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Oct 22, 2020 | 01:40 PM EDT DOUG KASS
Some Investment Themes to Consider Over the Next Few Months
As you map out your strategy for year-end and for 2021, here are some themes to consider:
* Short Fixed Income: Bonds are among the most risky and least
Oct 22, 2020 | 01:40 PM EDT DOUG KASS
Some Investment Themes to Consider Over the Next Few Months
As you map out your strategy for year-end and for 2021, here are some themes to consider:
* Short Fixed Income: Bonds are among the most risky and least
efficiently priced asset classes extant. The 10 year note yield is about to break to the upside (of its 200 day moving average) - the 30 year yield already has. A large, Democratic-led February stimulus package could be a catalyst for the 10 year US note to climb over 1% in the
near term.
* Short Homebuilders: The sector is negatively influenced by the rate of change in bond yields. With mortgage rates rising and home prices catapulting higher the seeds of slowing home demand are being sown. Peak Housing may be at hand in the next few months. After
* Short Homebuilders: The sector is negatively influenced by the rate of change in bond yields. With mortgage rates rising and home prices catapulting higher the seeds of slowing home demand are being sown. Peak Housing may be at hand in the next few months. After
having tripled from the March, 2020 lows homebuilder stocks are vulnerable.
* Short "Growth": Growth has benefited from a low risk free rate of return which has expanded valuations. This tailwind of 2019-2000 could become a headwind to high price earnings multiple stocks, and
* Short "Growth": Growth has benefited from a low risk free rate of return which has expanded valuations. This tailwind of 2019-2000 could become a headwind to high price earnings multiple stocks, and
maybe for the market as a whole.
* Short Stocks That Have Had Large Valuation Expansion: Again, interest rates rising are non supportive of further P/E expansion and argue in favor of multiple contraction. Apple (AAPL) is the poster child.
* Long Value: There is so much money in
* Short Stocks That Have Had Large Valuation Expansion: Again, interest rates rising are non supportive of further P/E expansion and argue in favor of multiple contraction. Apple (AAPL) is the poster child.
* Long Value: There is so much money in
"growth" that any incremental fund flow losses and pivot into value could have a forceful marginal impact on demand/supply equation for value stocks - which are very cheap relative to growth. A Democratic administration will likely lead to a lengthy regulatory attack which most
companies, I have written, will endure profitably.
* Long Banks: I have written that 3Q2020 likely represented a cycle low in net interest income/margin. This, coupled with historically low valuations - that rival 2009 - could light the fire of the much hated bank stock
* Long Banks: I have written that 3Q2020 likely represented a cycle low in net interest income/margin. This, coupled with historically low valuations - that rival 2009 - could light the fire of the much hated bank stock
universe over the next few quarters. @jimcramer @tomkeene @SquawkCNBC @cnbcfastmoney @threadreaderapp unroll
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