One of the interesting aspects of the brief selloff in stocks in late November was that breadth deteriorated markedly. The broad indexes were only down a few percentage points, but there were more than a thousand stocks making 52-week lows on a daily basis. And, of course, the stocks that went up were the same ones that seem to always go up: Apple Inc., Microsoft Corp., Nvidia Corp. and a few others.
This presents challenges and difficulties to a range of players on Wall Street. In the analyst community (of which I am a part), how can someone honestly and objectively recommend Apple? It is poised to gain at least 30% for a third straight year and its market value is on the edge of $3 trillion. Analysts, no matter where they sit on Wall Street, are incentivized to find rare opportunities and unloved stocks that are typically ignored. I have a newsletter, and if I wrote to my subscribers that after hours of thought, research and deliberation that my best idea was Apple, I would be a laughingstock. After all, everyone already owns it, either directly or indirectly through something like an exchange-traded fund or similar investment vehicles.
