Where to as the market tanks?
The market ended down again as Covid-19 case counts ramped up again. Eventually settling down 650 point on the Dow Jones, it was the largest tumble since September. While the justification may have been unpredictable, the set-up was ripe considering the period of uncertainty coming up. Not only were cases already beginning to tick-up but the upcoming election is prone to be a most disturbing of circumstances due to all the uncertainty and pent-up frustrations that abound for all sides involved.
So where to from here? It might be helpful to withdraw some funds into cash if you haven't already, but at the same time it could be a good time to redeploy some capital. Although overvalued, the large tech names have held up considerably well all things considered and have largely been pegged as Covid-resistant. Amazon, for its part, was one of the few names in the green this down day as the rest of the market tanked.
There is also a huge gap forming in the value names, many of which have never recovered nearly as well as their growth and tech counterparts. I still remain a huge fan of some oil & gas infrastructure play while less bullish on their oil giant peers. Real estate is also heavily favorable given how well its held up during this recession.
But offhand, the most promising sector to me remains the commodity names at the present. Lumber continues to sell well above its normal trading range for example. A play on iron/steel like Cleveland-Cliffs (CLF) continues to be on shorthand list ready to be bought at a moments notice. Likewise, a company like Norlisk (NILSY) looks very favorable given the trendline for the renewable sector. Some irony there considering Norlisk remains one of the worst polluters in the world.
But above all, I would continue to maintain a good hand in international exposure (especially in Asia).
Prosus (PROSY) & Naspers (NPSNY) remain my largest positions due to their large exposure to China via Tencent, while still being opportunistic global investors. Albeit its poor reputation, Softbank (SFTBY) also provides a similar story with its holding in Alibaba. In both cases, these are prime names considering their stock's absurdly steep discounts to their underlying holdings in these public companies. All of these plays remain over 30% discounted to a more fair valuation.
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