Nothing earth-shattering here. The world is a risky place and the capital markets are volatile; we all know that. Three weeks ago on September 2, I wrote a blog post on the phenomenal YTD performance of the iShares MSCI USA Momentum Factor (MTUM) exchange-traded fund; up +25% YTD at that time. Its top holdings included high-flyers like Amazon, Apple, Microsoft and, of course, Tesla.
Well, what a difference a day makes (21 days to be exact!) MTUM has lost 12% of its YTD performance and is now up “only” +13% YTD! Still a great showing in a mostly dismal year for the much broader markets, but it goes to show the volatility embedded in the market leaders. The top holdings in MTUM all took a steep dip over this time horizon (e.g., Apple -19%, Amazon -15%, and Microsoft -13%). Even Tesla, due to Wednesday’s drop, is down double digits at -15%. See chart below for more details, noting the steep declines starting at the 0% mark on Sept 2.
Is this just a short downward blip, or a prelude to longer term steep decline? I could go on and on about the fundamental and technical indicators supporting either view. But, the real answer is two words: Beats Me!