month and quarter, and stocks are still up significantly on the quarter. This means many investors are likely to take some gains and rotate into fixed income—a negative for equities. Secondly, anxiety about the election seems to be rising, which should keep the markets volatile.
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FINSUM + Magnifi: This Volatility is the Second Leg of a Bear Market say Analysts
(September 2020)
The volatility and losses over the last four weeks have been more severe than most imagined they would be. What started as the market “taking a breather” has morphed into very significant losses and a market teetering on the brink of returning to a bear market. Now a chorus of Wall Street analysts are saying something similar: this may indeed be the next phase of a bear market. Aside from the short-term warning sign of large investors taking profits, the long-term driver of the next phase of a bear market might be the rise of deflation. With so many workers losing their jobs, and automation taking over in many areas, deflation seems quite likely. If that happens, an extended bear market reaching into 2021 may take hold.
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