Investors may face a pain trade with crowded US stocks and shorted Chinese stocks

From Nasdaq: 2024-10-02 09:38:00

According to Bank of America, the most crowded trade is in the “Magnificent Seven” US stocks, followed by shorting Chinese stocks like Alibaba and Baidu, leading to a major short squeeze.

Tesla stock could be at risk due to its high valuation compared to peers like NIO and BYD, with Wall Street analysts forecasting limited growth potential and downside risk of up to 40%.

Warren Buffett cut his stake in Apple by 50%, possibly due to weakening consumer discretionary sector and potential impact of interest rate cuts on the dollar, leading to a downside risk of 17.8%.

Meta stock crashed due to heavy cash outlay towards the Metaverse project, with concerns over the success of new AI glasses venture. Analysts predict a 5% downside from current levels, with uncertainty surrounding the financial impact of this new project.



Read more at Nasdaq: Why the Magnificent 7 Could Become a Pain Trade for Investors