The Fatman Sings
Today is November 9, 2020 and we heard this morning that Pfizer has made great progress on a vaccine. Since Covid-19 took over the world scene, this day has always seemed so far away. The market is celebrating this news with a roughly 4% upside move, just over 1220 points on the DJIA as I write. And the Fatman is singing. Say what?
A very popular trade for the past six or seven months has been the F-A-T-M-A-N trade: Facebook, Amazon, Tesla, Microsoft, Apple, and Netflix. Cute acronym don’t you think? These six stocks have all moved sharply higher as investors embraced the technology and communications breakthroughs represented by these unique innovators. While the market has trended higher since the March 23 lows, these six higher growth names have moved sharply higher. Today, they are unabashedly lower. Does this mean the reign of the FATMAN is done? Has the last song been sung?
Richard Wagner gets credit for the expression “it ain’t over ‘til the Fat Lady sings”. Wagner never said it, the saying is a reference to an opera he wrote which culminated in a twenty minute aria sung by Brunnhilde ending the show. Brunnhilde was the original “Fat Lady”. We hear this expression mostly in relation to sporting events, or sometimes elections. My father, like many Philadelphia fans, always rooted for our sports teams until the fat lady sang – we NEVER left a Phillies game before the final out. But I digress.
The market action today may indicate that the easy trade of the FATMAN is done, but then again it may not. Markets rotate all the time. I blogged about this earlier this year (see “The Rotation Play” from 7/20/2020). If you ask me, a broader market advance is much better for most investors, and I’m not saying that just because I don’t own most of the FATMAN names. Yes, it may make the markets more difficult to trade as stock selectivity becomes more vital, but I believe it will separate the owner/investors (i.e the long term shareholders) from the renters/traders of the last six months.
Bottom line: the markets are never easy. Humility and diligence are always required. Let’s celebrate the good news. And you can be assured that we will stay focused on the markets and the economy in the weeks and months ahead, regardless of who may be singing.
One more thing: be sure to thank a veteran on Wednesday, November 11th, 2020.
Ralph McDevitt November 9, 2020
Any opinions are those of Ralph McDevitt and not necessarily those of Raymond James.
