{"id":230569,"date":"2021-05-28T18:48:54","date_gmt":"2021-05-28T18:48:54","guid":{"rendered":"https:\/\/aptuscapitaladvisors.com\/?p=230569"},"modified":"2023-03-16T17:53:34","modified_gmt":"2023-03-16T17:53:34","slug":"snap-ya-fingers-do-ya-step-you-can-lose-it-all-by-yo-self","status":"publish","type":"post","link":"https:\/\/aptuscapitaladvisors.com\/snap-ya-fingers-do-ya-step-you-can-lose-it-all-by-yo-self\/","title":{"rendered":"Snap Ya Fingers! Do Ya Step! You Can Lose It All by Yo&#8217; Self!"},"content":{"rendered":"<p>Going into this year, a theme for our clients was that \u201cthe path of least resistance is up, but we could encounter some type of volatility\u201d. This is exactly what we have seen thus far this year, and we continue to believe that this will be the case moving forward.<\/p>\n<p>So, let\u2019s break this statement down into two parts.<\/p>\n<ul>\n<li><strong>The Path of Least Resistance is Up<\/strong> \u2013 This is the enjoyable part. The market is up over 10% YTD off of massive amounts of liquidity being put into the market \u2013 both fiscally and monetary. Just think of all the stimulus that has hit the market. Most Americans are flush with cash and, more importantly, are very ready to spend that excess cash as the economy continues to open. So, given this backdrop, we believe that the market can continue to grind higher.<\/li>\n<li>*<strong>The second part of that statement<\/strong>, \u201cbut we could encounter some type of volatiltiy\u201d is more difficult to endure than the first part because it can create behavior biases. Looking back at history, we know that that, every year, the market tends to see three (3) 5% pullbacks and one (1) 10% correction &#8211; the market hasn\u2019t encountered any of these thus far. More importantly, the second year of a recovery tends to see atleast one 10% pullback.<\/li>\n<\/ul>\n<p>Even though the market has not had a drawdown of 5% this year, we have seen some bubbles from Q1 slowly pop one-by-one over the last few months. From SPACS to high growth tech to crypto, we think the most amazing takeaway of these bubble pops (where hundreds of billions in capital was quickly erased for investors), is that the <strong>S&amp;P 500 has done nothing but rally in the face of the following themetic declines<\/strong>:<\/p>\n<ul>\n<li>SPACs fell ~30% from Feb to April (SPX rallied 6% during that time)<\/li>\n<li>ARKK fell ~35% from Feb to May (SPX rallied 7% during that time)<\/li>\n<li>Archegos stocks including VIAC, DISCA, TME, VIPS, etc. fell ~60% from March to April (SPX rallied 5% during that time)<\/li>\n<li>Solar\/renewable stocks fell ~40% from Feb to May (SPX rallied 7% during that time)<\/li>\n<li>Cryptocurrencies fell ~50% last month (SPX flat during that time)<\/li>\n<\/ul>\n<p>The recent violent sell-off in bitcoin seems to be testing the S&amp;P 500\u2019s \u201cteflon\u201d designation once again, as volatility fear metrics have screamed higher. Even though the SPX is near all-time highs, the equity volatility market was pricing a high degree of fear\/anxiety. We\u2019ll see if this time is different, though we don\u2019t believe that it will be.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-230570 aligncenter\" src=\"https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2021\/06\/BitcoinChart.png\" alt=\"\" width=\"688\" height=\"457\" srcset=\"https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2021\/06\/BitcoinChart.png 688w, https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2021\/06\/BitcoinChart-480x319.png 480w\" sizes=\"auto, (min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) 688px, 100vw\" \/><\/p>\n<p>Let me repeat the biggest takeaway here \u2013 The S&amp;P 500 has done nothing but rally in the face of what we consider to be adversity, as many \u201chot\u201d thematic areas of the market entered into a bear market at one point during the year. Why is this? Well, since vaccine day on 11\/9\/2020, we have seen the return of the \u201caverage\u201d stock, which has underperformed the Mega-Caps for the last few years. Furthermore, we have seen areas of undervalued parts of the market that have been out of favor finally start to outperform on market inflation expectations, i.e., materials (specifically metals &amp; miners).<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-230571 aligncenter\" src=\"https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2021\/06\/Equal-Weight-vs.-Cap-Weight.png\" alt=\"\" width=\"431\" height=\"288\" srcset=\"https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2021\/06\/Equal-Weight-vs.-Cap-Weight.png 431w, https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2021\/06\/Equal-Weight-vs.-Cap-Weight-300x200.png 300w\" sizes=\"auto, (max-width: 431px) 100vw, 431px\" \/><\/p>\n<p>We think the big questions investors should be asking is &#8211; given the blowup in these thematic areas, is there any need to worry about any structural problems within the market? First, we do not believe that these are structural problems in the market \u2013 there was momentous froth in these niches areas that simply unwound. Secondly, once we take our Michael Burry cap off, we recognize that not all threats are systemic in this business, and while we\u2019ve likely all read the same accounts of billions of dollars lost on these trades &#8211; we\u2019re equally struck by the benign response from credit conditions. We\u2019d favor the idiosyncratic call, not the systemic one.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Disclosures<\/strong><\/p>\n<p><em>Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. Forward looking statements cannot be guaranteed.<\/em><\/p>\n<p><em>This commentary offers generalized research, not personalized investment advice. It is for informational purposes only and does not constitute a complete description of our investment services or performance. Nothing in this commentary should be interpreted to state or imply that past results are an indication of future investment returns. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with an investment &amp; tax professional before implementing any investment strategy. Investing involves risk. Principal loss is possible.<\/em><\/p>\n<p><em>Advisory services offered through Aptus Capital Advisors, LLC, a Registered Investment Adviser registered with the Securities and Exchange Commission. Registration does not imply a certain level or skill or training. More information about the advisor, its investment strategies and objectives, is included in the firm\u2019s Form ADV Part 2, which can be obtained, at no charge, by calling (251) 517-7198. Aptus Capital Advisors, LLC is headquartered in Fairhope, Alabama. ACA-2105-12.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Going into this year, a theme for our clients was that \u201cthe path of least resistance is up, but we could encounter some type of volatility\u201d. This is exactly what we have seen thus far this year, and we continue to believe that this will be the case moving forward. So, let\u2019s break this statement [&hellip;]<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","content-type":"","inline_featured_image":false,"footnotes":""},"categories":[20],"tags":[],"class_list":["post-230569","post","type-post","status-publish","format-standard","hentry","category-blog"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Snap Ya Fingers! Do Ya Step! You Can Lose It All by Yo&#039; Self! - Aptus Capital Advisors<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/aptuscapitaladvisors.com\/snap-ya-fingers-do-ya-step-you-can-lose-it-all-by-yo-self\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Snap Ya Fingers! Do Ya Step! You Can Lose It All by Yo&#039; Self! - Aptus Capital Advisors\" \/>\n<meta property=\"og:description\" content=\"Going into this year, a theme for our clients was that \u201cthe path of least resistance is up, but we could encounter some type of volatility\u201d. This is exactly what we have seen thus far this year, and we continue to believe that this will be the case moving forward. So, let\u2019s break this statement [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/aptuscapitaladvisors.com\/snap-ya-fingers-do-ya-step-you-can-lose-it-all-by-yo-self\/\" \/>\n<meta property=\"og:site_name\" content=\"Aptus Capital Advisors\" \/>\n<meta property=\"article:published_time\" content=\"2021-05-28T18:48:54+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-03-16T17:53:34+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/aptuscapitaladvisors.com\/wp-content\/uploads\/2021\/06\/BitcoinChart.png\" \/>\n<meta name=\"author\" content=\"David Wagner\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"David Wagner\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/aptuscapitaladvisors.com\/snap-ya-fingers-do-ya-step-you-can-lose-it-all-by-yo-self\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/aptuscapitaladvisors.com\/snap-ya-fingers-do-ya-step-you-can-lose-it-all-by-yo-self\/\"},\"author\":{\"name\":\"David Wagner\",\"@id\":\"https:\/\/aptuscapitaladvisors.com\/#\/schema\/person\/dadaf72c4f2a9c91338a6da9c1d78ced\"},\"headline\":\"Snap Ya Fingers! 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