The recent run-up on tech stocks has some of the same ingredients as round one:
- Retail investors flush with US Treasury cheques.
- US yields in a corrective phase.
- COVID rebounding in many places.
So, off it goes in the US and Australia:
There are 1078 words left in this subscriber-only article.
Start your free 14-day trial today!
Alas, there are key differences this time around. The Bear Traps Report points one out:
Here’s the truth of it. FAANGS are leading this rebound and are trading at record highs because they have real earnings. Frankly, most are more like quality than growth and can benefit from factor rotations into either cyclicals or defensives. Besides, relative to the wider market of zero earners, they are infinitely cheap:
Profitless tech is not doing anywhere near so well in the rebound:
For mine, this new leg in the great tech lunacy is a bear market rally as US yields consolidate, which I have been expecting, though, as usual in this accelerated cycle, it has arrived early:
The moment yields begin to rise again, and I still think that they will in the next few months, this little tech bounce will disappear like water on the mountainside.
If not, water can run uphill until yields do rise.