Displaying items by tag: rebound
Before the pandemic, advisors and their staff were enjoying elevated compensation levels. But once the pandemic occurred, advisors suddenly needed to take stock of the financial health of their businesses. While the market downturn in 2020 didn’t last long, its effects led firms to become more conservative with their expenses. The continued volatility in the market resulted in firms looking to increase profit margins and aggressively cut costs. Rent and office expenses were the first to be cut, however, the largest expense by a considerable margin was non-owner compensation. According to an article in City Wire USA written by Damian Lo Basso, managing partner, and CFO at Journey Strategic Wealth, the years 2020 and 2021 were the first years since the financial crisis that many firms kept salaries and bonuses flat. In addition, some firms are now tying up to 50% of team members’ bonuses to overall firm performance.
Finsum: Due to the effects of the pandemic and ongoing uncertainty in the market, advisor teams are seeing their compensation being tied to firm performance.
Stocks got wounded very badly in the last quarter of the year, with many stocks entering deep bear markets. Many analysts think stocks are in for a good year, so many feel it is a good time to buy. So what are the best rebound picks for 2019? Sector-wise, it might be best to look at IT, energy, communication services, and utilities. In terms of individual names, consider Noble Energy, Conagra Brands, Alexion Pharma, American Airlines, Electronic Arts, Norwegian Cruise Lines, Tiffany & Co., and Citigroup.
FINSUM: Quite a diverse list! But then again, that is what happens when the S&P 500 falls 20%--there are a lot of wounded stocks to choose from.
2019 is often to an uneven start. We have had some good days and some bad ones, but the market has surely not found solid footing or a narrative to drive it. With that in mind, the question of allocation becomes eve more complicated than it was a few months ago. Goldman Sachs has just put out its recommendations and argues that investors should put money back in shares, as they are due for a big rebound. Historically, shares generally bounce back after falling 20% in a quarter, and Goldman thinks there are big returns to be made. Companies seeing margin expansion might be particularly favorable.
FINSUM: The S&P 500 has already advanced almost 10% since Christmas eve, but we are not sold the current tread is upward.
Retail stocks have seen management boost outlooks recently, but that hasn’t helped prices, which have been falling to end the year. However, despite headwinds in the sector, there are a handful of retailers that look likely to see good performance in the near term. Those stocks are Ulta Beauty, Target, and Kohl’s. All three stocks are up for the year but down big in the fourth quarter. One stock analyst summarized his views this way, saying “We like these three stocks given the strong underlying consumer, not easily replicable product assortments, digital investments and innovation”.
FINSUM: These are very consumer-staple oriented, which we think is a good choice for the currently tenuous market environment.
December is usually a very good time to go with momentum stocks. What has been doing well the previous 11 months seems likely to continue in December, so says Barron’s. Momentum investing as a style has been well-founded in studies, but what is less well know is that it is particularly strong in the last month of the year. In fact, the momentum effect for stocks in December is 10x greater than in the other months of the year! Interestingly though, the effect is completely reversed in January, when tax-loss selling is concluded. With that in mind, here are some stocks to look at in the new year (the losers from this year): General Electric, Cognex, Dentsply Sirona, Western Digital, Adient, Bristow Group, McDermott International, Owens & Minor, Synnex, U.S. Silica Holdings, and Winnebago Industries.
FINSUM: This is quite an interesting angle as the losers from one year usually fall hard in December and then perk up in January.