The other 494 stocks within the index are simply along for the ride, not contributing much. And that is the essence of the momentum trade, which is self-reinforcing by nature because it involves betting on the market's past-year winners and betting against its losers.
Marko Kolanovic, the global head of quantitative and derivatives strategy at JPMorgan, pinpointed the phenomenon in real time. Kolanovic continued: "Momentum stocks typically make gains in small incremental steps with confirmatory news flow and have big losses on days when unexpected contrarian information is revealed . In other words, Momentum factor returns have a fat left tail."When news of a COVID-19 vaccine broke on Monday, investors seemingly couldn't jettison momentum-based issues from their portfolios quickly enough. It's the exact type of scenario Gundlach's been warning over.
For that reason, Gundlach doesn't recommend owning US stocks at this time. But if you're going to do so anyway, he says you have to own those six momentum names. Just be ready to get out at the drop of a hat.
Stop getting this assholes opinion on anything. He also said Donald trump would win again.
Capitalism still has a few decades to live but some parts of it is crumbling like the idea of the American dream🥴🥴
This goes with the traditional 10 year reset cycles of capitalisme. Nothing to worry about.
horrible
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