FNArena’s Weekly Insights – November 16 2020

Dear time-conscious investor: Fresh developments and investor optimism now favour Value over Growth & Quality

In this week’s Weekly Insights:

-Value Ready For Catch-up
-Conviction Calls

Value Ready For Catch-up

By Rudi Filapek-Vandyck, Editor FNArena

Nothing lasts forever, in particularly not in financial markets, or as I like to put it: this too shall pass, eventually.

With “this” I am referring to the relentless, and extreme, bifurcation of equities into “winners” and “losers”, with very few shades of grey in between, certainly since the arrival of the covid-19 pandemic.

Before the virus hit economies and life as we knew it up until that point, many a market expert had already observed the distance between “popular” and “unpopular” had probably never been recorded as wide as it had become.

Since the arrival of the virus, however, the distance between the two opposing categories of equities has only widened further.

Now we really can conclude the gap between Winners and Losers, Growth & Quality versus Value and Cyclicals, might have never in the history of financial markets been pushed out as far as it has in 2020.

Just about every market researcher has published a chart to illustrate equity markets’ extreme polarisation in recent years, and many of them are updating the data this month.

The example I picked below is from Morgan Stanley. It shows how much further the elastic band has been stretched; much, much further than at any other point over the past three decades.

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