If 2020 was the year for the stay-at-home stocks, well, 2021 wasn’t. Bloomberg columnist John Authers points out that an investor who shorted the S&P 500 home entertainment stocks and invested in regional malls instead would have returned a hefty 120% gain this year.
So is the recovery story totally done? Maybe not. Need to Know recently examined what an artificial intelligence-driven portfolio manager was doing — shedding big tech names such as Microsoft
MSFT,
Alphabet
GOOGL
and Amazon.com
AMZN
for a more well-rounded portfolio.
Kevin Muir, author of the Macro Tourist blog and a former institutional equity derivatives trader, is expecting what he calls a violent rotation out of large-cap growth into more value-type names in the first quarter. U.S. economic growth is shifting to one driven by the lower end of the wealth spectrum, boosted by fiscal instead of monetary stimulus, which will lead to what he calls a regular, old-fashioned economic expansion. “This means stocks like industrials and other boring companies that facilitate traditional economic growth are what you want to own,” he writes.
But how to do that? There’s an exchange-traded fund, the ProShares S&P 500 Dividend Aristrocrats
NOBL,
based on an index that limits membership to S&P 500 companies that have raised their dividend for 25 consecutive years. MarketWatch data show the fund’s top sector exposures are industrials, with a 23% weighting, and consumer goods, with 20%, and only 3% exposure to technology.
The opposite, says Muir, of a zero-coupon-like growth stock would be a high-paying stable dividend company. “If you are looking for a way to fade the Top 8 basket dominance, then what better way than owning a bunch of companies that pay regular dividends, aren’t bid to the moon with speculative exuberance, and will participate in the upcoming economic upswing,” says Muir.
The buzz
South Africa reported it has passed its omicron peak without a major spike in deaths from the coronavirus variant.
Israel began administering a fourth COVID-19 vaccine dose, becoming one of the first countries to do so.
The U.K. approved Pfizer
PFE’s
oral antiviral Paxlovid to treat COVID-19, following its approval of Merck
MRK’s
Lagevrio last month.
The largest operator of IKEA stores says it is planning to hike prices by 9% on average next year.
Exxon Mobil
XOM
said higher gas prices would lift its fourth-quarter profit by as much as $1.1 billion.
Hunter Douglas
NL:HDG
shares jumped 70% in Amsterdam, after 3G Capital agreed to buy a controlling interest in the home furnishing company in a deal valuing it at $7.1 billion.
The markets
It wouldn’t take much for the S&P 500
SPX
to notch its 71st record high of the year, but in the early morning, U.S. stock futures
ES00
NQ00
were a bit weaker.
Several international exchanges, including in Germany, Italy and Japan, were shut.
Top tickers
Here are the top tickers on MarketWatch, as of 6 a.m. Eastern.
Random reads
Billionaire investor Chamath Palihapitiya predicted Visa
V
and Mastercard
MA
will be the biggest business losers of 2022, citing the threat from altcoin projects.
Dancing literally helps to power this building.
It’s going to be so cold for the Winter Classic National Hockey League game on Saturday in Minnesota that the ice will have to be heated.
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