For several weeks now, I?ve warned investors that cyclical stocks are due to underperform the broader market. My favorite cyclical gauge, the Morgan Stanley Cyclical Index (CYC), reached its peak against the S&P 500 in mid-February, but only recently has it started to lag the market badly.
To give you an example of how the market?s mood has changed, on Tuesday the S&P 500 lost just 0.04% while the CYC dropped 1.51%. Investors are clearly flocking out of cyclical names for safe shelter in defensive stocks. Don?t weep for cyclical stocks; they?ve had an amazing two-year run. If the Dow Jones had kept pace with the CYC since its March 2009 low, it would be over 25,000 today.
I strongly encourage investors to tilt their portfolios away from cyclical stocks. I think we?re in for a multi-year period of cyclical underperformance. That?s how these cycles usually work. Outside of a
Complete Story »
Jenny McCarthy Zooey Deschanel Tara Reid Coco Lee Katy Perry
No comments:
Post a Comment