Sunday , February 28 2021

Protection strategy. Why the United States started investing in old companies



US investors have changed from a technology sector to a business with a long history: Procter & Gamble, McDonald's and Walmart. These assets are not able to grow rapidly, but are protected from depreciation.

The largest of the US economy. U., Procter & Gamble, McDonald's and Walmart have risen substantially in recent days, observed in The Wall Street Journal. Its growth has still helped the Dow Jones Industrial Index recover the losses of October crunch.

What about American exchanges?

In the last two weeks, the Dow Jones index has increased by 1300 points. This is the best indicator since November 2016, and now the index separates from the peak registered at the beginning of October at 3.1%.

However, index growth was interrupted last Friday after Peter Navarro, the first economic advisor to President Donald Trump, stabbed in Beijing and at the same time Wallman's Goldman Sachs. Calling the globalists of Wall Street and the "unpaid foreign agents" of Goldman Sachs from Beijing, Navarro accused them of weakening the position of the president of the United States before an important meeting with the Chinese leader Xi Jinping in December.

The most sensitive to the news of commercial warfare actions began to fall. The decline affected industrial giants of the 3M and Caterpillar US economy, as well as technology companies – traditional Wall Street favorites from January to September this year.

Friday's fall in auction appointments in New York was another confirmation that investors are still afraid of the rising cost of loans, the slowdown in the US economy. As well as an increasing disagreement in the commercial relations between EE. UU. And China.

As a business with markets developed by history

In the search for more reliable investment instruments, investors have moved from companies with higher earnings growth rates to those that will generate more stable profits and will emit large dividends. These companies tend to resist better in times of difficult economic situation. These include Procter & Gamble, McDonald's, Walmart and other leading American markets with a long history. Their actions rose over the last month by 12%, 9.5% and 8.7% respectively.

Technological giants, which grew strongly in the price, who were the leaders of the growth just a month ago, now are cautious with the investors. The expected slowdown in the growth of sales of technological giants such as Apple and Amazon stimulated the sale of shares of many technology companies, which led to the weakening of the S & P 500 and Nasdaq Composite indexes. Now, these indexes are lower than their recent peaks at 5.1% and 8.7%, respectively.

Waukesha Financial Advisor, James Hayett, recommends buying more reliable stocks in companies that pay dividends. According to him, customers now prefer Procter & Gamble and General Motors and do not buy technology companies.

According to Bank of America Merrill Lynch and EPFR Global, about $ 3.1 million was spent on technology funds last month, while in January 2017 until September this year, more than 41 billion dollars were invested in these funds

How is a defensive strategy justified?

Now investors are investing more in stocks that were ignored during the technological boom, particularly in the consumer sector. According to the Bank of America / EPFR, during the week ending on Wednesday, about $ 500 million was received by health care funds and consumer funds, while money was withdrawn from most other sectors, including technology, finance and energy. Investors have become "more selective, finding names that today have marginal stability," said Anik Sen, head of the stock trading unit of PineBridge Investments.

In addition to the fees Trump imposed on products from China, companies have to face the highest labor costs in one of the toughest job markets in recent decades. According to analysts, the Fed interest rate increase rate will also exert pressure on profit margins, which will make companies with high and stable profit margins more attractive to investors.

"We still recommend having" quality "actions that should show the best result as the cycle grows and economic growth slows down," Goldman Sachs Group analysts said. These companies are able to withstand increasing costs and their actions are able to overcome the growth of the S & P 500 index.

What will happen to the actions

According to the Refinitiv polls, analysts do not expect a growth of Procter & Gamble. Now the stock price exceeds the annual consensus goal by 3.3%. Of the 24 experts surveyed by Refinitiv, seven recommends buying paper, 16 – to keep.

Regarding the Walmart titles, analysts have more positive expectations. The annual objective is 0.24% higher than the current price. There is no recommendation to sell Walmart shares. It is recommended to recommend 15 interviewees against 17, advising the accomplishment of the work.

As for McDonald's actions, analysts have the most optimistic forecasts for them. Of the 31 experts, 23 recommends buying stocks, eight – wait. As shown by the Refinitiv, analysts expect the growth of McDonald's shares by 3.5% during the year.


Source link