Wells Fargo’s 2021 forecast features a warning to Tesla traders

Wells Fargo Securities’s Chris Harvey has released the bank’s top 10 predictions for the next year.

# 1 on his list: Tesla becomes the new AOL.

“It reminded us so much of 1998 – the late 1990s,” the company’s head of equity strategy told CNBC’s Trading Nation last week. “AOL, like Tesla, had breakthrough technology and incredible performance [and] it goes into the [S&P 500] Index ended the year in December after an amazing run. But it was a landmark event. “

AOL, the former king of the media, saw his influence dissipate because he couldn’t keep up with the breakneck pace of technology. Harvey warns that the electric car maker could suffer a similar fate. His warning comes as Apple tries to take over Tesla by producing its own self-driving vehicle by 2024.

“After 1999, many tech and growth companies lost 50% to 100% [of value]”said Harvey.” In 2020 we think everything will go much faster. So if it took 12 months to begin the end, it will now be six months. “

Tesla stock is up nearly 700% this year.

The record run is one of the reasons Harvey encourages customers not to think about growth at any cost.

“You need to deal with cyclicality. You need to think about adding more Covid beta names to their portfolios,” he said. “Old economy, not a new economy.”

And that’s number 2 on Harvey’s list: stocks with ugly charts are taking off.

“You really want to be looking for the really battered, less outdated stories where the chart actually looks broken.” he said.

Harvey says next year’s winners will look very different from 2020. He sees investors gradually losing interest in growth and momentum stocks as economically sensitive areas receive an offer for renewed economic growth.

“The stocks that have risen have continued to rise, and we believe there will be a regime change,” said Harvey, adding that the recessive environment for 2020 looked very similar to 2003 and 2009 as investors closed Growth games came.

His third prediction: The Republicans will split the Georgia runoff election and retain control of the US Senate.

“The polls tell us it’s a pretty high probability,” said Harvey. “It is very good if you keep control of the Senate for the stock markets.”

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