Big Bull market investor states that software is becoming a crowded trade

The stock market’s bull investor is predicting the S&P 500 to gain another 7%, however the3 investor has started issuing a warning that a popular trade is not expected amid the rise. Wells Fargo Securities’ Chris Harvey stated that the company eliminated software to become underweight from neutral and decided to declare itself as a crowded trade. The investor stated that the decision was made after incorporating the fundamentals of technical and high valuations. He goes on to state that from a valuation point of view, the customer is paying over 75% in premium to the market for software.” Dow Jones US Software Index soared more than 28% amid the past five months due to the work from home scheme.

The investor is finding the opposite scenario to be true in case of media and entertainment. When a company downgrades a software, it helps in upgrading media and entertainment. If an emphasis is laid over the media and entertainment industry, the customers have been witnessing a rising revisions, and growth opportunities. However, the customers are only paying out a premium of 15%. The investor has boosted his rating for media and entertainment groups to be overweight from neutral and has listed the industry to be a top market player. The media and entertainment showcases rising opportunities for capitalizing on the reopening plays. The investor not only expects to witness a strong fundamental and improvement in the sentiments of the consumers. The investor also expects that advertising is making a comeback across the diverse group, including the cable companies and big tech.

However, the investor firmly believes in the risk-on camp. He expects that the consumers had like to want more cyclical exposure and suggests that the rising COVID-beta plays to be reason for the economy to move forward.