Displaying items by tag: equity
Hedged equity is an increasingly popular term in investing. But what exactly is hedged equity? How can you use hedged equity in a portfolio? What are examples of hedge equity strategies?...see more on our partner's site
Whether the US’ current bout of inflation is caused by transitory supply-side factors, or trillions of dollars poured into the economy by policymakers, is irrelevant because investors are now tasked with finding a way through the stock market jitters. As inflation rises it eats at yields and the value of fixed coupons falls. To avoid the pitfalls of rising prices look to dividend stocks, whose yields are pushed higher by inflation. Of course not all dividend stocks are created equal and some will outperform in an inflationary environment. The best income stocks are in the financial sector because they benefit from rising interest rates, as their interest rate margins expand in such environments. Energy is next, at least currently. Higher demand boosts prices of oil and gas, which benefits energy sector investors as it is one of the highest dividend payers. These sectors are the most likely to boost their dividends in the rising price environment.
FINSUM: Dividend stocks have no doubt outperformed just about every segment of the bond market, and expanding your dividend holdings may be a good idea as inflation comes in at 20-year highs.
September saw the Vix creep to a 4-month high as the S&P 500 blew off 4.8% of its value. Most investors were hoping for a bounce-back month in October, chalking up September’s poor performance to a checkered history for the opening of autumn. However, they are likely to be remiss as volatility indexes are still climbing. The pullback in September was the largest since March of 2020, when the pandemic began.BofA said that while October is generally a well-performing month when it trails a struggling September, October can drag as well. Debt ceiling negotiations, oil price spikes, and Fed tapering are just a few of the onslaught of headlines which are giving the market fits.
FINSUM: While volatility has yet to hit the peaks of September it is already consistently above its 200-day moving average, which could be a sign of even more volatility to come.
Expensive stocks are the norm these days as P/E ratios are near all-time highs…see the full story on our partner Magnifi’s site.
For those paying attention, ESG has had a great run over the last year. While many may feel that in an intangible way, the real world results are strong too, with ESG investments outperforming the S&P 500 by 1.3% in 2020. ESG investment experienced some solid outperformance early in the pandemic because if its natural defensive. Millennials appear to be driving the trend, which seems likely to only increase. More generally, the environment has become a major focus for both retail investors and major asset managers, like BlackRock, which has helped make the sector mainstream.
FINSUM: Our best call for ESG is that it will do great in 2021. The main reason being that the Biden administration is bringing a strong and renewed focus on the environment, which will both awaken public consciousness but also give ESG some favorable regulatory tailwinds.