Hi, TA, nice seeing you again. Let us know when and why you are leaving, so we can check out your reasons :-)
I agree, the deferred tax selling has a lot to do with it as well; however, the techs also ran at the end of 98, and the tax selling didn't hit for much longer, and it wasn't as violent. Same with the portfolio rebalancing, took much longer.
Why the difference this year? Maybe because of the interest rate fears that you mention, people and institutions want to be out ahead of the Fed's February meeting. They probably had already rebalanced their portfolios and figured their tax sales by the end of the year, and were just waiting for when to pull the trigger. The rapid rate rise the other day may have been the catalyst, but it went up so fast that everyone jumped on the trigger at the same time. Now a 1/2 point Fed rise is already built in, so I don't know if the Fed is going to have much more effect on the markets for the near term.
And as far as rebalancing and rotation into the rest of the market, well, that can only be good for the market in the long run. Better to rotate than to pull out of the market. Besides, that money will come back into techs when they realize that utilities haven't make too many millionaires with their dividends :)
BWDIK |
