$INDUSTRIALS - Quantitative strategy has rotated into industrials based on rules-based reconstitution, representing actual capital allocation with less tech exposure than ever before
$SMALLCAP - Small cap stocks historically outperform large caps by 1.7% annually since 1926, and the current 13.5-year underperformance period suggests a mean reversion opportunity
$FINANCIALS - Financial companies can leverage AI technology at low cost while tech companies bear massive infrastructure expenses
$HEALTHCARE - Healthcare sector can efficiently apply AI technology to provide value without bearing the massive infrastructure costs
$UTILITIES - Utilities can benefit from AI applications without bearing the infrastructure costs that tech companies face
Bearish:
$PASSIVE - Passive investing structurally forces buying overvalued stocks and is the opposite of buy low, sell high strategy
$MSFT - Microsoft's price-to-sales ratio of 14 is 40% beyond the peak of the tech bubble, indicating extreme overvaluation
$AAPL - Apple could drop 50% and still be overvalued relative to its historic PE ratio of 14-15 versus current 39
$MAG7 - Mag 7 companies view AI as an existential crisis leading to irrational capital allocation decisions
$NVDA - Massive disconnect between $1 trillion in AI infrastructure costs versus only $20 billion in revenue generation