Stock Traders: A Once-in-a-Generation Investing Opportunity in Under-the-Radar Stocks
Welcome back, stock traders! Starbucks has recently released a limited-edition red, stainless steel tumbler that has attracted impressive resale value online. Selling originally for $49.95, the tumbler has been resold for as much as $300. But let’s move on to today’s big story, which focuses on a potentially game-changing investing opportunity that might go unnoticed by many.
The Under-the-Radar Stocks
Richard Bernstein, an investment chief and former Merrill Lynch strategist, believes that the real value in the stock market lies in the under-the-radar stocks. While many investors are busy following the popular and highly touted “Magnificent Seven” stocks, Bernstein argues that there is a “once-in-a-generation” opportunity in less-glamorous stocks.
Bernstein’s thesis is straightforward: there is a broadening of stocks experiencing significant gains, which means that previously unloved stocks have the potential for resurgence. He questions whether these seven popular stocks are truly the best growth stories in the global equity market.
The data supports Bernstein’s argument. While only one of the Magnificent Seven stocks (Amazon) showed over 25% earnings growth in the past 12 months, more than 100 other US companies achieved this level of growth.
Outside-the-Box Thinking
Thinking outside the box might be the best strategy for today’s investors. Bank of America’s Sell Side Indicator, which indicates bullish signals when Wall Street becomes overly bearish, is currently neutral but suggesting a 15.5% gain in the S&P 500 over the next year. Considering the mixed signals and uncertainties in the market, having conviction and avoiding the popular stocks could be a wise move.
Bernstein cautions against expecting an immediate market rally akin to the one following the pandemic. He suggests looking back to the 2000s when market leaders lost value and underdogs outperformed as a more accurate comparison.
News Brief
Here’s a quick catch-up on the top news from over the weekend:
1. What Last Week’s “Baby Rally” Means for the Market
Tom Lee, Fundstrat’s strategist, identifies fundamental and technical reasons for the market to maintain its momentum. A strong earnings season and a decrease in Wall Street’s fear gauge are positive signs.
2. Charlie Munger Sounds Off
Warren Buffett’s right-hand man, Charlie Munger, shares his thoughts on various topics, including bitcoin and the challenges of stock picking. He believes there’s a 50/50 chance that Berkshire Hathaway will make another significant acquisition.
3. The End of the AI Market Boon
Veteran investor Bill Smead predicts a decline in stocks related to artificial intelligence, considering it an overhyped trend. He sees AI as a crutch for tech stocks and the S&P 500 index.
3 Things in Tech
1. Good Kid, ‘Dumb’ Phone
Rapper Kendrick Lamar’s creative agency has released a minimalist phone called Light Phone 2, which has already sold out. Priced at $299, it offers a no-frills experience without apps or color.
2. Elon Musk on the Future
Elon Musk recently shared his thoughts on various topics during an interview with the British prime minister. He touched on the future of jobs and the need for government regulation in AI development.
3. Linda Yaccarino’s Stance
Linda Yaccarino, CEO of X, reportedly took action to remove a viral pro-Hitler post on the platform. This move contradicts X owner Elon Musk’s support for free speech.
3 Things in Business
1. Gen Z’s Financial Savviness
Gen Z, having witnessed the struggles of previous generations, is showing impressive financial savviness. Most Gen Zers are already saving for retirement, according to a recent survey.
2. The Impact of Weight-Loss Drugs
An expert predicts a surge in “better-for-you products” as weight-loss drugs have consequential effects on lifestyle and fitness, prompting a focus on healthier choices.
3. The Layoff Decision Process
An expert in company layoffs shares insights into the decision-making process. It is revealed that layoffs are often driven by the need to tighten margins rather than solely based on individual performance.
In Other News
What’s Happening Today
Former President Donald Trump is expected to testify in the civil fraud trial against the Trump Organization. Additionally, OpenAI is hosting its inaugural developer conference, OpenAI DevDay. And finally, happy Saxophone Day!
Martha Stewart’s Recipes
Martha Stewart, the queen of home cooking, shares five essential recipes that everyone should learn how to make. From delicious pies to a simple salad vinaigrette, you can find all the details here.
That’s all for today! Check back tomorrow for more insightful news and updates from the world of business.
