On QQQ vs. S&P debate. Growth vs. Value.
1/ The surge in cyclicals and recovery plays feels eerily familiar, similar to what we saw last year with WFH stocks.

2/ The debate about factor rotation between growth, value and GARP feels misplaced to me. What the true dilemma appears to be is: what earnings, margins and growth are sustainable?

3/ For the value/cyclicals: what names will benefit from a permanent uptick in demand and will be able to raise prices? Vs.
What names will experience a one-time demand boom and then re-normalise?

4/ The narrative on those cyclicals will end up being similar to what WFH names are currently undergoing-> tough comp headwinds. It will be the same in 1 year for the recovery plays once initial surge has passed.

5/ Sternlicht “The [summer] numbers will be astronomical, but that’s going to be a bubble...We’ll have to see across the whole economy what’s sustainable” when talking about business travel and convention centre bookings encapsulates the challenge of diving into the recovery play

6/ On the other side, the tech names currently bleeding the calculus for buyers is different: what names have had a permanent adoption increase / enlarged TAM, have had their competitive positions strengthened vs those that had a demand pull forward

7/ Growth investors will need to deal with tough comps, inflation scares, tapering. Many will flinch. Multiples will contract and patience will be required to see how those companies perform on the other side of those cold winds.

8/ I anticipate that when the true difficulty of figuring out what side of the trade to be on becomes apparent, GARP will be the preferred and easy choice for investors not wishing to commit.