Yahoo Finance Zacks Investment Ideas feature highlights: Nasdaq Biotech ETF, Russell 2000 Index and the Regional Banking ETF
For Immediate Release
Chicago, IL – December 4, 2023 – Today, Zacks Investment Ideas feature highlights Nasdaq Biotech ETF IBB, Russell 2000 Index IWM and the Regional Banking ETF KRE.
2024 Game Plan: 5 Rules to Find Success
Wall Street: Expect the Unexpected
2023’s version of Wall Street teaches us the repeated lesson to expect the unexpected in equity markets. Equity markets are rooted in the inherent complexity and unpredictability of financial systems. Markets are influenced by a myriad of factors, including economic indicators, geopolitical events, and human behavior, making them susceptible to sudden and unforeseen changes. Attempting to predict these fluctuations with absolute certainty is challenging.
“Simplicity is the Ultimate Sophistication”
Why do some of the brightest minds, like doctors and lawyers, often underperform their peers? While intelligence is helpful on Wall Street, it can also be a double-edged sword because it leads to overthinking and “paralysis by analysis.” Breaking down markets to their simplest form can help investors by providing clarity, facilitating better understanding, and aiding decision-making. Below are five, simple but powerful rules to follow in 2024 to achieve profitability:
“Don’t Fight the Fed”
Monetary policy, set by the US Federal Reserve, influences liquidity in the financial system, which, in turn, impacts equity markets. When the Fed lowers interest rates, they increase the availability of money and credit. This added liquidity encourages borrowing, spending, and investing. The best way to track the Fed is to look at the CME FedWatch tool. Currently, the FedWatch tool predicts that the Fed is done hiking interest rates and will ease rates by May 2024.
Strength Begets Strength
Newton’s First Law of Motion states, “an object in motion stays in motion...”. According to the data, Newton’s First Law also applies to equity markets. Analyst Ryan Detrick points out that “This month will go down as one of the best ever for the S&P 500. (+8.5%). Did you know that after previous months that gained >8%, continued strong returns were common?” Historical returns show us that a year later the S&P 500 was higher 90% of the time and up 15.8% on average.
Be Open Minded
The concept of being in the interpreting game rather than the predicting game emphasizes that instead of trying to foresee specific market movements, investors should focus on interpreting available information and adapting their strategies accordingly. In other words, try to have an open, unbiased frame of mind. After the drubbing tech stocks took in 2022, few expected them to outperform the way they did in 2023. Could the market once again fool the masses and drive dramatic rallies in beaten-down sectors like the Nasdaq Biotech ETF, Russell 2000 Index and the Regional Banking ETF Recent relative price strength suggests that this is likely to occur.
Fade the Masses
George S Patton famously said,“If everyone is thinking alike, then someone isn’t thinking.” On Wall Street, the madness of crowds cannot be understated. In 2023, the market reversed course in the opposite direction each time the CNN Fear/Greed Sentiment Indicator hit extremes.
Markets Discount Future Earnings
A common mistake made by amateur investors is to put too much emphasis on current earnings and not enough on future earnings. Equity markets are a forward-looking device, and as such, investors should put the most weight on future earnings. Zacks Consensus S&P 500 Estimates suggest healthy EPS growth into 2024.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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iShares Biotechnology ETF (IBB): ETF Research Reports
iShares Russell 2000 ETF (IWM): ETF Research Reports
SPDR S&P Regional Banking ETF (KRE): ETF Research Reports
