The Real World

“What’s going on in the stock market?”

This usually isn’t an easy question to answer. But we live in unusual times and right now the stock market is very easy to explain.

Look through a few dozen charts and you’ll find a very clean narrative. Today’s winners were last year’s losers and today’s losers were last year’s winners. Said differently, stocks in the physical world are outperforming stocks that live in the digital world.

Look at this chart which compares the two groups. In the physical world, we have Macy’s, Marriott, MGM, Royal Caribbean, Delta, Simon Property, Freeport-McMoran, and Exon. In the digital world, we have Docusign, Shopify, Peloton, Teladoc, Zoom, Spotify, Netflix, and Unity.

Homebuilders, materials, industrials, transports. These names are rocking. SAAS names, which have been all the rage the last few years, look like death.*

Right now investors are focusing on crypto, the digital asset of the 21st century. But inside the stock market, it’s all about the physical world.

*I’m only describing what’s happening today. I have no idea what tomorrow brings.