Right now, what’s working is overpriced, what might move is ridiculously priced, and what should move is barely priced at all.
Cloud Czars like Apple and Microsoft are trading for more than they should. Their price to earnings ratios hover around the mid-30s, their dividend yields are below 1%.
What might work, speculative EV stocks like Workhorse Group or pot stocks like Tilray, carry prices you can’t evaluate at all, based on the size of the businesses.
What should be moving are companies focused on increased demand from the economy. The COVID relief package is going to pass. It’s going to give Democrats the support needed to do more. Both private and public demand are going up.
This means “value” stocks, grocers like Kroger, landlords like Simon Property, and even oil companies like Exxon Mobil, should be exploding. They’re not. Exxon is up, but that just brings its dividend yield to 6.9%. Simon is yielding 5%, and Kroger’s price to earnings ratio is below 10.
There’s more money running around than there are good places to put it. Investors aren’t chasing returns, but “alpha,” which means returns higher than the market. All the children are not above average.
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