B&K Investment Management Recruitment’s Post

What to do? The stock market has everyone talking (and predicting) these days. Will it keep going up? How big of a crash is being set up? Is it too late to buy Nvidia/AI stocks? I like this article that ponders how "portfolio managers" view the markets and investing at the moment. For the record, I agree with some of these points, but not all. In the cult favorite movie Better Off Dead, one the lines repeated multiple times was to "go that way really really fast, and if something gets in your way...turn". Maybe good advice for an experienced skier, but I'm not sure I love it as an investment philosophy. yet, does the fact that AI centered stocks have done so well mean that they can't continue? Any how, here is a good read: https://lnkd.in/g4hJK56y

Last week, a friend showed me a study suggesting that Fed rate cuts lead to hardship in the equity market, using this to argue against getting involved in the market now. However, I believe this time is different. The Fed might cut rates because inflation is getting under control in a strong economy rather than an impending recession. I pointed out that staying out of the market could be as risky as being involved. Missing the best days of the market can hurt long-term investment performance, as shown in the below study. Additionally, Daniel Kahneman's research on loss aversion shows that people feel the pain of losses twice as strongly as the pleasure of gains, which can make them overly cautious. To balance risk and reward, especially with stocks like NVIDIA that, in my opinion, have high upside potential, I suggest using a trailing stop. This algorithm adjusts the stop level as the stock price rises. Setting it at, for example, 20% below the latest price. This way, your maximum loss will be capped at 20% while allowing you to engage in the upside (NVIDIA gained +38% last month). Given the improving macroeconomic picture and the AI revolution just beginning, this strategy helps manage risk while capturing potential gains.

The stock market's obsession with artificial intelligence is waning as investors broaden their focus to other sectors and opportunities. #StockMarketTrends #BeyondAI #InvestmentDiversification #MarketOutlook https://lnkd.in/gREtdyw9

Capital Economics warns of a stock market crash like 1929, but not just yet We’re in the early stages of a bubble. The S&P 500 might soar by 23% to hit 6,500 by 2025, but brace yourselves for a painful correction in early 2026, according to the company. #StockMarket #Prediction 📈💥 https://lnkd.in/g7DyF8hY

An insightful article sheds light on the growing concentration of the world's largest stocks in the MSCI All Country World Index. According to the report, the top ten stocks in the Index now represent 19.5% of the benchmark, a significant increase from less than 9% in 2016. This concentration matters because it makes the stock market more susceptible to substantial falls in value. Additionally, many of these top stocks are viewed as AI plays, putting investors at risk if the technology fails to live up to its hype. Stay informed and keep an eye on these developments. In my opinion, true global diversification may take more than buying a single passive global index fund. #StockMarket #Investing #Technology #AI #MSCI #EmergingMarkets #DevelopedMarkets

Very interesting. “I wrote a paper in early 2021 entitled “Reports of Value’s Death May Be Greatly Exaggerated”. Over the last 60 years, value has beat growth. Over the last 16 years, not so much. We set about to validate the notion that value investing is dead, by asking where did value’s underperformance come from? And we found, to our surprise, that over 100 per cent of the underperformance was strictly a function of value getting cheaper versus growth, relative to the underlying fundamentals. So value had a yield that for 16-17 years averaged 1.5 per cent more than growth. That should have been a 20-25 per cent improvement in performance if the underlying fundamentals performed the same. The underlying fundamentals did perform almost the same, shockingly. Ninety-nine per cent of your readers likely don’t realise that the underlying fundamentals — earnings, sales and dividends — of value stocks have grown pari passu with growth stocks over the last 17 years. “ #corpgov #ai Drew Edwards Fumie Kikuchi Scott Anderson Tsuyoshi Maruki

Don't be like Abhimanyu in the 'Chakravyuh' of investing! Learn to identify market trends and have a clear exit strategy. Find out why selling stocks at the right time is crucial in our latest article. 💡 Tap the link to learn more: https://lnkd.in/dVFE8ZuY

Don't be like Abhimanyu in the 'Chakravyuh' of investing! Learn to identify market trends and have a clear exit strategy. Find out why selling stocks at the right time is crucial in our latest article. 💡 Tap the link to learn more: https://lnkd.in/dVFE8ZuY