Why does it seem like every time I remind a group of people about the underperformance from Technology stocks, they're always surprised to hear it.
It's like they don't even know that Large-cap Tech stocks have been underperforming for most of the year, and Small-cap Tech has been underperforming for 18 months.
Is this not common knowledge?
Large-cap Tech was actually down in Q3. And then it started out Q4 with a flat September.
Small-cap Tech is somehow down for all of 2024, despite the Small-cap Russell2000 Index being up double digits this year.
That's the exact definition of underperformance.
Now, let's keep in mind what Technology even is...
The S&P500 Technology Index includes stocks like Apple, Microsoft and Nvidia as its largest components.
Google and Meta are NOT in Technology. They're both in the Communications index along with Netflix.
Large-cap Communications are actually the best performing sector so far in 2024. This group is very different than "Tech":
Communications are outperforming the S&P500, Nasdaq100 and even Utilities (which became cool this year).
When you say, "Technology stocks are underperforming", people often seem confused. They reference the Nasdaq near new highs or the fact that some of these stocks (that are not even in the Tech index) are doing just fine.
But digging deeper into this theme, Amazon and Tesla aren't in the Tech sector either. These are actually the 2 largest components in the Consumer Discretionary Index:
And if they're ever going to step up and buy this group, this is where that would be.
This is where it needs to be...
This chart above shows Large-cap Consumer Discretionary relative to the S&P500 potentially putting in a massive 10-year top.
But if that's what this is, then the bull market is over.
Period.
So if you do not think the bull market is over, and believe it still has legs, then the bet is they come in and buy Discretionaries...
Today after the market close we get Amazon's earnings - arguably the world's most important retailer.
If you didn't already know, Jeff’s father spent his entire career at Target, retiring in 1994 after a decade as CEO.
“Dad and I would visit stores the way most kids and dads play catch,” he says. “At this point, I’ve been thinking and talking about retail longer than most people have been alive.” - Jeff Macke
This is the guy you want giving you the color commentary during the $AMZN earnings release and conference call tonight.
