Displaying items by tag: stocks

The energy sector has been the top-performing sector so far this year, but it may be time to sell. That is according to JPMorgan's Marko Kolanovic. Kolanovic, who is JPMorgan’s chief global markets strategist, recommends that investors sell out of energy stocks to capitalize on the performance divergence between oil and energy stocks. Oil prices surged more than 72% at the beginning of the Russia-Ukraine war, but have since plunged almost 50% and are now down for the year. The decline in WTI and Brent Crude Oil can be seen at the pump as the average price for a gallon of gas in the U.S. fell to $3.32 on Friday after previously hitting $5 earlier in the year. However, as oil prices have fallen, oil stocks are still trading near their multi-year highs. Historically, oil prices and energy stocks have been highly correlated, but the large difference this year and a broad pullback in the equity market could result in a selloff in energy stocks. Kolanovic believes that investors could take advantage of this by selling energy stocks now and then buying them at a lower price before the next upswing.

Finsum:JPMorgan strategist recommends selling energy stocks now before a major pullback that could be driven by the divergence between falling oil prices and rising energy stocks.

StockSnips, a firm that provides easy access to stock market news sentiment analysis, announced that it has introduced a new SPDR Sector ETF-based portfolio model that ranks sectors by leveraging its proprietary sector sentiment signal. This will be the fifth StockSnips model portfolio that aims to deliver alpha after the launch of equity-based portfolios last year. With model portfolios increasingly attracting assets and markets being impacted by social media, investor sentiment, and chatter, StockSnips believes its signal can quantify those investor sentiment trends, resulting in alpha for end investors. While most sentiment analysis uses a survey methodology, StockSnips separates signals from the noise through Micro-sentiment, focused at the individual firm level. Ravi Koka, CEO of StockSnips commented on the model, "We are excited to bring a sector ETF-based portfolio model to investment advisors and asset managers, leveraging our extensive research in transforming unstructured textual information to a valid signal, and a robust proxy for measuring investor sentiment for a sector.” Their ticker-based portfolio models have performed well so far in a volatile 2022, and they believe the back-testing results for their sector model bode well for investors as well.

Finsum:StockSnips introduced its fifth model portfolio that aims to achieve alpha through its proprietary sector sentiment signal.

Some of the biggest names in finance are benefitting from a lack of reliable ESG data in emerging markets. Federated Hermes is one firm that has spent considerable time over the past year building its ESG exposure to emerging markets. The company says “artificially low” environmental, social and governance ratings have created opportunities for investors. Martin Todd, a portfolio manager at Federated Hermes told Bloomberg that “the mainstream ESG ratings firms often give emerging-market stocks a lower ranking because of fewer disclosures relative to companies listed in the developed markets. That’s created some really interesting valuation opportunities.” In emerging markets, ESG regulations are less advanced than in developed markets and ratings aren’t as established. In fact, ESG ratings for emerging market companies are artificially low due to a lack of disclosure, not because of any particular concern. While that creates an extra layer of risk for some investors, for firms with deep pockets, it provides an opportunity to beat the market.

Finsum:Fund managers are generating alpha in emerging market ESG stocks due to a lack of disclosure and artificially low ratings.

Stocks and bonds during the first half of the year?

Kerplunk. Scientifically speaking, of course.

That’s where balancing could come in handy, according to morningstar.com. Investors who abided by strategy dictated by discipline wouldn’t have taken as big a hit, according to morningstar.com.

Of course, rebalancing doesn’t come with any guarantees when it comes to generating an improvements on returns, results this year show why maintaining a tight rein on risk isn’t such a bad idea.

As an investor, whether you’ve been around the block a few times or are wet behind the ears, your priorities probably vary widely, according to smartasset.com.

Thinking about building a portfolio from scratch? Well, you might want to try this instead: you’ll be assigned a pre built model portfolio by many advisors.

Also consider that most investment advisors keep close tabs on and review their model portfolios to make sure they’re achieving their benchmarks and doing their thing at level that are proper. But that doesn’t happen at the snap of a snap of the fingers; instead the process entails rebalancing each portfolio, which your ability to maintain the asset allocation that was designated.

Small-cap stocks appear to be having their moment this year outperforming their large-cap peers. The S&P 600 small-cap index is currently on pace to outperform the S&P 500 for the first time since 2016. One reason for their outperformance is a strong U.S. dollar. This is due to the negative effect that a strong dollar has on the profits of multinational companies. A strong dollar harms U.S. companies that sell goods overseas by making them less affordable. Smaller companies, on the other hand, are more insulated from adverse currency effects as most of their business is done stateside. For instance, companies in the S&P 600 index generate only 20% of their revenue outside the U.S, while companies in the S&P 500 generate 40% of their sales abroad. This had led to some of the largest companies in the U.S warning of currency risks in their latest earnings calls. In addition to a strong dollar, small caps are also benefitting from better valuations. According to FactSet, the S&P 600 is trading at 10.8 times expected earnings over the next 12 months, which is well below the S&P 500’s forward price/earnings ratio of 15.3.

Finsum: Small-cap stocks are outperforming large-cap stocks this year due to a strong U.S. dollar and more attractive valuations.