www.zerohedge.com BY TYLER DURDEN
By Nick Colas of DataTrek Research
“Money always goes somewhere” is one of our core beliefs about capital markets. Capital is clearly fleeing US Big Tech. That is because earnings growth for these names has slowed dramatically from the 2020 – 2022 pandemic era. Capital continues to embrace Energy and Health Care, however, our 2 favorite large cap sectors. A lower Big Tech weighting is ultimately good for the S&P 500, as it allows other sectors to have more of an impact on index returns.
One of our core investment mantras is “money always goes somewhere”. Aside from market crashes, when value literally evaporates, capital simply sloshes around. It moves to assets where investors see a potentially better future return from assets where they see diminishing opportunities.
For this week’s Story Time Thursday, we have 2 related examples of this idea and a summary thought at the end of this section:
#1: Let’s start with the elephant in the market’s room – the terrible performance of US large cap tech stocks. Only Apple has outperformed year to date, and just barely (+1.6 percentage points). The rest are lagging the S&P 500’s 20 percent YTD decline, and badly so: Microsoft (-33 pct), Alphabet/Google (-36 pct), Amazon (-33 pct through today’s close, more after hours), Tesla (-36 pct), Meta/Facebook (-71 pct) and Nvidia (-55 pct).
