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Generals leading, soldiers not following...

Updated: Oct 31, 2023

“Beware of times when the generals lead but the soldiers don't follow.”

In rate parlance, the Fed is circling in an attempt to land softly but the plane is running out of fuel. Its amazing but good to think that the Russell 2000 growth index is roughly flat for the year versus a 28% gain in the Russell 2000 value index.

The Nasdaq is just 2.6% from all-time highs while only 35% of its members are above 200-day moving average. At the same time Apple is <5% away from a $3T valuation, the Market Cap of FANGMAN has hit a fresh ATH at $11.2tn.

US large-cap growth stocks have done incredibly well, thus grabbing headlines and the popular imagination, the US small-cap growth space has actually had a really tough time.

Nothing crystallises this bifurcation more than Apple, just think Buffets $31Bbn Apple investment is now worth $159 Bn.

With dividends, the position has compounded at 36% a year for ~5.5 years. Ark claims an

extraordinarily hyperbolic expected 40% per year for the next 5 years.

Cathie can but dream, the ARK is sinking. (SARK US is the ARK-short). In fact, the relative performance divergence between US large-cap growth stocks and US small-cap growth stocks is now unprecedented.

Zooming in further, it can be seen that after their recent pull-back, US small-cap growth stocks have given back about a decade's worth of outperformance.

All most care on is the Nifty 10! Alphabet, Meta, Microsoft, Apple, Nvidia, Amazon, Salesforce, Tesla, TSMC, Visa.

As to where we are today: The market continues to recover from a good internal oversold condition.

The 2 areas of undeniable strength still here are semiconductors and homebuilding related. I have semiconductor exposure in size, not builders or infrastructure related and am kicking myself for NOT owning a stock like Martin Marietta/MLM!

I also like how CVS is behaving. As with INFL ETF, more focus I’m sure after todays CPI Inflation number.

Finally I have talked in the last couple of months about Long Portfolio Insurance: XLP ETF and a name like Colgate/CL US and even COCA COLA/KO US still enticing for long-only crowd. Utilities also worth a flag as are waking up too!

Finally another to watch, It’s rare, but every once in a while, an actual real business goes public through a SPAC. PRPB is merging Getty Images, if this isn’t an NFT play, what is. I know this well, follow the family!

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