It seems that everywhere investors look, markets seem to be booming in 2023, a sharp turnaround from the 2022 slump.
Meme stocks, tech stocks, bitcoin have all surged this year, attracting the attention of bears who see signs of froth in many corners of today’s markets. Meanwhile, bulls argue that this is an exaggeration and that calling it signs of a bubble would be premature.
“These valuations are volatile,” Tavi Costa, portfolio manager at Crescat Capital, told MarketWatch.
Outside of the cash markets, demand for call options, which represent bullish bets on the market, also improved markedly in 2023.
Even with short-term Treasury yields offering investors a 5% return with little risk, some market strategists see room for the rally to continue.
“Early bull markets feel similar,” Cox said in a phone interview with MarketWatch. “I think investors are playing idiosyncratic, which is usually what you see early on.”
Here are the four corners of the market where the froth is most evident.
Meme shares
GameStop Corp.
GME:
kicked off the “meme stock” trend when it rose north of $400 per share in January 2021.
Many meme stocks are tied to money-losing businesses, but that hasn’t stopped the Roundhill Meme ETF from gaining nearly 59% this year, FactSet data shows.
Bitcoin:
Despite a crackdown by US authorities on cryptocurrency businesses, Bitcoin has seen its price plummet from its lows at the end of last year.
The leading cryptocurrency
BTCUSD:
is up 80% year over year to $29,856 per coin.
Its gains have also helped many crypto-related stocks, including MicroStrategy Inc.
MSTR:
,
which holds more than $4 billion in bitcoin, saw its shares rise more than 210%.
Riot platforms
GROUP:
,
is a crypto miner, has seen his shares increase by 440%.
See. Why Some Crypto Stocks Are Up 400% This Year, Outpacing Bitcoin
Katie Wood
Megacap tech stocks like Meta Platforms Inc.
AFTER:
and Amazon.com Inc.
AMZN:
grabbed a lot of attention in the headlines.
But many smaller tech companies have been crushed by taller behemoths. As a result, Katie Wood’s flagship fund, the ARK Innovation ETF, has gained more than 50% this year, according to FactSet data.
Certainly, the fund has won Tesla Inc., one of the so-called “Magnificent Seven” group of megacap stocks along with Meta and Amazon as its top holding. Tesla shares are up 111.09% year-to-date to $260.02 per share.
See. By this important measure, Amazon is the cheapest of the Magnificent Seven stocks
Coinbase Global Inc.
COIN
,
ARKK, the second-largest holding, is up 184.9% this year, far outstripping bitcoin’s gains.
Call shopping continues
Investors have piled up call options on the stock this year, a sign that traders expect the 2023 rally to continue.
On July 11, the CBOE stock’s sales ratio hit an 18-month low of 0.50. The gauge compares demand for contracts on US stocks and exchange-traded funds (including index funds like the SPDR S&P 500 ETF).
SPY
) at the request of call contracts.
At the end of last week, the index was at 0.60, in line with its five-year average.
Calls represent bullish bets on the underlying stock or index, while puts represent a bet that the underlying asset will decline.
[ad_2]