In short: Also removed from Terranova's ETF at the rebalance, and the one he minds: "the one that's painful is Royal Caribbean… a name we have had in the portfolio for the better part of the last two years and done really well with. So I'm disappointed to see this move to the sidelines." The exit is rules-based on near-term price performance, "a lot of that attributable to what's going on in the Middle East. So that could reverse itself very quickly" — not a negative fundamental view. Context: consumer discretionary is "the one sector in which I don't think momentum is very successful. It's a lot of fits, a lot of starts."
Royal Caribbean was removed from Joe Terranova's ETF at the July rebalance, and he says it's the exit that stings — a holding of nearly two years that has "done really well." The removal was mechanical, driven by weak recent price performance that he attributes largely to Middle East disruption, "so that could reverse itself very quickly." In other words, this is a rules-based exit rather than a negative view of the cruise line.
The broader lesson he draws: consumer discretionary is the one sector where momentum investing works worst — "a lot of fits, a lot of starts, a lot of quick entry into positions and a couple of quarters later you're out of it."
In short: Up 17% in Q2 "as it rebounded from its war correction" — the other consumer-discretionary winner alongside Ralph Lauren.
13:46All the cable stocks were down double digits. Consumer discretionary was a mixed bag. Yes, it was up 6%, but there was tremendous dispersion. Ralph Lauren was up 20%. Royal Caribbean was up 17% as it rebounded from its war correction. By contrast, Domino's continues to suffer from the low-end consumer pulling back. The stock was down 20%.
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