Succinct Summation of Week’s Events for 02.05.21 (plus Winning By Losing Less)

Sun 2-7-21

Below is the usual weekly summation, the big positive being the week's rally, the big negative being payrolls coming in below forecast. The big bonus this Sunday night is again this week's segment of the PBS program WealthTrack and its guest Charlie Dreifus talking at length about the pic that has dominated our conversations since Day One: increasing profits by cutting losses.  Please also make note of the P.S. at the end suggesting the required reading of Jason Zweig's Wall Street Journal column, "The Intelligent Investor" and its commendable analysis of the GameStop mania. Hope everyone had a great weekend.  

 

Succinct Summation of Week’s Events for 02.05.21

February 5, 2021 4:30pm by Barry Ritholtz

Succinct Summations for the week ending February 5th, 2021

Positives:

1. Markets rally on Covid /Stimulus plans
2. Unemployment rate came in at 6.3% for January, down from previous 6.7%.
3. Jobless claims fell 33k w/o/w from 812k to 779k.
4. Home mortgage apps rose 0.1% w/o/w, above the previous decrease of 4.0%.
5. PMI Composite came in at 58.7 for January, above the prio 55.3.
6. ISM Services index came in at 58.7 for January, above expectations.

Negatives:

1. GOP refuses to discipline Q-Anon Congresswoman and advocate of Congressional executions.
2. Non-farm payrolls rose 49k m/o/m, below expectations.
3. Non-farm productivity fell 4.8% annually, below expectations.
4. Private payrolls rose 6k m/o/m, below expectations.
5. Factory orders rose 1.1% m/o/m, below prior increase.
6. Construction spending rose 1.0% m/o/m, below prior increase.  

WINNING BY LOSING LESS - A message from Consuelo - February 4, 2021

View this email in your browser

Sponsored by: February 4, 2021 Dear WEALTHTRACK Subscriber, One of the most notable characteristics of the last decade was the wide divergence in market performance. We have reported many times on the narrow group of superstars, mainly large-cap U.S. tech stocks and the much wider universe of laggards, value and small-cap stocks in particular.  In 2020 that divergence blew up.  Small-cap went from worst to first. The year began disastrously.  Small-cap’s Russell 2000 benchmark suffered its worst quarterly decline in its 40-plus year history with a 30% plunge. That was followed by a strong rebound in the second quarter, a smaller one in the third, then blast off.  Small-caps ended the year with their best quarterly gain ever, a stunning 31% advance in the index, handily beating large-caps for the quarter.  When it was all over the Russell 2000 had gained 101.3% from its March 18th low to year-end, although it lagged large-cap and tech for the entire year.  As small-cap specialists and pioneers, Royce Investment Partners put it: “While we have witnessed many oddities in our nearly five decades of small-cap investing, we have never seen a year as extreme as 2020.”  We have a WEALTHTRACK exclusive this week with an investment legend whose specialty is in-depth financial analysis in the small-cap universe. He is Charlie Dreifus, lead portfolio manager of the Royce Special Equity Fund which he launched in 1998. He was named Morningstar’s Domestic Stock Fund Manager of the Year in 2008.  The fund is rated 5-star by Morningstar and carries a Bronze Analyst Rating. Special Equity’s risk-averse approach means it lags in bull markets, still capturing 80% of the upside but offers protection in down markets, experiencing only 66% of market declines. As a result it has beaten its benchmark with less risk over multiple periods since inception. Dreifus calls it “winning by losing less.” Before delving into small-caps I will ask Dreifus to share his perspective on current market conditions based on his half-century of managing money. A hint: he told me “I've seen this movie before, and it doesn't end well.”    Also, in this week’s EXTRA feature, what Dreifus believes will be the pandemic’s lasting changes on his professional life.  If you miss the show on public television, you can watch it on our website over the weekend. You can also find the WEALTHTRACK podcast on Stitcher and SoundCloud as well as iTunes and Spotify. We appreciate the time you spend with us on WEALTHTRACK and hope it will help you make the week ahead a healthy, profitable and productive one!  Enjoy the weekend.  Best regards, Consuelo P.S. One of the best analyses I read about the trading mania involving GameStock and its ilk was by frequent WEALTHTRACK guest, Jason Zweig in his “The Intelligent Investor” column in last weekend’s The Wall Street Journal. It is well worth reading.