Investors have begun to switch back to traditional growth stocks

On Thursday, the stock prices of Cisco, Alphabet, and IBM hit new highs. But more importantly, the previously unpopular speculative growth stocks, including stocks bought by many ARK funds, have now begun to rebound.

How is this going?

Investors' perspective on the market is changing. In the first quarter of this year, mainstream voices in the market believe that the economy will restart strongly, bond yields will rise, and inflation may become a problem later this year. After the end of the first quarter, these expectations were only partially fulfilled.

The U.S. economy has indeed restarted strongly, but bond yields fell in the first quarter instead of rising because investors began to believe:

1) Inflation and supply chain disruption may indeed be "temporary", as the Fed insists;

2) The second and third quarters will be the highest points of stock returns and economic growth.

Alec Young, a chief investment officer of Tactical Alpha, said: “Trading in value stocks is slowly declining, and those who are long-term bullish on growth stocks are reaping benefits. Bond yields are representative of growth prospects.” He pointed out that bond investors see inflation in the second half of the year. The growth rate will slow down.

This keeps investors in the stock market, but they are turning to defensive stocks (healthcare stocks) and growth stocks (tech stocks).

Why would investors switch back to growth stocks?

Alec Young commented: "The value is biased towards industrial, energy, materials and small-cap stocks, so they are very sensitive to economic changes. When coming out of the recession, value stocks are better investments and their earnings leverage is higher. ."

"But the problem now is that the U.S. economy has entered a period of recession at a very fast rate, and now it has emerged from the recession at a very fast rate. Now, growth stocks are more able to withstand the unpredictable effects of the business cycle than value stocks. Provide higher returns."

Ben Snider and David Kostin of Goldman Sachs agreed. They recently stated that "historical data, stock valuations, stock positions, and economic slowdowns indicate that the rotation from growth stocks to value stocks is about to pass."

The two Goldman Sachs bankers said: "Mutual funds value stocks more than ever. Although hedge funds still prefer growth stocks, they have been very cautious about growth stocks recently.

Comments

Will China's economy recover as the epidemic is under control?

During the Chinese Spring Festival, novel coronavirus broke out in Wuhan, and the Chinese stock market was hit hard. Subsequently, the Chinese government quickly took strict measures to block Wuhan, a city with a population of tens of thousands of people, to prevent the further spread of the epidemic, and to take corresponding epidemic prevention measures in other cities. When the worst of the epidemic had already occurred, the Chinese stock market quickly rebounded. As the number of infections continues to decline, China's Shanghai Composite Index is expected to rise further. Sars Period Looking back on similar events in the past, the SARS epidemic in 2003, the stock market also made a short-term decline, and then the SARS epidemic was brought under control, the stock market immediately went up for a long time. According to past historical data, the impact of the novel coronavirus epidemic on the stock market may be short-lived. China Fund Capital Flow Howeve...

Shopify stock forecast 2025：Is it worth buying?

In the last year, the stocks rose relatively well. Another sector is e-commerce. Whether it is Amazon, Alibaba, JD.com, Pinduoduo, SEA or vertical e-commerce platforms Etsy and Chewy, all of them have experienced huge gains, while another category has benefited from the e-commerce sector. The company is a website building tool company such as Shopify BigCommerce Holdings. Today I will talk about shopify, the leader of website building tools. First, let's briefly talk about shopify's business model. To put it simply, shopify is a fool-like website building platform. In the past, when a company wanted to build a corporate website, it generally needed to find a dedicated person to design and maintain the website. If you want to add shopping functions to the website, the cost of building the website will also increase. This is true for many small businesses and individual businesses. A very difficult thing. Shopify uses the SAAS model to provide websit...

The stock market entering a bear market？

On March 6, 2020, the US stock market continued its decline today after a few days of rebound. Is this the beginning of a bear market in the stock market? Next, let's analyze one important indicator of entering the bear market, Treasury bonds yield. What is the yield of Treasury bonds? Treasury bonds are a tool issued by the state to raise funds. When the bonds are issued, they promise to repay the principal and interest on a specified date. The ratio of the return of Treasury bonds to the principal invested is the return of Treasury bonds. The main factors affecting bond yield include coupon rate, maturity, face value, holding time, purchase price, and sale price. Rising bond yields and falling bond prices mean investors are selling bonds, turning to invest activities, or entering the stock market. In a healthy economic environment, the longer the Treasury bonds, the higher the bond yield. Because short-term bonds are more liquid, investors are willing to accept lower ...

10 stocks tell you why U.S. stocks plunged!

On February 24, 2020, the U.S. stock market plummeted by 1,000 points. Since the outbreak of the new coronavirus epidemic, although market funds have already begun to flow into safe-haven assets such as gold and bond markets, the epidemic does not seem to have an impact on the stock market trend. As the new coronavirus epidemic spread further, and companies began to publish performance reports, investors began to worry that the epidemic would affect the company's next quarter's profit growth and made predictions for the company's next quarter's performance. Analysts lowered the companies The profit forecast for the next quarter, and the Fed is expected to cut interest rates in March, the Fed's rate cut indicates that the economy may further decline. S & P 500 Index Fed watch As an investor, you need to know how to value a company using PEG indicators. Generally speaking, the valuation using the PEG indicator is more accurate, but it is only used t...

The Federal Reserve implements interest rate hikes or cuts？

Generally speaking, the Federal Reserve implements interest rate hikes or cuts. Interest rate rises are austerity monetary policies, and interest rate cuts are a loose monetary policy. When the rate hike cycle begins, it indicates that the Federal Reserve is optimistic about the future economic outlook, economic data shows a positive outlook, and market sentiment is optimistic. To avoid excessive economic growth, the Federal Reserve has implemented austerity monetary policy and implemented interest rate hikes. When the interest rate cut cycle begins, it means that the Federal Reserve is bad on the future economic outlook, the economic data shows a bad trend, and the market is pessimistic. To stimulate economic growth, the Federal Reserve has implemented a loose monetary policy and implemented interest rate reductions. Correlation between the S & P 500 and Federal Reserve interest rates Historical data from the S & P 500 shows that when the rate hike cycle begins, the sto...

Coinbase stock forecast 2025: it's first quarterly report

After the trading hours on May 13 (this Thursday), Coinbase Global (COIN) will release its first quarterly report. Take this opportunity to give us a glimpse of the prospects of the first share of cryptocurrency exchanges. Actually, on April 6, before Coinbase went public, it had already released a forecast for the first quarter of this year. The core data are as follows: Revenue in the first quarter was approximately US$1.8 billion, a year-on-year increase of 842%; before the net profit was between US$730 million and US$800 million, the median was US$765 million, a year-on-year increase of nearly 23 times! Assets on the platform are 223 billion US dollars, accounting for 11.3% of the market share of encrypted assets; 56 million verified users, and 6.1 million monthly transaction users (MTU). It is worth noting that Coinbase's net profit margin reached a terrifying 42.5% in the first quarter, and the business model of “casino” is really profitable! ...

FinanceLinkway

Search This Blog