Airbnb & Doordash Deliver | Small Caps Excel
The S&P in November had its best month ever. Think about that for a moment.
The S&P was expanded to 500 companies in March, 1957 - that was 764 months ago. The index was up over +10% in November.
While the Dow and NASDAQ were off this week, the Russell 2000 pushed ahead to its sixth straight up week. This goes to the ongoing rotation away from large cap into small cap companies that we've discussed. As the economy improves over the coming year look for this trend to continue. Investors tend to flock to stable large cap stocks (think big tech) when things aren’t well.
The market strikes a strong contrast to the current news, as the pandemic continues but stocks continue to hold up and mostly rise. That can feel jarring, even uncomfortable. Stocks are expensive here, but they have room to go higher. There’s just not many great places outside stocks to invest liquid capital right now.
The market, as a discounting mechanism, is looking through the next few months to the end of 2021. Economists generally see a full recovery as soon as late 2021, but the market has been running consistently ahead of economic projections. Some sectors of the economy are already recovered or are ahead of where they were pre-pandemic (think tech again).
There are times to be in indexes and times to be picking stocks. This market is advantage to stock pickers considering a fits and starts recovery over the coming months. Savvy investors can target and invest in areas of the economy that are positioned for economic outperformance.
Five Headlines You May Have Missed
Airbnb (NASDAQ: ABNB) was founded in 2007 with a few floor mats rented in a San Francisco flat. Its valuation skyrocketed, after getting traction at a couple sold out political conventions, to more than $30 billion by 2016. But here's the whacky part. When it IPO'd this week the valuation went from $20 billion to over $100 billion - in ONE DAY (see chart below). Only in Silicon Valley. And only in America
And that's your one minute weekly market scoop.