(San Francisco)

Even the most die-hard Apple investor must be feeling a little woozy right now. The company’s market cap just surpassed $2 tn. And guess what—half of that came in the last five months. Yes, the company doubled in value since the start of the pandemic and is now worth $2 tn! A couple months ago many were saying Apple was a bargain, now it seems to have a very significant premium. So the big question for investors—is it time to cash out because things feel very toppy, or do you stick with it? The company’s earnings have been phenomenal. So good in fact that Goldman made a blunt comment about flubbing its forecasts, saying “It turns out that we and consensus weren't even in the ballpark in terms of what was possible.”

FINSUM: $2 tn is a scary number, but it feels like it would be wise to stick with Apple right now. Momentum is good and there does not seem to be a big headwind that would wound the stock.

(New York)

High yield stocks have been wounded during the pandemic. The 100 worst performing S&P 500 stocks since the pandemic began have returned minus 39% and yield an average of 3.07%; the top 100 have returned over 35% and yield just 0.85%. However, now might be the time to buy in as there are some exceptional values. The core idea is that many of these wounded names are going to be bid up over the next several months as yield-starved investors try to find some income.

FINSUM: Right now it is very important to be selective about dividend stocks, as their returns are all over the map. For example, the Vanguard Dividend Appreciation ETF (VIG) has returned 4% this year, while the iShares Select Dividend ETF has returned minus 18%! The reason why is that the latter was weighted towards utilities and financials, which have suffered. Be careful what you choose!

(Washington)

Asset managers, other industry participants, and others on the left have been outraged over the last several weeks about a new DOL proposal that would essentially bar ESG investments from being included in 401(k)s. Multiple large asset managers, including BlackRock and T. Rowe Price have issued statements asserting how out of touch the new DOL policy would be with current wealth management trends. The general attitude of asset managers is that the DOL is trying to solve a problem that doesn’t exist. According to T. Rowe Price, “There is no factual support for the proposition that ESG is being misused currently … Accordingly, the proposed rule’s efforts to impose new requirements on fiduciaries’ consideration of ESG is not necessary”.

FINSUM: We understand the concern about making sure 401ks put economics first, but there just does not seem to be enough evidence of misbehavior to warrant this kind of restrictive policy. Furthermore, ESG funds have been outperforming conventional ones since the start of the pandemic!

(New York)

Wondering where the market is headed? (so is everyone!) Well, Goldman Sachs put out a pretty unequivocal opinion about it today. Despite the market being at all-time highs when the country is in a recession and unemployment massive, the bank says that the S&P 500 will rise another 7% to close out the year. The only damper in the bank’s forecast is the election. Goldman says it is assuming a Democratic victory, and that could cause higher taxes that could dent the market a bit. GS also says Treasury yields will fall to 1.1% by the end of the year.

FINSUM: So we have two big competing feelings here. On the one hand, with the Fed so strongly in support of markets (and another fiscal stimulus likely), it seems like it could be smooth sailing. On the other hand, 51% of the entire market’s gain since the bottom in March has come from five stocks. On the whole, we think gains are more likely than losses.

(Beijing)

If one thing has been clear over the last couple of years, it is that US-China relations are getting worse. It started earlier in Trump’s term and has escalated in a tit-for-tat battle over the last couple years. Some refer to it as a great “uncoupling” while others say it is a new cold war. Whatever you call it, there are a handful of sectors that will do well as the situation unfolds. One such sector is automation and robotics companies. These companies are likely to do very well as US businesses are forced to re-shore manufacturing from China and seek out automation to make the return more economical.

FINSUM: A major decoupling will be a very ugly event. US companies do $500 bn of sales in China each year. The automation play makes sense. Check out the Robotics ETF (ROBO).