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Find new investment opportunities based on Market Sentiment Indicator. Manage watchlist risk with leading indicator of volatility See what influential analysts and investors are saying about stocks in your watchlist
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Shai.GalShai Gal is a highly experienced financial journalist with expertise in the tech industry and dividend growth stocks. He has a strong track record of producing insightful content that helps investors make informed decisions. Shai is skilled in conducting in-depth research and analysis to identify trends and opportunities in the market.
Investors need new acronyms. FANG (Facebook, Amazon, Netflix and Google) and all the other versions matched for a certain period, but 2023 extended the market lead to seven, maybe eight companies that control it, and they seem to be dancing to a different tune than the rest.
These stocks are responsible for moving from a bear market to a bull market tentatively. And their rise comes alongside significant changes in market behavior, especially in regards to interest rates. Stocks at high valuations no longer seem to care what the Federal Reserve does.
Most, though not all, of this year's big winners are huge cash-generating companies with strong balance sheets -- the definition of "quality" companies in Wall Street parlance. While the recession that many predict has not yet happened, the combination between the risk of a recession and the bank panic that began in March makes quality stocks attractive.
Nvidia is already benefiting from the latest round of AI, and others are all set to benefit, thanks to their heavy investments in the field or because their cloud services are powered by artificial intelligence. I think too much of that is priced into the valuations, but it certainly helped this year.
They may not have reached the top, but they are almost certainly close to there. Stocks that crashed last year due to rising interest rates and bond yields are becoming less sensitive as the threat of further big interest rate hikes by the Federal Reserve is removed.
Taken together, those tailwinds have boosted the largest stocks in the S&P 500 and the Russell 50 and helped them beat the Russell 2000 index of smaller companies by more than 20% this year, better than any five-month period since the index was created In 2002 until the corona virus.
The usual mistake is to pay too much; Companies that Everyone agrees are great are more likely to be overpriced. Hence my opposition to Nvidia, the biggest beneficiary of AI. She'll probably really be a big winner, but everyone already knows that.
The second mistake is that friendships may not be what you think. Meta has done well this year, but its expected sales per share are still lower than at the beginning of last year, which is not a typical characteristic of a growth company. Tesla's earnings and sales expectations have fallen sharply this year, though that hasn't stopped the company's stock from soaring to a multiple of 54 times expected earnings.
The third mistake is that known risks are not priced correctly. In the case of the large technology stocks, the risk is of a new attack by antitrust regulators, because they have lost their popularity with the public and with politicians. It's unpredictable and hard to price, but could be very significant - as, for example, when antitrust regulators in the US and UK try to prevent Microsoft from acquiring game maker Activision Blizzard.
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Please note that the article should not be considered as investment advice or marketing, and it does not take into account the personal data and requirements of any individual. It is not a substitute for the reader's own judgment, and it should not be considered as advice or recommendation for buying or selling any securities or financial products.
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Disclaimer:
The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained.
The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.
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This information is provided for illustrative purposes only. You should not rely on any advice and/or information contained in this website and before making any investment decision. we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.
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Disclaimer:
The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained.
The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.
Please note that no offer or solicitation to buy or sell securities, securities derivatives of future products of any kind, or any type of trading or invesment advise, recommendation or strategy, is made, given or endorsed by StocksRunner including any of their affiliates ("TS").
This information is provided for illustrative purposes only. You should not rely on any advice and/or information contained in this website and before making any investment decision. we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.
