Wells Fargo Securities’ Chris Harvey is out with the bank’s top 10 forecasts for next year.
“It reminded us a lot about 1998– the late ’90s,” the firm’s head of equity method told CNBC’s “Trading Nation” recently. “AOL, comparable to Tesla had a game-changing innovation, extraordinary efficiency [and] it enters into the [S&P 500] index late in the year in December after a remarkable run. But it was a critical event.”
AOL, the former king of media, saw its influence unwind since it failed to keep up with the fast pace of technology. Harvey warns that the electric car maker could suffer a similar fate. His caution comes as Apple aims to handle Tesla by producing its own self-driving car by 2024.
“After ’99, numerous tech and development business lost 50% to 100% [of worth],” said Harvey. “We’re believing in 2021, whatever happens much faster. So, if it took 12 months for the end to begin, now it’s going to take 6 months.”
Tesla stock has risen almost 700% this year.
Its record run is one of the reasons Harvey tells customers to avoid considering development at any price.
“They require to start looking at cyclicality. They need to begin believing about getting more high Covid-beta names in their portfolios,” he said. “Old economy, not a new economy.”
And, that sets up No. 2 on Harvey’s list: Stocks with awful charts begin to dominate.
“You wish to try to find those really beaten-up, less selected over stories where the chart looks broken,” he stated.
According to Harvey, next year’s winners will look a lot different than 2021′& prime; s. He sees investors beginning to dislike development and momentum stocks as economically sensitive locations capture a quote from restored financial development.
“Stocks that increased continued to go up, and what we think exists’s going to be a routine modification,” stated Harvey, adding 2021′& prime; s recessionary environment looked a lot like 2003 and 2009 when investors went to development plays.
His third forecast: Republican politicians will split the Georgia runoff, and keep control of the U.S. Senate.
“The polls are informing us it’s a pretty high probability,” Harvey said. “It’s really good if they do keep control of the Senate for the equity markets.”