Published September 19th 2023

Daily Brief - 🌩️ Wait, there are non-tech stocks?

TLDR: If you had to summarize investor positioning in the last 12 months, it’s broadly this: everyone is long tech. And most want to be out of energy and financials. Sure, there are some other companies and sectors out there but really, this is where the big money is going (or leaving). Is there any value in other stocks?

tehc meme

Money flows don’t lie and they have not been good for stocks outside of tech. Who wants to own a retailer stock, or a trucking business, when you can be long AI? There is a reason WeWork claimed to be a tech company (albeit its software had a relatively patchy record).

sector fund flows

Morningstar publishes an interesting piece that highlights undervalued stocks (and their own methodology). Not surprisingly, the names on it aren’t going to get anyone’s heart racing: Conagra? Kraft Heinz?

But but but …

Even if you can only find stocks you love in the tech space, it always makes sense to look for “less correlated” trades. And this might be a good time to look at the sectors “in the middle” of the chart above.

For smaller portfolios, benefits of diversification initially are actually enormous (chart below).

benefits of diversification

Up until you’ve reached about 10-15 stocks, there is enormous gain from additional diversification.

If there are undervalued industrials, or consumer goods stocks, why not take a look?

What's happening in the markets?

This section is powered by Open AI connected to TOGGLE AI

The MSCI Emerging Markets Small Cap Index has been performing impressively this year, registering a significant 14.7% increase. This index comprises 1,905 stocks with an average market value of approximately $583 million.

In contrast, its large-cap counterpart has seen a more modest gain of 2.5%, featuring stocks with an average market size of about $7.9 billion. Noteworthy examples of remarkable growth within the small-cap index include Wistron Corp from Taiwan, soaring by an impressive 258%, Ecopro BM from South Korea with a remarkable 200% increase, and India's Jindal Stainless Ltd with a notable 96% uptick.

On the other hand, Chinese large caps like Tencent Holdings, JD.Com, and ICBC have experienced a downturn year-to-date, primarily attributed to the economic challenges faced by China. This disparity in performance can be partly attributed to a geographical bias, with portfolios favoring Taiwan, Korea, and India while reducing exposure to China.

However, it's essential to remain vigilant, as emerging-market small caps often bear the brunt of market sell-offs when risk sentiment takes a negative turn.

Aggregated Leading Indicators!


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Earnings Update: Stitch Fix reports tonight

sfix earnings

Stitch Fix is an online personal styling service. Last quarter after beating EPS expectations, the stock was up 29.62% in 1 week!

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.

Asset Spotlight: ConEd's Equity Risk Premium at a low


Toggle analyzed 11 similar occasions in the past where ConEd's equity risk premium reached a recent low and historically this led to a median decrease in the stock's price over the following 3M. Read full insight!

General Interest: Streaming is changing the sound of music


This is a great piece by the WSJ.

To succeed on Spotify and other services, songs are getting shorter, albums are getting longer, and artists are collaborating across genres.

Music is changing. Read how much here.

Daily Brief - 🌩️ Wait, there are non-tech stocks?

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