BlackRock : Don`t Have a Clue
(Wed, 22 July 2020). A senior quant strategist at BlackRock has no idea what`s going on in the stock market. That should terrify everyone. Larry Fink, Chief Executive Officer of BlackRock, no longer has a handle on the stock market. Wall Street today is a lot like 2017`s crypto-mania.
One BlackRock quant fund has given up on justifying stock prices, calling them a mystery. Piling into even frothier valuations is the only game in town on Wall Street. To cryptocurrency traders, the situation is as clear as day. Blackrock, the largest asset manager in the world, may have just inadvertently provided the best justification yet to avoid investing in the stock market. One of its quant teams thinks you should stop caring about price entirely, and that’s terrifying.
Blackrock Senior Quant Calls Stock Market Prices “A Mystery”
As tech stocks go berserk against the backdrop of an unemployment crisis and global pandemic, it’s almost impossible for a rational investor to justify current pricing. Enter Jeff Shen at BlackRock. According to a recent Bloomberg News article, Shen is leading a quant strategy to push the boundaries of returns as “value” stagnates and “growth” stocks explode higher.
Shen’s strategy is boldly seeking the riskiest stocks because they offer the most significant upside. (It’s a lot easier to be bold when you’re not gambling your life savings). If that doesn’t scream dot-com bubble, I don’t know what does.
This Is Crypto-Mania All Over Again
If an asset-manager at a Federal Reserve partner institution, which holds $7.4 trillion in assets, can’t get a handle of what’s going on, then no-one can. Except, that’s not entirely true. Cryptocurrency enthusiasts saw this exact storyline play out in 2017.
First, take a new and exciting asset with an incredible story and obvious potential. Now insert a populous existing in a world where asset prices are crushingly high, and life-changing investment returns are long gone. Cue a retail-mania as they see early investors make mega-money. FOMO strikes with a vengeance, and everyone’s layman friends are calling to ask where they can buy bitcoin.
At peak euphoria, the most effective trading strategy was to go into Binance and simply purchase the cheapest altcoins. I don’t mean figuring out what the lowest valuations were relative to supply, technology, or purpose, I mean simply the cheapest token or coin you can buy. That’s precisely what we see today in the stock market. If Amazon is bitcoin, Tesla may be Litecoin, and Nikola is Tron or XVG.
‘Where’s A Good Place To Buy Stocks?’
Over the last few weeks, financial professionals have been inundated with questions about how they can buy stocks. This is a speculative retail mania, nothing more and nothing less. We also have clear evidence the wolves are front-running the sheep. Last month alone, your author was asked by an insurance manager, a film director, a school teacher, a contractor, and a tennis coach about buying stocks.
BlackRock is wrong; there aren’t a million things this market is observing. It’s looking at one: prices.
GFS ASIA TEAM
- just now