JOET - Beware The 'Relative Value' Trap
2024-07-17 04:59:00 ET
Summary
- In the past five trading days, as US economic data has continued to weaken and the odds of a Fed easing cycle have risen, capital has been rotating out of tech into small and mid-cap indices.
- From October 2001 to April 2002, long-always equity funds and managers continued shifting from “growth” into “value” sectors before panic finally spread.
- In the seven cutting cycles since 1969, the stock market fell an average of 24% in the 195 days after the first Fed cut.
Over the past 32 months, economically sensitive small and medium-cap stock indices have underperformed the largest-cap tech-heavy indices (price x shares outstanding) to a degree not seen since the last tech bubble in 1998 through March of 2000....
Beware The 'Relative Value' Trap