Wall Street’s Sinister Sheep Herders

Dear Rundown Reader,

Wall Street thinks most folks are sheep.

And they treat you as such.

Buy this, sell that. Hold this. Overweight, underweight… Do what I say, you have to trust me.

Ok, but to what end goal? Increasing your wealth, or mine?

If you think Wall Street would prefer you take profits over them, we have a bridge to sell you too.

Today’s Rundown looks at Wall Street’s tech stock downgrade, and shows you why this may be a big mistake.

Your Rundown for Tuesday, July 10, 2018…

Morgan Stanley, Barclays Downgrade Tech Stocks

Stay away from tech.

That’s the message in short, as per Morgan Stanley’s (NYSE: MS) latest investor note.

MarketWatch reports, chief equity strategist Michael Wilson downgraded the tech sector from equal weight to underweight, stating tech’s “days of strong performance are numbered.”

The suggestion comes under the guise of savvy market advice.

Preventive measures for smart investors right?

After all, they are Morgan Stanley. They generally know what they are doing.

Justification for Morgan’s downgrade, as reported by CNNMoney, is as follows: “These stocks have rarely, if ever, been so over-loved and over-owned,” Wilson states.

We’re not buying that.

An extended look at core holdings shows Morgan Stanley stands to lose a lot of money if the tech sector goes belly up.

Here’s the percentage breakdown of Morgan’s holdings, as of April.

Almost a quarter of their assets are tied up in tech stocks, led by Google at 5.13% asset allocation and Apple with a 4.9% asset allocation.

It begs the question… What’s Morgan’s real endgame?

When Morgan Stanley speaks, people move. If enough people move away from tech, it could trigger a sell-off.

Especially when Barclays’ Maneesh Deshpande joins in on the narrative.

Maybe that’s Morgan’s end game.

Shake timid hands out of the market. Startle the herd, initiate a sell-off and scoop up all the tech shares they can grab on the dip.

Why?

Because they know, like we know… The world runs on tech. Tomorrow, it will run on more tech.

It’s the natural order of things today.

Maybe we are buying.

Tech stocks at least.

Now, turning to the markets this morning…

Market Rundown for Tues., July 10

Yield on the 10-Year Treasury sits at 2.869% this morning, up 0.009.

S&P 500 futures 5.50 at 2,793.

Oil’s up slightly at $74.14.

Gold’s down $10.30 to $1,249.

Bitcoin goes for $6,363 this morning, according to CoinDesk.

We’ll talk again on Wednesday.

For the Rundown,

Aaron Gentzler

Aaron Gentzler

You May Also Be Interested In: