I think something really interesting is going on – potentially concerning for most portfolios


The MSCI World Information Technology sector under-performed the MSCI World Index by 4.11% over the past 2 weeks

-4%, that’s not much, is it?

Hang on, this index has a market cap of $12trillion containing giants like Apple, Microsoft & Nvida

Which are also giants in the MSCI World Index, the benchmark that it underperformed

Meaning the under-performance v the non-giants in the MSCI World Index is even greater…

And we’re only talking about two weeks here!

In fact, such levels of underperformance have only occurred 5% of the time since the beginning of 1999


only 6 times since the beginning of the bull market in 2009

Do I have your attention now?


But why is this happening? I thought the “playbook” was supposed to be:

Low inflation means low interest rates which means we buy go-go technology

And last week we got a low inflation “print” AND here we have an index full of all the AI beneficiaries..

but there was no “go-go”

I did say this was “interesting”…

Speaking of that playbook, I assume you’ve noticed that when inflation was 9% in June last year, the US 2-year was 3%

but now with inflation at only 3.2% the 2-year has RISEN to 4.9%…

Yes, I  didn’t think it would play out like that …

Don’t worry, most didn’t

That’s why we don’t bother with macro forecasts

We know we aren’t going to get every call right but when we get them wrong, we prefer it to be in 2%-3% positions

Not a +20% macro call…

But I think you’ll find the reason lies in Supply and Demand


Well maybe, just maybe, DEMAND for hyped-up tech is finally exhausted

On the 18th of July, the FT ran an article saying the giant fund managers have run into strict regulatory limits on these tech stocks (see comments)

which of course makes you wonder who is going to buy the SUPPLY of the tech share options from staff cashing in …?

Whereas there’s seemingly no end of SUPPLY of treasuries (see FT article in comments)

Personally, I find neither 4.9% Treasuries or 2-3% FCF-yielding tech stocks enticing

Yes, but they’re “great companies” and they’re “growing”

Well, Apple hasn’t grown revenue or operating income in 3 quarters so a big “No Thanks” to that one on 30x earnings..

And let’s blame QE for us all forgetting that


Coke has always been a great business but had you bought it in August 1998, by October 1999, you were down 46%

Buying in a Jan 2008 “sugar rush” caused you to lose 42% by Feb 2009

Now you’ll recall I said the news was “potentially concerning”


Well, the average return 1 year after periods of the MSCI World IT underperformance was…

Minus 16%


Hey, it’s better than the median loss of -30%

What’s your holding in IT stocks?

Only 2%

I did say “most portfolios” 😉