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Each month, in our monthly Market Strategy report, Zacks lists a short 1-pager, with suggested portfolio allocations for Conservative, Moderate, Aggressive & Income investors.
In the chart below, we show you the last five years of Conservative, Moderate, Aggressive & Income portfolio returns.
They show a retail stock investor what share returns would have been earned, each year, from a pre-COVID 20219, to the surprisingly solid returns earned in 2023.
Consult these Zacks charts below, to further build up your understanding of these risk appetites.
Image Source: Zacks Investment Research
Over the last five years, the best asset allocation decision would have been to invest in an Aggressive portfolio.
A starting balance of $10K in 2019 would have created $15,652 in nominal gains, and $12,910 in inflation-adjusted gains.
However, you would have had to suffer through the 2022 loss of -18.29% for owning that aggressive share portfolio
In the best year of the Aggressive share portfolio (2021), you would have gained +24.78%
So, the Global Markets-related question to pose for 2024?
Should this aggressive share portfolio strategy be applied — in light of the looming and seemingly increasing geopolitical risks?
These types of geopolitical risks are found among the Types off Risks table below, in “Politics.”
However, the listing all kinds of risks to an aggressive share portfolio, makes you realize this…
You should not maintain a sole focus on geopolitical risks: Like closing the Red Sea shipping lane, or a Russian invasion of Northern Europe, or a Chinese invasion of Taiwan.
I note the “Ideological Basis of Governance mechanisms, choice and disputes” is also found inside the “Politics” tab. Think about the U.S. Presidential Election, among many other political events of global significance, expected in 2024.
Image Source: Zacks Investment Research
Then there are climate-related events, a possible U.S. or global recession, technological advancements and financial risks?
All of those have to be factored in to evaluate the risks to an aggressive share portfolio.
II. Zacks FEB Sector/Industry/Company Telescope
The latest Zacks Industry Ranks showed four Very Attractive, mostly cyclical sectors. Those hot sectors were Industrials, Utilities, Info Tech, and Consumer Discretionary.
I think the strong jobs and stock markets, and falling CPI inflation lit up the consumer.
However, this is making for a bifurcated set of fundamental signals. At Market Weight was a full set of sectors, with Energy, Health Care, Financials and Materials.
The sole Very Unattractive sector this month was Consumer Staples.
(1) Industrials stayed Very Attractive again. Business Products, Metal Fabricating, Industrial Products & Services and Construction-Building Services were strong.
(4) Consumer Discretionary rose further to Very Attractive from Market Weight. Non-food Retail, Publishing and Other Consumer Discretionary are strong.
(5) Communications Services fell to Market Weight from Attractive. Telco Equipment looks great.
(6) Energy stayed Market Weight. Oil/Gas Pipelines and Coal look best, at Market.
(7) Health Care stayed Market Weight. Drugs led again, at Market.
(8) Financials stayed Market Weight. Banks - Major are best now.
(9) Materials stay Market Weight, but bifurcated. Steel, Paper and Building Products looked great.
(10) Consumer Staples fell to Very Unattractive from Attractive. Miscellaneous Staples and Beverages looked best, at only Market Weight.
III. Conclusion
My solitary point is this.
Excessive investor focus on one major “Geopolitical” risk won’t cut it — in a potentially noisy and messy and cloudy 2024.
Enjoy the rest of my Zacks FEB 2024 Market Strategy report.
Warm regards,
John Blank Zacks Chief Equity Strategist and Economist
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Stay Aggressive with a Cloudy 2024? Zacks FEB Market Strategy
The following is an excerpt from Zacks Chief Strategist John Blank’s full Feb Market Strategy report To access the full PDF, click here.
I. Global Markets
Each month, in our monthly Market Strategy report, Zacks lists a short 1-pager, with suggested portfolio allocations for Conservative, Moderate, Aggressive & Income investors.
In the chart below, we show you the last five years of Conservative, Moderate, Aggressive & Income portfolio returns.
They show a retail stock investor what share returns would have been earned, each year, from a pre-COVID 20219, to the surprisingly solid returns earned in 2023.
Consult these Zacks charts below, to further build up your understanding of these risk appetites.
Image Source: Zacks Investment Research
Over the last five years, the best asset allocation decision would have been to invest in an Aggressive portfolio.
A starting balance of $10K in 2019 would have created $15,652 in nominal gains, and $12,910 in inflation-adjusted gains.
So, the Global Markets-related question to pose for 2024?
Should this aggressive share portfolio strategy be applied — in light of the looming and seemingly increasing geopolitical risks?
These types of geopolitical risks are found among the Types off Risks table below, in “Politics.”
However, the listing all kinds of risks to an aggressive share portfolio, makes you realize this…
You should not maintain a sole focus on geopolitical risks: Like closing the Red Sea shipping lane, or a Russian invasion of Northern Europe, or a Chinese invasion of Taiwan.
I note the “Ideological Basis of Governance mechanisms, choice and disputes” is also found inside the “Politics” tab. Think about the U.S. Presidential Election, among many other political events of global significance, expected in 2024.
Image Source: Zacks Investment Research
Then there are climate-related events, a possible U.S. or global recession, technological advancements and financial risks?
All of those have to be factored in to evaluate the risks to an aggressive share portfolio.
II. Zacks FEB Sector/Industry/Company Telescope
The latest Zacks Industry Ranks showed four Very Attractive, mostly cyclical sectors. Those hot sectors were Industrials, Utilities, Info Tech, and Consumer Discretionary.
I think the strong jobs and stock markets, and falling CPI inflation lit up the consumer.
However, this is making for a bifurcated set of fundamental signals. At Market Weight was a full set of sectors, with Energy, Health Care, Financials and Materials.
The sole Very Unattractive sector this month was Consumer Staples.
(1) Industrials stayed Very Attractive again. Business Products, Metal Fabricating, Industrial Products & Services and Construction-Building Services were strong.
Zacks #1 Rank (STRONG BUY): Sumitomo (SSUMY - Free Report)
(2) Utilities stayed Very Attractive again. Water Supply, Telephones, and Gas Distribution looked great, at mid-winter.
Zacks #1 Rank (STRONG BUY): Veolia Environment (VEOEY - Free Report) )
(3) Info Tech rose to Very Attractive from Attractive. Software Services led, then Electronics and Semis.
Zacks #1 Rank (STRONG BUY): Netflix (NFLX - Free Report) )
(4) Consumer Discretionary rose further to Very Attractive from Market Weight. Non-food Retail, Publishing and Other Consumer Discretionary are strong.
(5) Communications Services fell to Market Weight from Attractive. Telco Equipment looks great.
(6) Energy stayed Market Weight. Oil/Gas Pipelines and Coal look best, at Market.
(7) Health Care stayed Market Weight. Drugs led again, at Market.
(8) Financials stayed Market Weight. Banks - Major are best now.
(9) Materials stay Market Weight, but bifurcated. Steel, Paper and Building Products looked great.
(10) Consumer Staples fell to Very Unattractive from Attractive. Miscellaneous Staples and Beverages looked best, at only Market Weight.
III. Conclusion
My solitary point is this.
Excessive investor focus on one major “Geopolitical” risk won’t cut it — in a potentially noisy and messy and cloudy 2024.
Enjoy the rest of my Zacks FEB 2024 Market Strategy report.
Warm regards,
John Blank
Zacks Chief Equity Strategist and Economist