![]() In the U.S., Medicare will run out of money far sooner than most expected, and Social Security’s financial problems can’t be ignored either. Journal, in 1978 the percentage of profits coming from America’s 100 largest companies was near 46%, today we’re approaching 85%! The inequality decade has some very ugly side effects, doesn’t she? The clock is ticking here, G10 countries have VERY large aging populations. This growing disparity in the markets extends to real economic terms as well.Īccording to an analysis conducted by the Wall St. Since January, while Netflix and Amazon have gone up 67% and 38% respectively, while the number of NYSE stocks at their 52-week highs has declined from 341 to 177 in June – to now just 71! Bottom line, the divergence between the few (just 5 stocks) FAANG equities, and all the rest of the market presents a crystal clear example of negative breadth. ![]() While FAANGs Boom, the Rest of the Market is Left Behind In early June, the number of NYSE stocks at their 52-week highs started to move sharply lower, breaking the trend (see above) with the price of the FAANGs equities (Facebook, Apple, Amazon, Netflix, and Google). Largest Weekly Fund Capital flows into Technology Equities All-Time Returns appear far better than the rest of the market’s offerings, so even more capital flows in – it’s a toxic, self-fulfilling cycle – when broken the declines will be HISTORIC. As more and more capital flows into passive index funds, more and more FAANG shares MUST be owned. This is just another example of a classic, late-cycle development often found in tired bull markets – the hot money chase indeed. It’s NOT Fidelity’s fault, they’re just offering another index fund the mad mob wants to invest in. As a market-weighted, passive index fund there is no choice or selection process, this beast MUST own these FAANGs – a colossal failure of common sense indeed. ![]() Assets in this giant have climbed to more than $153B, with $21B forced into FAANG equity ownership. The most shocking part of this story is found in the explosive asset formation in Fidelity’s S&P 500 (Passive) Index Fund. With assets north of $100B back in the year 2000, today he sits as just a shell of his former at $17B. Famously known as the largest mutual fund on earth in the 90s, what became of this beast is nothing short of remarkable. Looking at the passive asset management orgy, there’s no better example than the Fidelity Magellan Fund. Why does this matter? Passive asset management is simple ownership of the market through index funds, the capital MUST be fully invested and has been the fuel behind the toxic run-up in FAANG equities. Nearly $7T is now positioned in passive asset management, over $2T of this money has arrived in the last five years. ![]() Since 1993, capital shifting into passive asset management is up 161x, this compares to only 7x for active management. Our Index of 21 Lehman Systemic Risk Indicators has risen to its HIGHEST level since the summer of 2015.Įnjoy our segment on CNBC with an analysis of the FAANGs. Above all, beneath the surface, there’s something far more disturbing. equities today, there’s burning question how many stocks have really been invited to this party? Every day we hear about markets hitting new highs, despite the fact that the S&P has been wrapped around 2800 since January. One of the golden rules of market analysis is found in true underlying breadth. The Fab Five: FAANGs Equities (Facebook, Apple, Amazon, Netflix, and Google) Peter Lynch, Portfolio Manager of the Fidelity Magellan Fund 1977-1990 “If I could avoid a single stock, it would be the hottest stock in the hottest sector” Conversely, a disproportional number of declining securities is used to confirm bearish momentum.” Positive market breadth occurs when more stocks are advancing than are declining and suggests that the bulls are in control of the market’s momentum. Market breadth - “ a method used in technical analysis tries to determine the direction of the market. This blog was published on July 20th, on July 26th Facebook plunged 22% on record volume, $120B was wiped out in one day – the largest single stock incident of wealth destruction on record. Get on the Bear Traps Report Today, click here Join our Larry McDonald on CNBC’s Trading Nation, Wednesday at 3:05pm ETĭon’t miss our next trade idea. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |