All articles tagged with #stock picking
The article discusses cautious optimism for 2026, highlighting high market valuations, expected earnings growth driven by AI, and a preference for selective stock picking over broad market exposure due to valuation concerns.
Goldman Sachs predicts a new 'postmodern' era in markets characterized by higher bond yields, rising inflation, and stretched valuations, which may lead to disappointing broad index returns. Skilled stock pickers and diversification, especially outside the U.S., could offer better opportunities amid changing macroeconomic conditions.
Vanguard plans to launch its first actively managed stock-picking ETFs this year, expanding from its traditional passive index funds, with strategies focusing on dividend growth, growth stocks, and value stocks, in response to rising demand for active ETFs.
Tom Lee's Fundstrat Granny Shots US Large Cap ETF has rapidly grown to $1.5 billion in assets within eight months, outperforming its benchmark and peers through a disciplined, thematic, rules-based stock selection strategy focused on long-term trends like energy, cybersecurity, AI, and millennial influence, with top holdings including Robinhood, Oracle, and AMD.
Goldman Sachs equity team identifies consumer discretionary and information technology sectors as offering the best stock picking opportunities based on dispersion, with high dispersion indicating a favorable environment for picking stocks. They highlight 25 stocks with the highest dispersion scores, including Monster Beverage, DexCom, and Akamai Technologies, among others, as potential opportunities for investors.
Recent market reversals in the equity and fixed-income markets have highlighted the challenges of making accurate forecasts in the investment business. However, these reversals also serve as a reminder of the timeless investor psychology lesson to be fearful when others are greedy and greedy when others are fearful. Investment strategists provide prompts for professional investors to consider whether their portfolios are properly calibrated, rather than offering exhortations for action. While some investors may act on analyst opinions, the highly regulated world of investment management emphasizes caveat emptor. The critique of Wall Street's daily firehose of opinions and warnings suggests that fewer people are needed in stock picking, as many of these opinions are more prescriptive in theory than in practice.
The Federal Reserve's recent projections indicate a potential shift towards increased vigilance on unemployment and GDP growth, leading to a "higher and longer" federal funds rate path. This suggests the Fed's concern that strong employment could impact inflation. The US economy is expected to face significant constraints in 2024, leading to a restrictive policy environment that will weigh on growth. Valuations for the S&P 500 are fair but not necessarily cheap, indicating that active stock picking will be crucial in 2024. Investors should focus on sectors and companies that can sustain growth amidst headwinds, such as large tech companies with opportunities in cloud computing, e-commerce, enterprise software, and energy transitions. Small and mid-cap companies with improving customer trends and cash flows also present alpha opportunities. The continued penetration of e-commerce and non-store retailers is a key trend to watch. Overall, investors should prioritize individual stock selection over passive index investing strategies in 2024.
Joel Tillinghast, the manager of Fidelity Low-Priced Stock, has outperformed the S&P 500 and the Russell 2000 index since the fund's launch in 1989, with an annualized total return of about 13%. Tillinghast's strategy involves seeking undervalued small and mid-cap stocks that trade at a discount to their intrinsic value. He emphasizes the importance of long-term investing and considering a company's earnings potential over several years. Tillinghast also highlights the need for investors to have a clear advantage or special approach when choosing active funds over passive index funds. His advice for young investors is to take a long-term view, be patient, and carefully assess the price and value of investments.
Exchange-traded funds (ETFs) can still compete in today's "stock picker's" market, offering the benefits of active management and stock picking along with tax and cost advantages, according to Avantis Investors Chief Investment Officer Eduardo Repetto. He predicts that actively managed ETFs will continue to gain traction in the second half of the year. Over the past three years, the number of actively managed ETFs has grown, providing investors with more options beyond index ETFs. Avantis Investors' actively managed Avantis U.S. Equity ETF, with top holdings in Apple, Microsoft, Amazon, Meta Platforms, and Alphabet, has seen a 12% increase this year and a 49% increase over the past three years.