Investment Learning

  • September 10, 2024

SMH ETF: Selloff Could Present Opportunity for Long-Term Investors

After a dazzling start to 2024, the VanEck Semiconductor ETF (SMH) has dropped 24.1% from its 52-week high and suffered a nearly 10% loss in the past week alone. However, for long-term investors, the selloff could present a long-term buying opportunity. I’m bullish on the largest and most liquid semiconductor ETF due to its robust long-term track record, consistently outperforming the broader market over the past three, five, and 10 years. I’m also bullish on SMH and the semiconductor industry i

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  • September 9, 2024

Patience 'could be a virtue' in current market: Strategist

After last week's tech-heavy sell-off, many investors took the opportunity to buy the dip. Slatestone Wealth chief market strategist Kenny Polcari joins Catalysts to discuss the current state of the equity market (^DJI, ^IXIC, ^GSPC) and how investors can best position their portfolios heading into 2025. "I think you have to take a broader look at where we think the market's going over the next six or seven weeks, just because we're in that seasonally weak time in the market, August through October. I think that the August lows of 5,116 [for the S&P 500] are likely going to be tested again, which means that as a long-term investor, you just need to be a little bit cautious," Polcari tells Yahoo Finance. He points to Nvidia (NVDA) as a buying opportunity since shares are down about 25% since its June high. He does not expect the stock to rally back up to its high, but rather, he sees it as "on sale" for long-term investors. "Now, if you're worried about further downside for the broader market and you think it's going to get dragged with it, well then just sit back a little bit and wait. I think, you know, for most of the clients, that's the conversation I'm having, just about being patient, because patience, in this case, could be a virtue," he adds. Polcari argues, "We're at the very infancy stages of AI. I think Nvidia sits at the nexus of this tech revolution that's happening." He expects more volatility in the stock as the AI race continues. However, in the long term, he views Nvidia as "a core name and a core portfolio." As the consumer discretionary sector (XLY) leads the market's charge for a rebound in Tuesday's trading session, Polcari is more bullish on consumer staples (XLP): "I think we're already seeing consumers run into problems. We're seeing people live on credit cards, and discretionary is just that — it's discretionary spending. Those are wants versus needs. So I would be cautious on that sector at the moment, and I'd be more focused on the staples sector. While it's boring... I think it plays nicely in an environment where you think it's going to be a little bit of a pressure on the broader market and on the consumer." For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Melanie Riehl

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  • September 9, 2024

Goldman Sachs analyst on what Fed rate cuts mean for Big Tech

Goldman Sachs managing director Kash Rangan sits down with Brian Sozzi and Madison Mills at the Goldman Sachs 2024 Communacopia & Technology Conference to discuss the top themes in tech and the sector's overall outlook. Rangan argues that there are three important things for software companies at this juncture: interest rates, the election, and generative AI. He notes that the Federal Reserve will likely initiate a 25-basis-point cut at its September meeting, and will likely total between 325 and 350 basis points by the end of its easing cycle. Easing rates will bring down the cost of capital for businesses, and will serve as a "tailwind for existing customers to expand their deployments." "With every economic cycle, as we come out of an economic cycle, coincidentally, there's always a new tech cycle that also goes with it," Rangan tells Yahoo Finance. He explains that after the 2008 recession, tech companies came out with cloud products, which eventually became "the catalyzing force for the tech industry." He notes that for real growth, there needs to be innovation alongside economic improvement: "It's not as easy as saying lower rates are good. I mean, they're kind of the first lift. It's the primer. The next thing, it has to be followed by real innovation." Rangan adds that after the 2024 presidential election in November, there will be less uncertainty: "It's not important to nail what the new policies are going to be, but it's more important to have less uncertainty and more certainty about what those policies are," he says, which indicates companies may move forward with projects it put on the backburner during peak uncertainty. Finally, Rangan believes generative AI will be a long-term theme for the tech sector. "I am very bullish how it unfolds eventually in the long term. But if you're looking for proof points today, there's a scattering of proof points, but not enough to get conviction that this is going to be a thing in '25 or '26." Catch more Yahoo Finance coverage and interviews from the Goldman Sachs Communacopia & Technology Conference. For more expert insight and the latest market action, click here to watch this full episode of Market Domination. This post was written by Melanie Riehl

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  • September 9, 2024

US economy is in 'middling' phase as Fed fights inflation

US market averages (^DJI, ^IXIC, ^GSPC) closed Monday's session higher after last week's sell-off. NorthEnd Private Wealth CIO Alex McGrath joins Market Domination Overtime to discuss the state of the market ahead of the Federal Reserve's first interest rate cut. "We're coming off the back end of a pretty long inflation battle here with rates being at historic peaks. And, you know, you look at the underlying macro data that we're staring at every day, and it's not exceptional, but it's not bad either. It's just kind of in this middling phase. And certainly a much better start to this week than we had last week," McGrath explains. He argues that the Fed's cuts will not immediately come to the rescue as its cuts will likely "take time to work through." He adds, "I don't think you have to look much further than a lot of the numbers we've seen from the consumer discretionary companies, where they're slashing forecast because the demand just isn't there like it has been. And that's not entirely surprising." While inflation is down, he argues, "the problem is there's 20 to 30% built up in there that's still increasing on a month-over-month basis. And it's just the consumer's got to get tapped out at some point. And I'm not saying that's like a death and destruction phase coming, but you are starting to see inklings of that." However, easing rates should help counter that issue. Moving forward, McGrath believes the equities market "could be a bit rocky," so investors should take more of a defensive approach and take a position in sectors like industrials (XLI), utilities (XLU), healthcare (XLV), real estate (XLRE), and consumer staples (XLP). He also recommends semiconductors, calling them "the new industrial." On the fixed-income side, he argues that "it's probably time to start taking some duration there" as the Fed kicks off its rate easing cycle. For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime. This post was written by Melanie Riehl

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