This article first appeared in National Review.
Investors are finally beginning to hit the brakes on the sky-high electric-vehicle stock.
In the end, the needles that likely pricked the bubble were those used to inoculate millions of Americans starting last November. For the stock market, there was before November 9, the date of Pfizer’s vaccine announcement, and after November 9. The news that vaccines developed by Pfizer and Moderna were safe and effective fired a shot signaling that the pandemic would soon be controlled and that the economy would return to normal before long.
The market rotation since then has been rapid, with former leaders stalling or losing ground and former laggards recovering rapidly. Since that November date, the FAANG (Facebook, Amazon, Apple, Netflix and Google) stocks that led the way in 2020 have averaged a return of 3.1 percent, gaining mainly thanks to Google, which was up 15.7 percent (the FAAN without Google averaged a negative 0.1 percent return). Microsoft did better, up 5.5 percent. Zoom Communications and Peloton Interactive, the 2020 icons of work at home and exercise at home, were down 34.3 percent and 12.7 percent respectively. (Returns are as of the March 22 close.)
On the other side of the tracks, the old and unsexy names, which fell in March 2020 and could not sustain a decent recovery through the remainder of the year, have all soared. Since November, “ok boomer” companies Exxon and Valero are up 70.6 percent and 89.4 percent; Carnival Cruise, Delta Airlines, and Marriott International are up 98.8 percent, 52.7 percent, and 45.8 percent; Gap, Darden Restaurants, and Ulta Beauty are up 40.9 percent, 33.9 percent, and 46.5 percent.
But then there was Tesla. Tesla, the maker of fortunes and dreams. Tesla, the rocket, the star, the supernova. Continue Reading >>>