Will The Leaders Continue to Lead?

It was less than two weeks ago that the market rallied more than 20% off of the June low and the bottom callers were out in full force.

It's easy to get caught up in the positive headlines and price action when stocks rally for multiple weeks but the leadership was not exactly what you want to see as I pointed out in my August 18th post:

When I think about what a "risk on" market looks like, utilities doesn't come to mind. I prefer to look for leadership from transportation stocks, financials, semiconductors, and growth for signs that investors are more comfortable taking on risk. And these sectors still have a lot of work to do in order to get back to new highs.

It seems like the rally came and went in a blink of an eye and all it took was a hawkish tone from Jerome Powell in Jackson Hole. Or at least the "interpretation" from equity market participants took it that way and sold stocks.

Did JPow's speech really matter? After all don't stocks go up and down? Why do we think they should only go straight up or straight down?

I came across a great quote this morning from legendary Investor and fund manager Stanley Druckenmiller that was a great reminder to not get too caught up in the day to day or even week to week fluctuations in the market.

"...never, ever think in the present. That's a good way to lose money...If you can envision the world 12 to 18 months ahead, and not look at historic earnings or where we are now, you'll make money."

So, how do you think the investing environment will look twelve to eighteen months from now? What sectors and industries will perform best? Will the current leaders continue to lead?

These are difficult questions to answer but we can try our best to look for hints and one way to do that is to look at what industries have been showing relative strength even as the S&P 500 and NASDAQ move lower.

Over the last month Coal (BTU), Uranium (URNM), and Oil/Gas (XOP) have been outperforming the market. Will this continue into the end of the year and into 2023?

Let us know what you think.

We'd love to hear from you.

Greg R.

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Nothing in this blog post should be considered investment advice and is provided for educational and entertainment purposes only. The commentary and information represent the opinion of the author and are not recommendations to buy or sell any security or investment product. The author may or may not hold positions in the securities and investments mentioned. Full disclaimer here.