Friday, 29 May 2020 14:01

The Loser’s Rebound

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Some stocks seem to be rallying for no apparent reason. The only underlying logic being that they got badly beaten up during the COVID meltdown and now look cheap relative to the market’s rebound. Call it the loser’s rally. Delta, for instance, has seen some significant gains in its price despite the fact that the airline business continues to look very bleak. Delta could be considered best-of-breed though, having a much healthier balance sheet than American Airlines.

FINSUM: This is a dangerous game—when stocks that look weak rise for no apparent reason. They will fall sharply when sentiment swings back.

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