In 2024, investors may need flexibility to avoid potential economic hits.
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As the Federal Reserve focuses on dealing with abnormal inflation after the epidemic, the stock market has become extremely sensitive to the Federal Reserve’s comments and economic data. Economists’ forecasts for a recession are also constantly changing, reflecting continued uncertainty.
Now, Wall Street’s most prominent strategists are offering a new set of mantras for navigating the uncertainty of 2024, including agility, discipline and a focus on small and mid-cap stocks.
Here’s what three investment strategists think investors should consider as we enter the new year:
Truist: Investment strategies cannot be automated
Keith Lerner, co-investment director at Truist, advises investors to “go with the weight of the evidence.”
“The most important thing is to stay flexible.” Lerner on Yahoo Finance Live. “It’s more important that your views are grounded and adjusted as the data and time change… We’ll let the data speak for itself. In some ways, we rely on the data, just like the Fed . ”
Truist is currently overweight heavyweights, technology and communications stocks, but the firm believes it will make sense to “go big on penny stocks” at some point this year.
“Currently, the stock price of Keke is rising, the profit trend is very strong, and the relative price trend is also very strong.” Lerner said. “So we will continue to be overweight. If we start to see something fishy about these earnings trends, we will change our stance.”
Charles Schwab: Observe strict discipline and avoid “zombie companies”
Liz Ann Sonders, chief investment strategist at Charles Schwab,’s top thought for 2024 is discipline.
“Now is the time for serious risk management,” she told Yahoo Finance. “It’s about diversification and rebalancing. It’s the best way to deal with an uncertain outlook.”
Sonders believes that de-risking unprofitable businesses is a disciplined practice in itself.
“In traders’ terms, you want to get rid of low-quality brands that are doing well but continue to rise in quality,” Sonders said.
Although the Russell 2000 is the most commonly used small-cap index and has outperformed the benchmark over the past month, Sonders reminded investors: “Nearly 40% of the stocks in the index are unprofitable – and 31% of the stocks are zombie companies. In contrast, constituents of the S&P 600 (another small-cap index) must be profitable to enter.”
Northwestern Mutual: Stock market leaders will change positions
Brent Schutte, investment director at Northwestern Mutual Wealth Management, says investors should not Don’t forget about diversification.
“If you look back at every economic cycle in the 1970s and 1980s, the leadership of the market has changed.” Shutte said on Yahoo Finance Live: “I don’t think investors are talking about ARKK anymore. The focus is on technology stocks and Growth stocks. I do think there is other value and opportunity in small and mid-cap stocks.”
In his outlook, Schutte also predicted that the Federal Reserve’s actions to suppress inflation would make it difficult for the economy to have a soft landing.
Shifts in the economic cycle may allow high-quality small and medium-sized companies to outperform the market – a prediction that Sonders and Lerner generally agree with.
Schutte said on Yahoo Finance Live: “There is evidence that small and mid-cap stocks have absorbed the impact of the earnings recession, and the price fluctuations are more limited than the S&P 500 index, which is considered to be of higher quality and more defensive in nature.”
2023-12-11 07:01:16
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