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 In The Lonely Bull

Sell growth, buy value; lighten up on value, buy growth. That is exactly what has happened over the past few weeks and periodically since September of last year. Seems like a merry go round, thankfully it has occurred in a generally advancing stock market, more like a ratchet process with more advance than retreat. In some sectors, however, little progress has been made. Many large technology companies’ valuations peaked in August and September of last year. Others have made progress. Stock selection has become ever more important.

Interest rates have come back into focus for investors. The recent advance from under 1% to over 1.6% in short order caught many by surprise. It is not that 1.6% is too high for this economy, it was more the fear that the advance would keep going. In time, it will, but a pause at current levels is a relief. That is what brought buying back.

Expect more of the same! An irregular advance with periodic selloffs that seem scary at the time. However, with fiscal stimulus, still relatively low interest rates, a foreseeable end to the pandemic in the U.S., further advance is almost baked in. Some of what could cause selling might be a new difficult to control variant of Covid-19, a bout of inflation, negative macro events (especially with China), and of course the true surprise. The incredible liquidity in the economic system is likely to overcome any of these, stay steady, my friends.

The Lonely Bull

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