FNArena’s Weekly Insights – October 05 2020
In this week’s Weekly Insights:
-Market Momentum Switch: A Messy Affair
-Conviction Calls
-Dividend Traps & Opportunities
The Economic Recovery, A Messy Affair
By Rudi Filapek-Vandyck, Editor FNArena
Under more “normal” circumstances, we’d all be talking about the economic recovery by now, with follow-on consequences for government policies, central banks’ focus and a decisive switch in momentum for specific segments of the share market.
But these are not, by anyone’s standards, “normal” times.
Irrespectively, if we observe price action for global equities over the past six or seven weeks, combined with forecasts and market commentaries from experts and global strategists, there is unmistakably a preference building for cyclicals and cheaply priced laggards in search of the next engine for outperformance and outsized returns.
The face value reasoning behind this anticipated switch in market momentum is built on two pillars:
-Pandemic “winners” and new era technology have become a crowded trade (everyone is in on it)
-The ‘value’ part of the share market is too cheaply priced, in particular on a relative comparison
So, what will shift momentum out of winners and into the laggards?
