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Passive Investing in Volatile Markets: Experts Think About It

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Investors often hear that despite a market crash, stocks tend to go up over time. But say that to investors who are watching their portfolios decline, especially if they are passively investing in index funds. Those represent groups of stocks that track indices like the S&P; 500 (^ Salafist Group for Preaching and Combat), Nasdaq (^ninth), or the Dow Jones Industrial Average (^ DJI).

Continuing with Yahoo Finance’s “What to Do in a Bear Market” series, we asked experts what they think of investing in indexes during these volatile times.

The markets have been hit this year. Passive investors in underwater index funds. Is the investment index over?

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“Generally speaking, it’s not a good idea to try to time the market, whether you’re buying an index fund or an actively managed fund. When the market is down, that’s often the best time to invest money in the long-term business,” said Jim Polk, Head of Investments. Stocks at Homestead Advisers, for Yahoo Finance, over the past decade plus we’ve been in a period of cheap money where fundamentals were less important.

“Almost all stocks were going up, so the presence in the index was good. The more assets that poured into the index fund, the more the fund had to buy what it already owned, creating a virtuous circle,” he added.

Meanwhile, Terry Sandvin, chief equity strategist at US Bank Wealth Management, said, “History shows that investors with long time horizons tend to generate positive returns as year-to-year volatility of returns, both positive and negative, is wiped out from the bottom line. Long time. period. This applies to both active and passive investment styles.”

Should investors be more picky when investing?

“Investors should always be selective when investing, although in a climate of high uncertainty and low expected returns, doing so becomes even more important.” Daniel Berkowitzchief investment officer of prudent management partnersfor Yahoo Finance.

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With interest rates rising, we believe the investment environment will be more challenging than it has been in the past few years. “The market will differentiate between companies and stocks a lot more than it has in the past few years,” said Polk of Homestead Advisors.

“As active managers, we believe there is value to knowing what you own and applying a disciplined process to identifying high-persuasion opportunities. With this changing market dynamics, more value will be given to active managers who can differentiate themselves from the benchmark.”

How do investors search for and select winning assets?

“Not all stocks are placed equally. Terry Sandvin, chief equity strategist at US Bank Wealth Management, told Yahoo Finance that ‘winner’ stocks are those that align best with investors’ goals, ranging from international versus domestic, to large companies Small business versus growth versus value patterns and asset allocation mix.

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“Ultimately, companies need to have consistent revenue growth to purposefully go up. Other factors include balance sheet strength, capital requirements, cash flow, competitive landscape, etc.

For investors who use actively managed strategies in particular, “holding them through full market cycles is critical to success. Determining winning managers up front is a challenge, but only half the battle,” Berkowitz said. prudent management partners.

“It is very easy to salvage an actively managed strategy in which the market is underperforming significantly in a given year, or even on a 3-year horizon, but even the most successful of the active strategies experience this kind of underperformance — it’s a normal part of investing,” he He said.

Ines is a markets reporter covering stocks from the bottom of the New York Stock Exchange. Follow her on Twitter at Tweet embed

Click here for the latest stock market news and in-depth analysis, including events that move stocks

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MicroStrategy is at its lowest level since 2020 after the sales were revealed

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(Bloomberg) — Shares of MicroStrategy touched their lowest level since August 2020 after the enterprise software company, which in recent years has been known as the largest buyer of bitcoin, revealed its first sale of the token.

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The stock fell 1.1 percent to $136.63 on Thursday, down 75 percent this year. Bitcoin rose less than 1% to around $16,590 and is believed to have fallen 64% since the start of the year.

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In a filing on Wednesday, MicroStrategy said it acquired approximately 2,395 Bitcoin between the beginning of November and December 21 through its subsidiary MacroStrategy, and paid out approximately $42.8 million in cash. It then sold 704 of the tokens on Dec. 22 for a total of about $11.8 million, citing tax purposes, before buying another 810 of them two days later.

Matt Malley, chief market strategist for Miller Tabak + Co. Step down as CEO. This news means they don’t seem to want to do that anytime soon.”

Overall, MicroStrategy held about 132,500 bitcoins worth over $4 billion USD as of December 27th. The company paid an average purchase price of $30,397 per bitcoin.

“Given MicroStrategy’s $2.4 billion in leverage, we believe the company may have a lot of leverage over Bitcoin, and may face some liquidity risk,” Jefferies analyst Brent Thiel wrote in a note on Wednesday. Thill has an “underperform” rating on the stock and a price target of $110.

Over the years of the pandemic, MicroStrategy has become well known for its Bitcoin takeovers, largely led by Saylor. Earlier this year, Saylor stepped down from that role and now serves as CEO at the company and continues to lead its bitcoin strategy.

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MicroStrategy was trading around $120 before Saylor first announced the company’s Bitcoin purchases in 2020. The stock reached an all-time high of $1,315 in February 2021.

(Updates to include the stock’s closing price in the second paragraph.)

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Bankman-Fried May File Petition in New York Federal Court Next Week Before Judge Louis Kaplan By Cointelegraph

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Former FTX CEO Sam Bankman-Fried is set to appear in court on the afternoon of January 3 to enter a lawsuit over two counts of wire fraud and six counts of conspiracy against him related to the collapse of cryptocurrency exchange FTX, according to Reuters. mentioned on December 28, citing court records. Bankman-Fried will appear before District Judge Lewis Kaplan in Manhattan.

Judge Kaplan was appointed to hear the case on December 27 after the original judge in the case, Ronnie Abrams, Resigned herself because of connections between FTX and the law firm Davis Polk & Wardwell, where her husband is a partner. The company provided advisory services to FTX in 2021.