Macro thesis in deflation vs inflation Here is a and edited vs of my original comment which I wrote on my phone at a coffe shop..
and just to clarify I think the important part is that the fears of inflation, rising interest rates and the corresponding tech sell of (which has hurt WELL and other tech stocks) is overblown and we will see a return to tech sooner rather than later as investors switch back from "cyclical stocks" to defensive plays (such as health care) and tech stocks (at least the ones that are correlated to technology displacing workers which is often a bi-product or a deflationary environment where corporations are seeking cost cutting measures)...
Here is a counter trend macro analysis of why the recent tech sell off might be a mistaken belief in rising inflation and in fact we are headed towards deflation...the main reasons everyone thinks we are headed towards serious inflation (and the reason bonds yields have been rising and tech has been falling) is that money managers feel that fixed income, bonds and treasuries will be negatively effected with high inflation (essentially the higher inflation eats into the relatively small yield of the bond). So the thought goes that if we see inflation (both from increased monetary supply and real growth - ie increased supply and demand) then the best equity play is “value stocks” and “opening up stocks.” This has caused money managers to sell of tech stocks that have seen huge growth over 2020 (some of which haven’t really become more profitable relative to their revenue streams - unlike WELL, but unfortunately WELL has myopically been lumped into that group). The initial belief was that too much funds parked as cash deposits in financial institutions would cause banks to sell bonds (normally lots of money in bonds would contribute to deflation because fixed income - ie bonds - is money that is not really participating in the economy and therefore contributes to deflation) but we have in fact seen them buy up Bonds like crazy ever since the SLR exemption expired (which you should google and figure out on your own if you wish) ... the SLR rule was temporarily withdrawn to increased lending during COVID but was put in place to force banks to hold cash deposits (at about 5%) of what people put into the bank so they can handle sudden widespread withdrawals that often occur during economic downturns (think of the scene on “its a wonderful life” when everyone came to the bank at the 1929 crash to get their money and they were greeted with a “closed” sign)..but the Feds have made it possible for them to hold both cash AND bonds to buttress that above mention 5% of deposits held at the institution and since that SLR exemption expired bonds have been bought up like crazy and yields are now falling (not to say that is guaranteed to continue though). This has caused a massive increase in bonds which has caused the yield to fall. Add in the fact that inflationary data has recently come out way lower then expected and I think other factors are causing everyone to overemphasize the inflationary fears that are causing this recent tech sell off. Deflation in my view is the real risk that is approaching (As job losses continue, tech displacement of workers - and at least partially as explained above and counter to popular belief- quantitative easing may actually be contributing to deflation because overall that money is staying parked in institutions in the form of bonds, share buy backs, and debt repayments of all kinds) and so, in my view, the best investments continue to be those at the begging of the pandemic when deflation fears were huge (utilities, tech, health care, and interestingly crypto - google that one too) because I am taking the contrarian view that we are not headed for inflation but I fact DEflation..Just my thoughts, do your own DD.. but for those reasons you should load up on more WELL.