Monday Morning QB - Preview
Monday Morning QB Preview - March 29, 2021
Winners & Losers: Let the Great Tug of War Begin
On one side of the rope we have a vaccine, dovish Federal Reserve, and a new U.S. Congress hell-bent to embark on the greatest spending spree since the New Deal. On the otherside there's valuations teetering on ludicrous, talks of 1970's style inflation, and deficits as far as the eye can see. Give me a couple cocktails and tell me to pick a side and I, along with many others no doubt, would have no problem making a passionate case why this new bull market is either just getting started or destined to die a most painful death.
The truth probably lies somewhere inbetween but when looking at market action over the past week it is clear that investors are struggling with the same data. Whether simply looking at the daily returns of broad asset classes or relative returns between small caps and large caps, value and growth or cyclical and defensive companies... there's a clear tug-of-war at play!
This week in "Winners & Losers" I will try to highlight through the lens of ETFs some examples where we see the biggest battle lines being drawn.
Daily Returns of the Nasdaq 100 (QQQ)
Follow the Flows: Diamond Hands
The litany of reasons I've been so mesmorized by the Reddit/WallStreetBets rise to fame extend from pure curiousity to legitimate research (yes, I've been impressed with many of their takes) to simple entertainment but the biggest phenomenon I've been most flabbergasted by is the concept of diamond hands. For those of you hiding under rock and not familiar with this term, Urban Dictionary's top definition reads: "Fortitude in continuing to hold an extremely risky financial position. This fortitude may take the form of either refusing to sell a badly losing position (waiting for it to recover while risking even larger losses), or refusing to sell a highly profitable position (waiting for even greater gains while risking the loss of earlier gains)."
Inside ETFland nowhere can this new boom or bust approach to investing be best visualized than within the growing space of thematics. The question of course is can it last?
This week in "Follow the Flows" I will look at how thematic ETF flows are holding up in the face of drawdowns that might even make the most ardent purveyors of the diamond hands method queasy.
Monthly Flows of popular ARK Invest ETFs
Thematic Spotlight: Wanna Get $AWAY?
I know I've been doing it! Whether simply to take my mind to a different place or becuase the vaccine is close to making travel a reality again... more and more I find myself logging into my favorite travel app to explore all the places to go.
Whether you're looking for some new apps to try or maybe looking for an outside of the box, and asset lite, way to invest in the potential explosion of travel that's on the horizon... this week's "Thematic Spotlight" has you covered: ETFMG Travel Tech ETF (AWAY)
Weekly Rant: Gamified!
There's zero shortages of takes regarding the explosion of day trading among individual investors. Opinions vary widely with some saying it's great to see so many new investors coming to the mix while others warn of the dangers. But regardless of opinions, one thing that I can't stand is the idea that it's ok to hop a plane to vegas or gamble on a ping-pong match via a sporting app but it's not ok to take a flyer on a stock. At least with the latter, the house isn't charging a 10% juice!
In this week's rant I will explore the amazing growth of online gambling and share my two-cents to why I think day trading, while not a great strategy for retirement, offers many more long-term positives. Full disclosure: I'm in favor of both!