Market Musings 3/31/2021
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
TLDR: Despite Q1 weakness in growth-oriented portfolios, we view strengths in Financials and Recovery stocks to continue and near-term correction in Growth names to be a buying opportunity.
The first quarter of 2021 is a wrap! While the overall S&P 500 is up +6% this year, it’s been a roller coaster if you breakdown the components.
Let’s take a look at our overall 2021 theme #Flight2Safety. S&P 500 Value stocks are up +10% YTD. Meanwhile, S&P 500 Growth names are only up +2%. Compare that vs. 2020 where Growth was up over +30% with Value roughly flat.
So what’s going on? We see 3 macro trends bifurcating the market:
💸 Inflation fears driving #RisingYields. 10-year treasury yield has jumped +90% since the beginning of the year. Concerns stem from record Fed purchases, significant $1.9T fiscal stimulus package and economy reopening. Huge beneficiary Financials are up +15% this year while high-growth Tech was pummeled. We believe Financials are at the beginning of a multi-year tailwind from #RisingYields.
💪 #COVIDRecovery momentum. Vaccine distribution has greatly accelerated this year with full 🇺🇸 adult eligibility around the corner. Many of our biggest gainers YTD are tied to #RevengeTravel anticipation, #Reopening businesses and #Back2Work office returns. We expect #COVIDRecovery themes to continue to play out into next year.
📱Rise of #RetailInvesting. #COVID19 accelerated a steady rise as retail trading volume mix doubled to 20% from a decade ago. We believe 2020’s market recovery (in particular Tech Growth stocks) was largely supported by #RetailInvesting. We’re watching the #Reopening closely－will #RetailInvesting support wane as discretionary spending options go back to normal? (ie DRINKS!!! 😁)
So what does this mean? Yes, growth-oriented aggressive strategy portfolios were weaker in Q1. However, we take a longer term view. We view strengths in Financials from #RisingYields and #COVIDRecovery stocks to continue and temporary weakness in Growth names from #Flight2Safety near-term correction to be an opportunity to buy the dip.
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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.