Last year, the theme was mega cap technology at the expense of everything else. Since my “pound the table buy bottom” October 30th, we have had a complete reversal of fortunes. Small caps have led the indices. Cyclicals like banks, energy, industrials, transports and materials finally sprung to life. Bonds became as hated as they were loved.
It’s really quite fascinating how the markets value things differently in different climates. Investors who get married to a particular theme or stock are typically oblivious to what is going on around them. They usually believe nothing is wrong and their theme or stock is just experiencing a short bout of weakness. These days, that should be called The Apple Syndrome. Apple has become the single most important and cult stock of this century. I have heard time and time again from investors that it’s outpeformance will definitely continue and it belongs as a perma-hold in portfolios.
Since August, the landscape has changed. Apple and its brethren have become laggards or underperformers which is my theme for at least the first half of 2021. Put a different way, the group went from buying weakness to selling strength until proven otherwise.
While growth and technology are taking a breather, the rest of the market which has been largely ignored and unloved is shining. The old, stodgy Dow Industrials look like a tech index at new highs along with the S&P 500, S&P 400 and Russell 2000.
