Singapore Jan 12, 2021
In the chart above we have plotted the cumulative trading volume by the major asset classes since the US elections. For purposes of clarity Equity Funds have been grouped with Equities and likewise for Fixed Income.
As you can see, the ‘Buy Equities and Sell Fixed Income’ trend is alive and well.
But there are a few key differences
There are some key differences as compared to what we saw during most of 2020. The chart below is for the same time period as above but shows more granularity in asset classes. Essentially
- US equity buying has tapered after mid December (to clarify this means that, as a whole, investors have stopped adding fresh positions but continue to hold what they already own)
- Buying in Non-US Equities and Equity Funds continues
- Selling in Bonds is largely focused on Developed Markets
Buying is really broad based
This buying that we are seeing is really broad based and we are not able to make out a clear sector or geography specific bias.
For example in Equity Funds we are seeing buying across a very large number of funds most of which have broad themes (e.g. Russel 2000 ETF and MSCI Emerging Markets are typical purchases).
The chart below shows Industry Sector wise net buying for Equities since Nov 2nd. Technology continues to be important but is no longer the sole focus.
Tesla profit taking
Elon Musk replaced Jeff Bezos as the world’s richest man this last week. To answer the question that pretty much everyone is asking me, yes we did see substantially more net buying in Tesla as compared to Amazon during all of 2020. Microsoft was the single most net bought stock of 2020 in our data (incidentally in 2019 it was Tencent) but Tesla was not that far behind.
There has now been some partial profit taking on Tesla and other tech stocks (unlike what we are seeing in Pharma for example). The chart below shows cumulative trading volumes since 1 Jan 2020 for Tesla, Amazon, Microsoft and Gilead
Please note that this newsletter is just a data analysis of actual investor behavior and does not constitute investment advice in any form.