The past months the focus of the market has been on Tech, to put it mildly. The Nasdaq index has been on a tear and has left the other major U.S. based indexes (S&P 500, Russell, Dow Jones) in the dust.
Year to Date (YTD)
S&P 500 – 1%
Russell 2000 – 14.4% (measures performance of approximately 2000 of the smallest cap American companies)
Rather than rehash all the positive dialog regarding the big 5 (FB, AMZN, AAPL,NFLX and GOOG) and Tesla, we are curious about those sectors/ stocks that have been left behind.
The Financial sector YTD -23%, Utilities sector YTD -10% and Energy sector YTD -39% have all had a tough run in 2020. (I have chosen the SPDR exchange traded funds as proxies)
While the Nasdaq + 22.5% (QQQ) and Technology sector +16.8% (XLK) have crushed it!
For info on SPDR see link here: https://www.investopedia.com/articles/exchangetradedfunds/09/spdr-etfs.asp
Low rates and flattening yield curve
Loan loss on back of pandemic developments
Competition from fintech in day to day banking services
Worries over Democratic victory in November
XLF: Top 5 holdings: 40% of fund
JPMorgan Chase & Co
Bank of America
Global growth/ demand destruction
Volatile energy prices
Shale sector challenges
XLE: Top 5 holdings: 56% of fund
Exxon Mobil Corporation
Kinder Morgan Inc
Clients unable to pay bills
Defensive in nature, suffer when market rallies
XLU: Top 5 holdings: 43% of fund dividend yield of 3.5%
Nextera Energy Inc
Dominion energy Inc
Duke energy Corp
American Electric Power Company Inc
We at Minter are not ready to jump on the unloved sector bandwagon as of yet, but we think it is prudent to think about allocating some of the very strong gains out of the Tech sector and finding alternative sectors/ companies to invest in for the rest of 2020.
|Ticker||Date Opened||Entry Price||Stop||Target Price||Current Price||% Change|
|LONG Austevoll Seafood ASA (AUSS:xosl)||2020/06/02||76.75||72.00||SPREAD TRADE||79.45||+3.52%|
|SHORT Leroy Seafood Group ASA (LSG:xosl)||2020/06/02||56.75||SPREAD TRADE||SPREAD TRADE||54.40||+4.14%|
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