Twenty years after the Tech Bubble decimated investors' savings, there are echos of it in the S&P 500. Reuters' Noel Randewich and lewis Krauskopf report: At the height of the dot-com era, technology stocks accounted for over 35% of the S&P 500’s value. Today, the tech sector accounts for about 25% of S&P 500 market capitalization, according to Refinitiv Datastream. But combining the tech sector with the communications sector, which includes Internet-related companies like Alphabet, Facebook and Netflix (NFLX.O), the group accounts for 35% of the S&P 500. There is growing … [Read more...]
You May Be Feeling Uneasy with Growth Stocks: You’re Not Alone
Some investors "could take Apple’s warning on Monday that it won’t meet revenue expectations for the current quarter as a sign that the growth stock run is over," notes Gunjan Banerji in The Wall Street Journal. Over the long-term, he continues, value stocks have outperformed growth stocks. He writes: As they grapple with a murky outlook, investors will turn their attention this week to the Fed’s latest meeting minutes and fresh reads on manufacturing. Meanwhile, results from Walmart Inc. on Tuesday will offer new insight into the health of the consumer. The run in value stocks “was short … [Read more...]
“Mr. Smart Guy’s” Bullish Signal for Stocks
This is the time of year when you start figuring out how much you support Uncle Sam, literally. As you tally up the numbers, it’s hard not to wonder if you’re paying too much in taxes. Be careful, though, because going down this road leads to thoughts like: “Well, if I just invest in stocks, I’ll avoid taxes, and, if I need to sell, I’ll pay the more palatable capital gains rate.” Don’t get distracted and let “tax planning” ruin your portfolio. Take a deep breath. Look around you and consider your environment and how it relates to your situation. Don’t Let the Wise “Guys” Get in Your … [Read more...]
Investor Exuberance Soars
The signs of investor exuberance are too many to list, but here Bloomberg points out soaring option volume as a sign of excessive optimism. The volume of options has soared to levels where the underlying shares each option contract controls are now almost equal to the total shares traded in the market. Bloomberg's Joanna Ossinger reports: A frenzy of bullish bets on the biggest U.S. tech names is captivating Wall Street and powering equities to all-time highs. It’s also sending waves through options markets. Volumes for contracts tied to single stocks have surged by 77% in the past six … [Read more...]
Are Most ESG Funds Just Tech Funds in Disguise?
At The Wall Street Journal, Akane Otani explains the tendency of ESG Funds (funds focused on investing for environmental, social or governance preferences) to invest in certain types of stocks that may not actually be the best match for the mandate they have been given. The end result may be that these funds are just closet tech funds. He writes: Companies focused on issues that the environmental, social and governance movement has come to be associated with, such as renewable energy, clean water, and racial and gender diversity, are relatively underrepresented among such funds. For instance, … [Read more...]
Are Markets too Complacent about Coronavirus?
The FT reports here that China’s energy executives anticipate a 25% drop in the country’s oil demand. That equates to a 3% drop in global consumption. China accounts for 16% of the global economy and an even larger share of its growth. With the stock market back at an all-time high, are investors being too complacent? Sun Yu, Anjili Raval and David Sheppard write for FT: “The epidemic has dealt a huge blow to our business,” said one executive at a Chinese refinery, who asked not to be identified because of the sensitivity of the issue. An executive at another refinery said that if the … [Read more...]
One More Reason You Shouldn’t Invest in China
The coronavirus is just one more reason you should avoid direct investment in China. Symptoms of a bigger problem are the decisions of the Chinese government to: restrict information on the spread of the virus, deflect blame onto others, and to silence early attempts to alert the public to the problem. In 2012, I explained China’s bigger problem to readers, and why you should avoid the Middle Kingdom as an investment destination: China I have long advised against direct investment in China. Among the many reasons I am bearish on China is the country’s vastly distorted … [Read more...]
Did Amazon’s Value Really Increase $92 Billion in a Day?
If Amazon’s gains hold up through the close, the stock will have added $92 billion to its market capitalization in a single day. That’s the equivalent of adding a 3M, a UPS, or a Lowe’s. Or if you prefer, it's like adding GM, Ford, and Harley, the entire auto manufacturing industry in the S&P 500. Maybe Amazon and its investors have figured out a way to defy the law of large numbers. As for profitability in the core business, that still looks pretty elusive. Bloomberg's Brandon Kochkodin reports: The largest U.S. e-commerce company saw its shares jump by more than 10% after Thursday’s … [Read more...]
Microsoft Beat Wall Street: Here’s How
Microsoft's reported quarterly financial results beat Wall Street's expectations. A big part of the company's successful quarter was an impressive 62% increase in sales for its Azure cloud computing segment when compared to last year. Tae Kim reports at MarketWatch: On Thursday, Bernstein analyst Mark Moerdler reaffirmed his Outperform rating for Microsoft shares, citing the company’s stellar earnings report. He also raised his price target for the stock to $203 from $174. “This was again another strong quarter as Microsoft continues to deliver Commercial Cloud growth as well as growth in … [Read more...]
Is the Stock Market Run Set to Continue? And Should You Care?
The stock market has been on a tear since the Fed announced it would start what has been labeled non-QE QE (quantitative easing) in October. The S&P 500 is up 15% since then. The more speculative Nasdaq is up more than 20% and the FANG+ Index (a new index comprised only of the hottest tech stocks) is up 35%. Envious of the returns in the S&P or Nasdaq? Don’t be. You can’t call yourself an investor today and expect to keep up with either index. Even the S&P has now become way too speculative for investors in or nearing retirement. To keep up with the S&P today you … [Read more...]
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