Week 48 - $921.96
Stocks prices continue to plummet from a major selloff last week, with technology stocks leading losses.
Total Report (Since October 11th, 2019)
Positive Performing Sectors
1. Consumer Discretionary (+38.66%)
2. Materials (+37.34%)
3. Industrials (+19.14%)
4. Consumer Staples (+18.72%)
5. Healthcare (+7.98%)
Negative Performing Sectors
6. Financials (-4.13%)
7. Communication Services (-16.41%)
8. Real Estate (-17.26%)
9. Utilities (-17.41%)
10. Information Technology (-17.48%)
11. Energy (-37.07%)
1. Consumer Discretionary (+38.66%)
2. Materials (+37.34%)
3. Industrials (+19.14%)
4. Consumer Staples (+18.72%)
5. Healthcare (+7.98%)
Negative Performing Sectors
6. Financials (-4.13%)
7. Communication Services (-16.41%)
8. Real Estate (-17.26%)
9. Utilities (-17.41%)
10. Information Technology (-17.48%)
11. Energy (-37.07%)
Weekly Report (September 11th, 2020)
Positive Performing Sectors
1. Consumer Discretionary (+3.16%)
2. Materials (+0.94%)
Negative Performing Sectors
3. Healthcare (-0.80%)
4. Industrials (-0.80%)
5. Consumer Staples (-1.04%)
6. Communication Services (-1.40%)
7. Utilities (-2.25%)
8. Information Technology (-2.95%)
9. Real Estate (-4.10%)
10. Financials (-4.12%)
11. Energy (-5.23%)
1. Consumer Discretionary (+3.16%)
2. Materials (+0.94%)
Negative Performing Sectors
3. Healthcare (-0.80%)
4. Industrials (-0.80%)
5. Consumer Staples (-1.04%)
6. Communication Services (-1.40%)
7. Utilities (-2.25%)
8. Information Technology (-2.95%)
9. Real Estate (-4.10%)
10. Financials (-4.12%)
11. Energy (-5.23%)
GICS Sector Performance Ratio - Balanced: From 4:7 (36.36%) to 2:9 (18.18%)
Review
Volatility has become the norm this year, driven largely by the dramatic impact the coronavirus has on both the global economy. Subsequently, the lack of progress on government stimulus and the ever-growing number of rising cases has fueled increasing uncertainty of a timely recovery.
Is this a sign of a second bear market, or is this merely a setback to the current recovery bull market? One key factor to take note of is the sudden lack of confidence in tech stocks that led the selloff during the past few days. During the height of the pandemic, tech stocks became safe haven assets for a highly volatile economic environment. Tech stocks did not require in-person employment to conduct business, with the benefit of having nearly all of their business conducted remotely. Furthermore, the lockdown orders garnered a greater demand for remote technology to cater for products and services that would otherwise be delivered in-person.
However, as the stock market is forward-looking, this selloff in tech stocks might indicate a shift in interests. Investors sought to take advantage of the surge of valuation in tech stocks during the pandemic, when demand would be highest for their respective businesses. With the crisis nearing a close to this year, it would be reasonable to assume that these investors would cash out their positions to take advantage of the hard-hit, now-undervalued stocks that they would have normally invested in under normal circumstances. Thus, this might be a clue to further confidence that there will be a recovery in the future.
Yet, it is too early to tell if this is the case. Should further pullback be seen in the next coming weeks, it is not too inconceivable that investor confidence in an economic recovery will crack, and a second stock market crash materialize.
Is this a sign of a second bear market, or is this merely a setback to the current recovery bull market? One key factor to take note of is the sudden lack of confidence in tech stocks that led the selloff during the past few days. During the height of the pandemic, tech stocks became safe haven assets for a highly volatile economic environment. Tech stocks did not require in-person employment to conduct business, with the benefit of having nearly all of their business conducted remotely. Furthermore, the lockdown orders garnered a greater demand for remote technology to cater for products and services that would otherwise be delivered in-person.
However, as the stock market is forward-looking, this selloff in tech stocks might indicate a shift in interests. Investors sought to take advantage of the surge of valuation in tech stocks during the pandemic, when demand would be highest for their respective businesses. With the crisis nearing a close to this year, it would be reasonable to assume that these investors would cash out their positions to take advantage of the hard-hit, now-undervalued stocks that they would have normally invested in under normal circumstances. Thus, this might be a clue to further confidence that there will be a recovery in the future.
Yet, it is too early to tell if this is the case. Should further pullback be seen in the next coming weeks, it is not too inconceivable that investor confidence in an economic recovery will crack, and a second stock market crash materialize.
Last Week's Update (September 4th, 2020)
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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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