As we begin the second half of 2017 astronomically , let’s look how the stock markets did so far.
- The Dow Jones industrial average is up 8.3%.
- The S&P 500 rose 8.7%
- The Nasdaq soared 15.9%
On the backs of FAANG stocks, the tech index is a very crowded trade. The ironic part of the gains in Facebook, Apple, Amazon, Netflix and Google is held by “hedge funds” and foreign central banks.
- Facebook: +33%
- Apple: +25.7%
- Amazon: +33.5%
- Netflix: +25.1%
- Google: +23.2%
Certainly there are losers in the tech sector during this run up in prices. Twitter and Snap are two of the once promising darlings that failed to attract investor interest.
Now why would hedgies be in these stocks, unless the hedge is not to show negative returns on their other bets.
As a point of comparison bitcoin is up roughly 64% for the first half of 2017.
Many market pros are saying this could be the top for these stocks. That makes sense from the strong first half returns, but my question is if this is true, then where will capital go to find the next crowded trade? Because that’s where you make money.