December 5, 2022, 8:51 pm EST
Tesla or Boeing
All sectors were down today with the stock markets: DJIA -1.4%, S&P 500 -1.8%, Nasdaq -1.9%. But, it is normal for a pullback to occur after rallying more than 20% in less than 2 months (Dow Jones index). Thus, bulls are still holding up well.
But the divergence (11/23) made the investment environment complex. This is the period for great stock pickers with accurate market timing to play. For example, holding Tesla (TSLA) or Boeing (BA) after feels totally different returns since mid-October as shown.
We believe this rotation, dumped-tech promoted-dow, is going to continue in December or even 2023. In this type of market, well-known stocks take more risk. Boring names could stand out.
Inflation is going to stay here longer because of the friendly Fed policy, strong job markets, and high housing prices. But, some industries should be avoided like retailers. For instance, VF Corp (VFC) announced a weak outlook and CEO departure that dropped -11% today.
Retailers in apparel and clothing enter into a tough time when the inflation threat squeezed consumer buying power.
Another example is the technology industry in software like Salesforce.com (CRM) -7% where CEOs were running out quickly. CRM made another fresh new low today.
In general, investing in this type of market condition is not easy because most stocks will suffer. There are still some rare opportunities in material, industrial, or healthcare. Following the principle of investing in the winning stocks and avoiding the losing ones is the rule of thumb on investment.