Letter 53 – November 27th, 2020: Vaccine
We think global equities are just shy of 2% of our end of the year’s target, while our Sentiment indicators are ultra-bearish. We also consider the rotation from “Confinement” towards “recovery” stocks to be half made, even if its continuity could evolve over a 6-month period with up and DOWNs. Our approach is now to buy on dip (or sell put) those “recovery” stocks that are expected to grow in a post-covid19 world. We screened for names that were down year to date before the 9th of November, the day Pfizer announced an imminent and effective COVID-19 vaccine. 9th November represents our new inflection date, a fractal from which we extrapolate the next months’ trends. This fractal captures stocks that benefited from the Vaccine announcement from Pfizer on 0911, were negative year to date until the 6th of November, and last but not least are quantitatively well ranked by our algos and are trading on more reasonable valuations than the indexes.