Week 42 - $768.29
New quarterly data for GDP growth displayed the expected downturn since the coronavirus, the sharpest so far, yet the week finished slightly positive with big tech companies leading remarkably in quarterly earnings.
Total Report (Since October 11th, 2019)
Positive Performing Sectors
1. Materials (+18.79%)
2. Healthcare (+18.13%)
3. Consumer Staples (+15.59%)
4. Consumer Discretionary (+12.60%)
5. Industrials (+10.78%)
6. Financials (+3.03%)
Negative Performing Sectors
7. Utilities (-2.50%)
8. Communication Services (-14.53%)
9. Information Technology (-22.00%)
10. Real Estate (-22.32%)
11. Energy (-25.85%)
1. Materials (+18.79%)
2. Healthcare (+18.13%)
3. Consumer Staples (+15.59%)
4. Consumer Discretionary (+12.60%)
5. Industrials (+10.78%)
6. Financials (+3.03%)
Negative Performing Sectors
7. Utilities (-2.50%)
8. Communication Services (-14.53%)
9. Information Technology (-22.00%)
10. Real Estate (-22.32%)
11. Energy (-25.85%)
Weekly Report (July 31st, 2020)
Positive Performing Sectors
1. Real Estate (+4.22%)
2. Consumer Discretionary (+2.52%)
3. Utilities (+2.27%)
4. Consumer Staples (+1.23%)
5. Communication Services (+0.06%)
Negative Performing Sectors
6. Healthcare (-0.31%)
7. Industrials (-1.51%)
8. Materials (-2.64%)
9. Financials (-2.68%)
10. Energy (-4.73%)
11. Information Technology (-8.26%)
1. Real Estate (+4.22%)
2. Consumer Discretionary (+2.52%)
3. Utilities (+2.27%)
4. Consumer Staples (+1.23%)
5. Communication Services (+0.06%)
Negative Performing Sectors
6. Healthcare (-0.31%)
7. Industrials (-1.51%)
8. Materials (-2.64%)
9. Financials (-2.68%)
10. Energy (-4.73%)
11. Information Technology (-8.26%)
GICS Sector Performance Ratio - Balanced: From 8:3 (72.73%) to 5:6 (45.45%)
Review
As the coronavirus crisis worsens and drive a further decline in economic activities from shutdowns, there is one sector within the economy that has managed to weather the storm and even thrive in such environment. The Technology Sector has by far been practically untouched since the beginning of the crisis, and with more people staying indoors and travel dissipating, demand for online services has only grown. This has made investors euphoric on big tech investments such as Netflix, Google, Apple, and many others, believing that such investments would be soundly capable of weathering any economy downturn.
However one should be wary of investing into the Technology Sector purely on this basis. While this particular sector has the greatest potential for growth, and thereby a high return-on-investment, it is also one of the most competitive. The ease of entry and the vast amount of existing competition means consumer confidence and satisfaction are paramount to business in the tech sector. Just as easily as it is to obtain customers to do business with, those customers can easy flock to competitors as soon as the produce or service is not to their liking. Other sectors do not have this emphasis as much as the Technology Sector does, as their inherent business model confines them to the physical limitations of the real world.
Nevertheless, the Technology Sector remains a strong performing sector overall. It is after all the sector in which nearly all technological innovation is derived from, driving both business and consumer activities higher thanks to their ease of use and high scalability. That is why the Technology Sector has been generally centered around growth stocks. Much of a tech business's resources are reinvested to help scale the business further for greater gains, and thus do not focus as much on dividends as more stable sectors such as Utilities and Communication Services might.
It may be best to continue investing in the more undervalued companies outside of Technology, in such case. The coronavirus crisis has taken a major toll on businesses that rely on some sort of foot traffic to keep their operations afloat. If one seeks greater gains from higher passive income, it may be better to invest capital in those assets instead.
However one should be wary of investing into the Technology Sector purely on this basis. While this particular sector has the greatest potential for growth, and thereby a high return-on-investment, it is also one of the most competitive. The ease of entry and the vast amount of existing competition means consumer confidence and satisfaction are paramount to business in the tech sector. Just as easily as it is to obtain customers to do business with, those customers can easy flock to competitors as soon as the produce or service is not to their liking. Other sectors do not have this emphasis as much as the Technology Sector does, as their inherent business model confines them to the physical limitations of the real world.
Nevertheless, the Technology Sector remains a strong performing sector overall. It is after all the sector in which nearly all technological innovation is derived from, driving both business and consumer activities higher thanks to their ease of use and high scalability. That is why the Technology Sector has been generally centered around growth stocks. Much of a tech business's resources are reinvested to help scale the business further for greater gains, and thus do not focus as much on dividends as more stable sectors such as Utilities and Communication Services might.
It may be best to continue investing in the more undervalued companies outside of Technology, in such case. The coronavirus crisis has taken a major toll on businesses that rely on some sort of foot traffic to keep their operations afloat. If one seeks greater gains from higher passive income, it may be better to invest capital in those assets instead.
Last Week's Update (July 24th, 2020)
M1 Finance Platform Referral Link: https://m1.finance/UIl_N9XNA_CO
M1 Finance Dividend Aristocrats 2020 Pie: https://m1.finance/quB1JH2k6
M1 Finance Platform Referral Link: https://m1.finance/UIl_N9XNA_CO
M1 Finance Dividend Aristocrats 2020 Pie: https://m1.finance/quB1JH2k6
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