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The first quarter of 2024 delivered even more impressive gains, propelling the S&P 500 (SPY) to new heights. It’s time…this is now. That means there’s good reason to believe the pace of gains will slow significantly. 44-year investment veteran Steve Reitmeister is happy to share his latest market outlook, as well as his trading plans and top picks to outperform the rest of the year. Please see the full text below.
Considering the S&P 500 was up a massive 10%, it was nearly impossible to take a loss in the first quarter (spy). What’s even more impressive is that when he turned back the clock to early November 2023, he increased by 25%.
When you realize that stocks are only increasing by an average of 8% per year, you can see that these good times won’t last long.
No…that doesn’t mean a bear market will start on the way. However, the pace of these gains should slow dramatically from here.
The purpose of this commentary today is to summarize the key details of the first quarter, which we hope will illuminate the path to superior earnings in the coming months.
Market commentary
Throughout 2023 and into early 2024, the stock market has been somewhat lopsided. That’s why big tech stocks, the ones with the little green arrow next to most other groups, have been overrepresented.
Therefore, the following graph showing Q1 performance by market capitalization is not surprising.
Once again, we can see that small-cap stocks (small caps, micro stocks, nano stocks) are lagging year-on-year. As we’ve said many times in the past, small caps have a notable historical advantage over long caps from his century ago. So the four-year advantage for large-cap stocks is a bit unusual.
In many ways, small-cap stocks leading a bull market is the healthiest sign because it shows investors are in a risk-taking mood. On the other hand, for me, stacking the same 7 megacaps of tech stocks is a bit like adding blocks to a tower in a Jenga game. It works for a while, but then it gets too high and becomes unstable, eventually leading to a fall. We’ll explain more about what that means in the Outlook section below.
Next, let’s take a look at sector-wise performance in 2024.
This is a repeat of 2023, with technology and communication services leading the way. Meanwhile, the more defensive groups (consumer defense, utilities, health care) are in the middle to bottom of the group.
This is very typical in bull markets, as technology and communication services are two of the better growth-oriented groups. Even more surprising is the weakness in basic materials and industrial products, which typically perform well in the early stages of a new bull market.
OK…this happened just 18 months into a new bull market. And given that they typically last five years or more, there is good reason to be optimistic that there are more upsides ahead. But as foretold in the intro…the pace of gains should slow down dramatically from here on out.
Market outlook and trading plan
I recently shared a more complete presentation on the outlook for the stock market for the rest of 2024, including trading plans and top stocks that will outperform. Watch here >
The summary version gave you an easy profit with a return of about 50% in just 18 months. That’s because investors do a classic job of looking ahead to strategies.
That means investors are well aware that the Fed will cut interest rates later this year, which will help spur higher economic growth. So they are bidding up the stock ahead of that action. It also opens up the possibility of a fairly lukewarm response to an actual rate cut, which is currently the case on June 12th.th Fed meeting.
In short, I think the highest value of the S&P 500 this year will be around 5,500. A slight 5-6% increase from current levels. But it will be on par with or more than a realistic annual return to expect as we move forward.
Yes, I know it’s not very interesting for investors who are just riding the market index. Once you understand these good stock selection criteria, you’ll be happy to know that you’ll be on your way to very good results.
First and foremost, the four-year advantage for large-cap stocks should end. I think small-cap stocks could easily outperform the S&P 500 by a factor of 2-3 over the next few years.
Second, basic materials and industrial products should outperform as lower interest rates also lower their cost structure and lead to higher margins (mainly due to lower borrowing costs). This idea also shows how to invest in other industries that benefit from lower interest rates. Homes, cars, banks, bonds, and even income stocks (as bond rates fall, income stocks’ dividend yields become more attractive, helping to push prices higher).
Finally, we are moving past the stage where growth becomes central to stock selection. Going forward, the average stock is fairly well valued, and many large-cap stocks are clearly overvalued. This will lead investors to look for undervalued stocks to improve performance.
The big advantage when it comes to finding stocks that meet all three of these criteria is that our proprietary POWR Ratings model analysts show 118 factors for each stock that indicate it’s likely to outperform over the next year. is.
Yes, past performance is no guarantee of future results, but given POWR Rating’s consistent outperformance over the past 25 years, it certainly improves your chances of using it moving forward.
Your eyes don’t deceive you. A-rated stocks have outperformed the top of the S&P 500 by nearly four times since his 1999. And that outperformance will continue here in his 2024.
The downside to this model is that it requires consideration of approximately 1,300 buy-rated stocks each day. If you’d like to narrow it down to my 12 favorites at the moment, read the details below…
What’s next?
Check out my current portfolio of 12 stocks packed with great benefits from the unique POWR Ratings model. (Nearly 4x better than the S&P 500 through 1999)
This includes five under-the-radar small-cap stocks that have been recently added with tremendous upside potential.
Additionally, I have one particular ETF that is incredibly well-positioned to outperform the market in the coming weeks and months.
This is all based on my 44 years of investing experience, having seen bull markets, bear markets, and everything in between.
If you want to learn more and see our handpicked 13 lucky deals, click the link below to get started today.
Steve Reitmeister’s trading plans and recommendations >
I wish you success in your investments.
Steve Reitmeister…but everyone calls me Leity (pronounced “righty”)
StockNews.com CEO, and Editor, Reitmeister Total Return
SPY stock was trading at $518.48 per share Tuesday afternoon, down $3.68 (-0.70%). Year-to-date, SPY has increased 9.42%, compared to the benchmark S&P 500 index’s increase of % during the same period.
About the author: Steve Reitmeister
Steve is better known to StockNews readers as “Reity.” He is not only the CEO of the company, but also talks about his 40 years of investment experience in the world. Reitmeister Total Return Portfolio. Learn more about Reity’s career and find links to his latest articles and stock picks.
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