The S&P 500 (SPY) is putting the ending touches on a powerful 2023 campaign. That is the 4th straight 12 months the big cap index has outperformed small and mid caps. Gladly there are signs that is going to alter which is a really healthy sign for the longevity of this bull run. 43 12 months investment pro Steve Reitmeister explains why in his latest commentary that features insights on this top 11 picks for today’s market. Read on below for more.
Stocks are once more flirting with the highs of the 12 months at 4,600 on the S&P 500 (SPY). And yes, will likely crack above given the positive seasonal effects that comes with typical Santa Claus rally.
Even higher than that’s that FINALLY investors are taking profits on bloated technology and mega cap positions. This money is being rotated to deserving small and mid cap stocks which have woefully underperformed so far in 2023.
That is the very best news for investors going into 2024. More on why that’s the case on this week’s edition of the Reitmeister Total Return commentary below…
Market Commentary
If an image is price a thousand words…then let this chart speak loudly about what was fallacious with the 2023 stock market:
As noted by myself and lots of other market commentators, the 2023 bull market was a little bit of smoke and mirrors. That is because just about all the gains really accrued to the mega cap technology stocks like Tesla, Nvidia, Apple, Microsoft etc. That explains the acute gains for that mega cap bar above versus tepid gains and even losses for the broader market.
It’s one thing for mega caps to guide and others modestly lag. However the nearly non-existent gains for small caps is kind of troubling. That is because history shows that small caps outperform over time because they grow earnings faster and that’s rewarded with higher share prices. Heck, that hasn’t been true for 4 years.
Thus, the chart below for the past week is a VERY welcome relief:
Not only are smaller stocks leading the best way, but profits are literally being trimmed from these bloated mega cap positions. That is the rotation we now have all been waiting for which signals that this bull market is for real…and has legs to run further ahead in the approaching 12 months.
But to be clear, it won’t be the S&P 500 having a banner 12 months in 2024. I believe that 5,000 shall be the 12 months end goal which calls for modest single digit returns.
As a substitute, it should be the neglected small and mid caps leading the best way. Where those market indices may show 2-3X the gains of their large cap peers as they play catch up.
The excellent news is that the POWR Rankings is exceptionally good at uncovering the very best of those smaller stocks that typically fly under the radar. And that shall be an enormous a part of our advantage in the approaching 12 months.
The one thing that would derail that’s, in fact, growing signs of a recession. Meaning what if the Fed overstays their welcome and creates a recession before rates start heading lower?
This was the fear that led to the bear market of 2022 because history showed that recession was the almost certainly consequence from such an aggressive rate mountaineering regime. Oddly, but gladly, this time was different. That being the hundreds of thousands of staff who selected early retirement during Covid which made the employment market incredibly resilient.
Principally anyone who really wanted a job could find one with a record breaking 10,000,000 job openings posted. And as history shows, so long as consumers have jobs and money of their pocket…they may spend it.
That is what propped up the economy in 2023…resulting in no recession and return of the bull market. So long as that picture of economic health stays…so too does bullish stock market conditions. But again, the 2024 playbook calls for a unique group of stocks to paved the way unlike 2023.
That also features a rotation within the sectors that investors shall be interested in. Here is the 12 months to this point 2023 sector performance breakdown:
And here is just the past week further showing the rotation that’s happening:
Real estate is leading the best way because rates are going lower making loans cheaper. There probably is more upside there, but I feel it’s the subsequent 3 groups that ought to see continued upside: Industrials, Financials, Basic Materials and possibly in some unspecified time in the future Energy will join that party.
Putting it altogether, 2023 was a superb 12 months for investors…but an odd one given the acute underperformance from small caps. This sets up 2024 as a superior investment 12 months for the common individual investor in case you look in the best spots.
Hopefully the knowledge above helps you focus in on those right spots going forward. Also the highest picks discussed in the subsequent section should aid you outperform within the 12 months ahead.
What To Do Next?
Discover my current portfolio of seven stocks packed to the brim with the outperforming advantages present in our exclusive POWR Rankings model.
Plus I even have added 4 ETFs which are all in sectors well positioned to outpace the market within the weeks and months ahead.
That is all based on my 43 years of investing experience seeing bull markets…bear markets…and the whole lot between.
When you are curious to learn more, and wish to see these 11 hand chosen trades, then please click the link below to start now.
Steve Reitmeister’s Trading Plan & Top Picks >
Wishing you a world of investment success!
Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Total Return
SPY shares were trading at $456.73 per share on Tuesday afternoon, up $0.04 (+0.01%). Yr-to-date, SPY has gained 20.75%, versus a % rise within the benchmark S&P 500 index throughout the same period.
In regards to the Writer: Steve Reitmeister
Steve is healthier known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience within the Reitmeister Total Return portfolio. Learn more about Reity’s background, together with links to his most up-to-date articles and stock picks.
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