Two things that stood out today; the huge day the biotech sector had and the underperformance of FANG; Facebook, Amazon, Netflix, Google, Apple, were all down.
You can attribute the huge performance in the biotech sector to the fact that the Republicans won the House and that Hillary lost the election. A lot has been priced in the biotech sector; I’m just not sure the headline risks are gone.
The FANG underperformance today probably stems from the fact that the Trump administration might push them to bring back the boat load of cash they have overseas. I think it is too early for that to be a big worry for these stocks, next year it’s a different story.
Few lessons about the action last night and today;
- It always pays to have something on, specifically index ETF’S; SPY, IWM, QQQ, maybe even XIV, when you get a bounce the index will always bounce, specific sectors, or stocks might not.
- It has not paid to de-risk, many years ago we used to take the stairs up and the elevator down, now we are also taking the elevator up (express). In these type of express elevator ride to the last floor moves, when you want to put risk back on you always feel like you are chasing because things are happening so quick. But by always having something on (point 1) your fear of missing out won’t be that great.