Taylor Collins: Commodities And Market Rotation

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Commodity prices and performance of many resource-related stocks have been picking up recently. In addition to this, many of the wildly popular, most-talked about tech/growth stocks now seem to be going sideways and/or sputtering altogether. If we go back just a few months to July of this year, NASDAQ was up almost 20% YTD, and we've all probably heard about the record IPO filings and insane valuations on many of those stocks (something we've discussed previously). 

It appears that we are witnessing a market rotation out of tech/growth and into value, and I believe this is just getting started.

There is a great saying from the historian James Grant, "Progress is cumulative in science and engineering,  but cyclical in finance." We will revisit this idea later, but for now let's take a look at a few indicators of commodity prices since the COVID correction back in March.

Taylor Collins: Mind Blowing Valuations – Tesla, AirBnB, DoorDash

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The stock market, and in particular, stocks popular among millennial “Robinhood traders” (who have never had the privilege of experiencing a deflating bubble) have been all the rage lately.

It’s fascinating to see companies like Tesla being added to the S & P 500, when it took 16 years for the company to even turn an annual profit. What’s even more astonishing is the enormous market capitalization of Tesla (and similar companies we’ll look at), when compared with their senior and more established competitors.

Tesla’s market cap currently stands at $658 billion ($659 billion if rounding up), beating out Warren Buffett’s Berkshire Hathaway by roughly $133 billion. This is incredible considering Tesla only has a global market share of 1% for passenger vehicles. The chart below illustrates how Tesla’s market cap exceeds the combined market cap of the world’s biggest auto makers – keep in mind Tesla has added 80 billion to their market cap since this chart: