What Goes Up, Occasionally Comes Down

In today’s chart of the day from Deutsche Bank’s Jim Reid, the chief credit strategist shows the dramatic performance reversal some of the most beloved stocks of 2020 have suffered in 2021 by mapping the return of the largest NASDAQ constituents in these past two years with the graph cut-off to reflect Tesla’s outsized +743% gain in 2020. So far in 2021 it’s the worst performer amongst these names (-18.1%), as the first shall be last.

As Reid notes, “technology shares have been battling the cross currents of strong growth and higher yields all year. Throw in heroic valuation levels in many names and 2021 is proving to be much more of a struggle than 2020… Even peerless companies like Apple and Amazon, which have announced two very strong quarters of results so far this year, have slightly declined in 2021.”

Reid then reminds readers that at the start of the year, his two biggest worries were “notably higher yields and a bubble bursting in tech shares. As we get closer to midyear, yields are indeed a lot higher across the globe and tech is deflating from its February peaks. However, this has so far had minimal impact on many other risk assets.”


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