Displaying items by tag: telecom
The Market’s Winners and Losers in the Midterms
(New York)
One of the big questions investors and analysts are still trying to sort out is who are the biggest market winners and losers as a result of the midterms. Here are some insights. The sector which seems likely to gain most is healthcare, as the risk of more regulation looks diminished, and the chances of increased government healthcare spending (as a result of the election of Democrats in key states) seems higher. The sectors which seem likely to lose out are banks and telecoms, both which seem likely to face much greater scrutiny by the now Democrat-led House.
FINSUM: We would also lump big tech into the losers category as increased scrutiny and regulation of the sector is one of the few areas of bipartisan agreement right now.
The Best Value Sectors in the S&P 500
(New York)
Despite a generally weak year in equities, the market is still very expensive. That said, not every sector is and there are still some bargains to be had. Interestingly, more than half the S&P 500’s sectors currently trade at a discount to their historical relative value (relative to the S&P 500’s P/E ratio). These include: Tech, Materials, Real Estate, Industrials, Health Care and Telecom. Telecom is 60% below its average relative valuation, for instance.
FINSUM: Interesting to see how many sectors are at discounts. That said, the problem with this view is that there are no catalysts to prompt a return to the mean.
The Dividend Trade-Off
(New York)
Investors turned heavily towards income-producing stocks prior to Trump’s presidency. With yields so low, they offered income which was very hard to find elsewhere. More recently, though, high yielding stocks have been losing out as rates move higher. This has caused an exodus from some areas, such as telecoms, which have lost 16% over the last 18 months. However, one important thing to bear in mind as one watches yields fall on stocks is that this is often caused by rising prices. For instance, yields have fallen in six S&P 500 sectors over the last 18 months, but the market has returned 25% in that time frame—a nice pay off for losing some yield.
FINSUM: The key point of this very basic article is to remember that falling yields in equity can mean that the sector is doing very well.