By Ben Carlson, CFA
A Wealth of Common Sense
One of the strange subplots of the past decade or so in the markets is that bad behavior has been rewarded.
You’re not supposed to chase yield, but chasing yield has worked as interest rates continued to fall year after year.
You’re not supposed to concentrate in a single region because of home country bias, but the United States has crushed the rest of the world since the end of the 2008 crisis.
You’re not supposed to concentrate in a single sector, but tech stocks have dominated every other segment of the market for years now.
The market can stay solvent longer than you can quote Warren Buffett, or something to that effect.
These themes seemed to go into overdrive last spring when the pandemic hit our shores. Tech stocks outperformed during the crash AND the ensuing rally. It didn’t seem fair to anyone who owned anything outside of these companies.
Then, something funny happened around September. Everything else began to outperform tech.