Wasserman said that stock picking isn’t dead per se. “When stocks are declining, a bear market is near and volatility is high, second-guessing investments is normal,” she wrote. “Now, stock market losses have made some investors sour on the strategy.”īut Bell noted that investors who do their homework can still “make smart investing decisions” as long as they maintain “a very hands-on style of investing” and don’t panic. “The excitement of stock-picking and the active investing strategies approach reached new levels of popularity during the meme stock trading phenomenon in early 2021,” Lindsey Bell, chief markets and money strategist for Ally, said in a report late last week. (AMC) may now be less bullish on individual stocks. Some investors who were flush with Covid stimulus cash last year and chased meme stocks like GameStop But the party’s over.”įorget the memes and focus on fundamentals The message was to buy the dips because the Fed has your back. “Rates were real low and people took on excess risk because anytime the stock market pulled back, the Fed cut rates. “The world is waking up to the fact that zero percent interest rates are done,” said Max Wasserman, co-founder of Miramar Capital. Many investors do not have experience navigating the market when the central bank is jacking up rates in a bid to cool things down. Stock picking seemed a lot easier when the Fed was doing everything in its power to try to stimulate the economy. Here's what investors are worried about as retail stocks plunge Total speculation is dead,” Mallouk said, adding that traders can no longer pass around blank check SPAC stocks, cryptocurrencies, unprofitable tech firms and other risky investments like hot potatoes and hope someone else will want to catch them. This is now more of a thinking person’s market. “The casino is closed,” said Peter Mallouk, president and CEO of Creative Planning, a wealth management firm. Investors just need to once again do more homework to find good bargains. Shares of many speculative tech companies are now tumbling due to worries about weakening fundamentals and unsustainable stock prices.īut this isn’t necessarily the worst news for the markets. Picking winning stocks isn’t easy, especially at a time when the Federal Reserve is raising interest rates and inflation is starting to hurt consumers and the broader economy. And factors such as the economy, earnings and valuations, which might sound like quaint relics of a bygone era, still matter even in a world seemingly dominated by memes and Reddit boards. Investors have learned a bunch of hard lessons so far in 2022.
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