Showing posts with label Cloud. Show all posts
Showing posts with label Cloud. Show all posts

Saturday, October 13, 2018

Cloud over wall street. Is it worth buying us stocks now

Cloud over wall street. Is it worth buying us stocks now

Cloud over wall street. Is it worth buying us stocks now

The s&P 500 index is now close to historical highs, and in the foreseeable future we can expect volatility and a new wave of correction in the us stock market. What should a private investor do in such conditions?

The us stock market is considered to be a place where dreams come true, including among Russian investors. More than 5,000 shares from 11 sectors of the economy and ADR of foreign companies, as well as about 1800 exchange-traded funds (ETFs) are traded on us exchanges. The s&P 500 broad market index covers about 500 of the largest issuers by capitalization, most of which are transnational corporations.

Many of them have become a part of everyday life of many people, it is enough to mention only Apple smartphones, Facebook feed, a Cup of coffee from Starbucks. If you follow the precepts of Warren Buffett, the company with a clear business is the best option for a"reasonable investor."

But in the current conditions, it is hardly worth rushing with active purchases of American shares. The s&P 500 index is now close to historical highs, and in the foreseeable future, it is possible to predict a high probability of volatility growth and a new wave of correction in the us stock market.

Caution above all

The main factor playing against active investments in us stocks is the fed's monetary tightening cycle, which has made it a rule to increase the key rate by 25 basis points once a quarter. Add to this the increased risks of trade wars and the currency crisis in emerging markets, which was the first sign of imbalances in the financial system.

At the same time, the yield of U.S. Treasury bonds (Treasuries) is growing, that is, in fact, market interest rates in the United States. The yield of two-year securities for several months exceeds the dividend yield of S & P 500, which makes us stocks less attractive compared to government bonds.

Intermediate elections in the United States, which will be held on November 6, will also contribute to the acceleration of volatility. There is a significant risk that the Congress will become fully controlled by the Democrats, which will increase the political split in the country. This could rock global markets.

As a medium-term target for the s&p 500 index, I would indicate the level of 2650-2550 points at the current value of more than 2900 points. At the same time, it is too early to talk about the upcoming trend change and signs of a recession in the US. The American economy is developing steadily, and the Federal reserve is quite cautious about the process of raising rates. According to the estimates of the research organization FactSet, at the end of 2018, you can expect an increase in consolidated earnings per share of S & p 500 by 20.6% year — on-year, and in 2019-by 10.3%.

Ideas for tomorrow

To reduce the risks associated with the growth of fed rates, it is necessary to adhere to simple rules:

- avoid stocks of enterprises with high debt load and weak operating performance and securities with inflated multipliers;

snoring to treat traditional dividend sectors;

- look for interesting long-term stories and papers-the beneficiaries of the growth rates.

Securities that can be bought in the expectation of long-term growth are less dependent on fluctuations in economic cycles and are focused on breakthrough ideas. Some shares have already fallen well in price — most of the external negative factors played their quotes, and the potential for further decline is limited.

Such actions may include, for example, paper Facebook. The company is the undisputed leader in the market of new media, is financially stable and constantly innovates. Her Instagram service is popular among young people, the number of Its users has reached 1 billion Ahead — the monetization of WhatsApp messenger.

No less interesting option is the manufacturer of semiconductors Micron Technology. Recently, investors have been concerned about the possible oversaturation of the microchip market and the risk of a full-fledged trade war with China, which will hit the export of Micron products. But in fact, we have a company with strong balance sheet indicators, serious prospects for income growth and low multipliers. In the spring, the Corporation announced a stock repurchase program by $10 billion Also worth noting is the shift of demand in the market of chips and semiconductors in the direction of more expensive solutions in cloud, mobile and autosegment.

Another attractive paper traded in the US market is the stock of Alibaba Group, the leader in e-Commerce in China. China's population exceeds 1.4 billion people, with 57% of citizens using the Internet. For comparison-in the US we are talking about 83% of the population. This opens up broad prospects for e-Commerce in China. In addition, Alibaba is expanding beyond the country, including India, whose population is about 1.3 billion people.

In the us market, you can find "protective" shares, which are less subject to fluctuations in turbulent conditions. First of all, these are papers of traditional pharmaceutical companies and manufacturers of essential goods.

It is worth paying attention to the shares of American banks. The balance sheets of many financial institutions are designed so that with the growth of interest rates increases the interest margin, and hence the interest income. Citigroup shares look interesting in terms of a set of factors, including market multipliers. JPMorgan & Chase securities seem to be a good investment, although now these shares are clearly overheated.

Despite the growth of the fed's rates, it is not necessary to completely discard dividend stories, because it is a good alternative to Bank deposits. You can look at the shares of Telecom giant AT&T, retailer Macy's and the leader of the American automotive industry General Motors. Their dividend yield is very solid 4-6%. However, before you buy these shares, you need to wait for their drawdown. At the same time, their dividend yield will grow.

Among the exchange-traded funds (ETF) it is worth paying attention to Vanguard Total World Stock, the portfolio of which includes 8109 securities of companies from developed and developing countries. In the sectoral context, the Fund of biotechnology companies iShares Nasdaq Biotechnology is quite popular — this industry can survive the second Renaissance against the background of population aging in developed countries. To earn dividends allow paper funds SPDR S&P Dividend Vanguard High Dividend Yield. There are also quite "local" ideas, for example, investments in the sphere of artificial intelligence, but these market sectors require careful study based on the analysis of fundamental factors.