There is a massive shift today out of growth into value, as the ten-year bond continues to edge towards a key resistance point.
The stampede is trampling shares of great companies and it’s a cause for concern. It's also a test for those that want to be investors, but have to deal with occasional turbulence, which is even more exaggerated for high Beta names.
We were here in October and November, as yields spikes also triggered greater panic.
The automatic actions, underscored in today’s session, should not superseded fundamentals.
On higher inflation the playbook says to own Energy.
On higher yields the playbook says to buy Financials.
On Fed tightening the playbook says to own REITs, but also semis and software stocks. Well software is getting wrecked and even semis are weaker than normal, and autos are supposed to be the worst performers, but Ford (F) is the number one name in the market (it's all about the electric F-150).
Trying to game the nuances of yields and scuttlebutt in buy and hold portfolios is a mistake. We don't like being down but don’t like closing positions in great companies because the Fed might hike rates. There will be more adjustments beyond the herd movement driving the acute right now.
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