| DAILY ISSUE Hello, Reader. Tom Yeung here with today’s Smart Money. If you ask the average retail trader how they feel about the market today, you can expect to get a list of four-letter expletives. Since the start of the year, the percentage of people surveyed by the American Association of Individual Investors (AAII) who are bearish about the market has surged from 34% to roughly 60%. The mood has also shifted among average Americans, with around half of survey-takers feeling the economy is getting worse, up from a third in January. And why wouldn’t they feel awful? Shares of companies like Nvidia Corp. (NVDA) trade 23% below their January highs, while those of Tesla Inc. (TSLA) are 40% underwater. Every day seems to bring another round of uncertainty over which country will face tariffs next… or which government agency will get the ax. But the broader stock market paints a different picture. The S&P 500 index trades just 6% below its all-time high reached in mid-February. Many emerging markets will drop by more in a single day. In fact, over a third of S&P 500 companies have risen over that period. The reason for this divergence is straightforward: The selloff in expensive, well-known tech stocks is being offset by a pivot into lesser-known value stocks. So today, let’s dig into why market uncertainty is reshaping investment strategies, pushing formerly overlooked trades into the spotlight… and how the move toward value investing pays off. Then, I’ll share an even bigger story playing out in the markets. It’s causing a big divide among investors… and you don’t want to get caught on the wrong side. | Recommended Link | | | | Luke Lango was ranked #1 by TipRanks in 2020. He’s picked out over 350 stocks that have double or tripled. And more than 33 picks that made 10x or more. He was early on Nvidia, Microsoft and AMD. Anyone that held on had the chance to see gains of 3,570%, 819% and 7,120% respectively. Now, he's saying the #1 Tech Stock of 2025 — is not an AI company. |  | | The Revenge of Value Since the S&P 500 peaked on February 19, prices of cheap companies have held up far better than their expensive counterparts. In fact, this divergence has been noticeable with even the most basic metrics. Over the past month, prices of the lowest-quintile of S&P 500 companies by current price-to-earnings (P/E) ratio have lost just 4%. This compares to an 8% loss among the highest S&P 500 companies by P/E ratio.  The split is even starker on a sector-by-sector basis. Over the same period, shares of biopharmaceutical companies are up 3%, energy companies have risen 4%, and water utilities have jumped 12%. Meanwhile, IT services are down 19%. So, the upshot of market uncertainty is that formerly “conservative” trades are becoming hot again. For instance, shares of recommendation Bristol-Myers Squibb Co. (BMY) – a recommendation in my paid service Fry’s Investment Report – are up 7% since February 19 on no particular company news. Analysts have largely kept their 2026 earnings per share estimates constant at $6.16. The rise of gold is even more noticeable. Since February 19, prices of the safe-haven metal are up 4%. Shares of companies with leveraged exposure, such as miners, have risen even further. The key change is the way investors are now viewing stable streams of cash. Profit-producing companies like pharma and mining firms are suddenly seen as a safe way to store and make money, rather than as money-sinks that get left behind. In a sense, this return to unpopular stocks is a return to more “classic” markets like those seen in the 2010s in the aftermath of the financial crisis, or the mid-2000s with the rise of China. Value companies with solid cash flows are performing well, while riskier moonshot assets are not. It’s a market where the Warren Buffetts of the world will succeed, while the Cathie Woods do poorly. In a Smart Money at the beginning of the year, Eric predicted that 2025 would see the “Revenge of Value” – where the richly priced “Magnificent Seven” stocks would underperform. In turn, value stocks, precious metals, and drugmakers would surge. That’s why over the past several months, Eric has recommended his Fry’s Investment Report members and other readers to exit Mag 7 positions and add lower-priced tech alternatives in addition to holding onto gold and other commodity picks. We’re now seeing these moves pay off. Though other investors might have plenty of four-letter words to go around, we’re maintaining our focus on one of the most important five-letter words in investing: v-a-l-u-e. The Coming Tech Divide And while tariffs, or even a full-blown trade war with several countries, is nothing to be ignored, most people are missing an even bigger story playing out... Since 2020, Eric has been tracking a phenomenon he calls the "Technochams." This phenomenon refers to the deep divide that technology is creating within the market. On one side of the gap are the companies (and investors) who leverage rapid technological innovation. On the other: Investors and businesses that get caught off guard and fall behind. Then, artificial intelligence came along and lit a match under the Technochasm, turning it into an abyss. But Eric, along with his InvestorPlace colleagues Louis Navellier and Luke Lango, see a big opportunity amid this disruption. One they are capitalizing on in their shared research service AI Revolution Portfolio. (To learn more about this service, click here.) The last time Eric went public with the Technochasm phenomenon, he helped his readers get in front of winners like 1,350% in only 11 months from mining company Freeport-McMoRan Inc. (FCX). That is why, this morning, Eric, Louis, and Luke held an important broadcast to explain exactly how this massive capital shift will create the next generation of tech millionaires – and potentially leave millions of others behind. If you want to learn more about this opportunity – and the six stocks at the center of it – click here to access the free replay. Regards, Tom Yeung Markets Analyst, InvestorPlace | 
No comments:
Post a Comment