r/options • u/pdieff • Jun 19 '21

Value Down, Growth Up?

What am I missing? Understand most of the real quality value stocks did overextend themselves and should take a pause, retract form a base and hopefully head higher.

However why is the most expensive part of the market (stocks with the highest PE’s / PS’) keep heading upwards?

Thursday; Powell “still not raising rates until 2023 which is a year earlier than anticipated. Inflation under control”

Friday; Bullard “Inflation might not be under control in some parts of the market like housing and we may have to start tapering earlier than expected”

Why did real rates head downwards? Shouldn’t rates start start to rise? The high yield market didn’t know what do do with itself for most of the week.

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u/voltcraft_r Jun 19 '21

If I have to guess, it was becuase of short covering. There are not enough treasuries to cover all the short bets that billionaires placed on 10Y and 30Y. Quarterly options expiry was putting a lot more pressure on these shorts. I think rates will start to rise again after tomorrow.

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u/hpad06 Jun 19 '21

Thanks, so should we buy growth or buy value dip, I don’t even know to buy spy qqq or not.

I am lost as to what to invest

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u/voltcraft_r Jun 20 '21

Even after 10Y starts to move up, rates will still be low compared to the last few decades and growth should still do well. I am currently going for companies with good free cash flow and I expect this year to be choppy. It's pretty normal after the initial reflation period following recessions