. It is amazing what the media considers premium content
.Beware the click bait and for heaven’s sake don’t spend your good money on it
Our headline for this post is pretty negative, save the part about “strong market internals” which brings up the rear. I’m pretty sure that was intentional. The part that lured me in was “patient investors punished.” I’m a patient investor (sometimes too patient — holding the wrong stock too long) and the last couple of months have not been punishing for me. My question is “who are these patient investors?” I came to find out that Santoli’s “patient investors” were people who either sold stocks during the March panic or had sold much earlier looking for an opportunity to buy back at more reasonable prices. Because the snap back from the lows was so rapid these “patient ” ones were not able to take advantage of the opportunity created by COVID19.
Now you have investors (patient) looking from the outside in posing the question (I believe the rookie question), “Why is the market continuing shrugging off all the bad news?”
There is a simple answer and Santoli as a long-time market observer should have pointed it out but he doesn’t.
The market is forward looking mechanism. February into March the market was being pummeled by the ‘what ifs’ of the Covid19 pandemic. By the end of March, based on all available information at the time the market was beginning to price in life after Covid19. The biggest problem for most, including the pundits, is that they continue to be paralyzed by the ‘what ifs’. I wrote about this May 16(“Stock Market at The Crossroads — Buy, Sell or Hold”)
“The Dash for Trash”
我认为，“垃圾”，在Santoli的作品的情况下，是什么价值，中小盘或小盘成长，什么罗素2000ish。这种口头不屑是事实，标准普尔500指数和纳斯达克是那里的行动已经在过去的五年，同时R2K是下降13.5％，从两年前的历史最高水平的反映（1742.09-8 / 31/18）。我自己的一些这个所谓的“垃圾”，我会向你保证，因为分叉的市场，我们已经看到在过去的几年中，它已成为great trash以合理的价格。
For the institutional investor with billions to invest, small and mid-cap stocks are labor intensive. And they are very difficult to own in a meaningful way. If you have $100 billion to manage and your maximum position can only be 5% of your $100 billion and you can own no more than 5% of any given issuer’s, stock a $100 billion market capitalization stock is as small a company as you can look at. If there is great $5 billion company out there you could only own at max $250 million worth. If that stock tripled it would add only 75 basis points to the value of your portfolio. It is hard to justify the effort to research the investment unless you saw much more upside.
The nice thing here is that there are a lot of smaller funds that can buy smaller cap growth and value where the performance would make a difference. In recent times they may have focused on the shiny objects known as the FAANGs (FB, AAPL, AMZN, NFLX and GOOG) plus many other Tech/Momentum stocks. This is where the action has been and why the cap-weighted indices, S&P and NASDAQ, so outperformed.
If you have money to put to work, if you missed this move, I would suggest you remember that Apple was once considered ‘trash’. I believe it is time to take the road less traveled and head to the dumpster to prospect for fresh ideas. Obviously there are cyclical reasons these stock have begun to outperform but their long-term underperformance and the fact that nobody seems to care makes them interesting. It really appears to me to be one of those times when The Street is leaning in one direction (a la the ‘tech Bubble) and those leaning against it could be handsomely rewarded.