Having introduced a new phrase into our reports yesterday we felt today would be an opportune time to show some illustrative examples at different stages of their evolution. Global equities continue to rally strongly from their March 2020 lows but stock / sector rotation has arguably been the main game in town as investors strive to add value / alpha in this low interest rate environment. MM can see this thematic actually becoming more pronounced as investors continue to migrate up the risk curve sending stocks higher, especially when bond yields do eventually rally strongly.
This is a great environment for “Active Investors” like MM who if anything should have been more prepared to take profits in 2021 as the place to be overweight for optimum performance feels like its been tossed around like a hot potato! We should always remember that stocks are usually looking around 6-months in advance hence spikes up on good news regularly fail as holders take profit and move into the next one i.e. the “smart money” was already long.
However we should also remember that surprises usually happen with the trend so just to make things trickier fading new highs wont always work with each scenario requiring careful consideration e.g. Whitehaven Coal (WHC) mentioned earlier.
MM remains bullish equities into 2022
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