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‘Nasdaq 1999’ feel may boost even humdrum stocks, Cambiar says

The Weibo logo is seen at the NASDAQ MarketSite in Times Square in celebration of its initial public offering (IPO) on The NASDAQ Stock Market in New York April 17, 2014. REUTERS/Andrew Kelly/Files (REUTERS)Premium
The Weibo logo is seen at the NASDAQ MarketSite in Times Square in celebration of its initial public offering (IPO) on The NASDAQ Stock Market in New York April 17, 2014. REUTERS/Andrew Kelly/Files (REUTERS)

  • The S&P 500 is up 39% from its March 23 bottom, as the Federal Reserve and governments globally added stimulus to help counter the economic devastation caused by the pandemic
  • The rebound has fueled questions about whether valuations are too high

Investors shouldn’t count out the potential for more plain-vanilla stocks to rally, according to Cambiar Investors LLC.

In a normal year, the advice would probably be to sell 10% to 20% of one’s portfolio after such a big rally and just hold some cash, according to Chief Investment Officer Brian Barish. But the “nearly Argentinian levels" of growth in money supply, likely vaccines or treatments for Covid-19 and high levels of short interest means it is a bad idea to take too much out of the market.

“There is a ‘Nasdaq 1999’ feeling to certain stocks which are evidently worth billions but have never made money or even a physical product," Barish said by email. “The presence of these doesn’t mean that old-school industrial companies should be sold. There are a lot of dollars out there willing to chase crazy stuff, and eventually these will find their way to more vanilla stocks."

The S&P 500 is up 39% from its March 23 bottom, as the Federal Reserve and governments globally added stimulus to help counter the economic devastation caused by the pandemic. But there’s a wide dispersion in performance -- the Energy sector has soared 65% and Info Tech 48%, while Consumer Staples has gained 21%.

The rebound has fueled questions about whether valuations are too high. Still, Barish isn’t alone in seeing potential for selective gains -- JPMorgan Chase & Co.’s John Normand also recommended cross-asset investors get more choosy in the second half of 2020.

Barish said his stock-picking strategy, even in an atypical year, revolves around the basics: earnings, cash flow, pricing power and long term market position. “For a lot of these more speculative names, nobody has a clue of any of that."


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