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Tag: Commentary/Opinion

  • Etsy drifts further away from its roots with first Super Bowl ad

    Etsy drifts further away from its roots with first Super Bowl ad


    Etsy Inc., once known as a quirky marketplace for handmade, artisanal and vintage items, seems to be moving further away from its origins amid a much tougher e-commerce landscape and the impact of AI.

    Etsy
    ETSY,
    +4.83%
    will be marketing to a whole new audience on Sunday, when its first Super Bowl commercial will run. The 30-second ad is quirky; it depicts a generic 19th-century American leader who’s flummoxed over how to reciprocate France’s gift of the Statue of Liberty. With the help of an anachronistic smartphone, he and his team search on Etsy using its new Gift Mode option, and find its “Cheese Lover” category after determining that the French love cheese. Voilà — they decide to send the French some cheese.

    The commercial is part of Etsy’s push of a new user interface featuring Gift Mode, which lets shoppers search for gifts for a specific type of person or occasion — combining generative AI and human curation to give gift buyers some unusual options.

    But are these moves desperate and costly efforts to try to reach potential new buyers, coming on the heels of Etsy’s plans to lay off 11% of its staff?Or could running a TV ad at the most expensive time of the year actually lead to more sales on the once-fast growing marketplace?

    Etsy believes these moves will help the company grow again, and its research shows the average American spends $1,600 a year on gifts. “There is no single market leader and Etsy sees a real opportunity to become the destination for gifting,” Etsy’s Chief Executive Josh Silverman said in a recent blog post.

    Etsy is clearly under pressure after seeing its gross merchandise sales more than double in 2020 during the pandemic, when it became a go-to place to buy handmade masks and all kinds of items for the home, from vintage pieces to antiques to castoffs. From personal experience as an Etsy seller, I saw sales at my own small vintage-clothing shop more than double in 2020 and then fall back in 2021, while still remaining higher than in 2019. In the last two years, sales have slowed, and some other sellers have witnessed similar patterns, based on their comments in seller forums.

    The number of sellers and buyers on the platform has increased on the same level as gross merchandise sales. But e-commerce competition has also gotten more fierce.

    “Our main concern with Etsy is growing competition in the space from new players like Temu,” said Bernstein Research analyst Nikhil Devnani, in an email. Temu and fellow Chinese online retailer Shein have raised a lot of investor jitters, as Etsy’s gross merchandise sales have slipped over the last year and are forecast to fall again in its upcoming fourth-quarter earnings report later this month.

    Devnani said a Super Bowl ad could potentially help the marketplace gain visibility, something it has always lacked.

    “One dynamic they’ve talked about a lot is that brand awareness/recollection is still low, and this keeps frequency low,” he said, noting that Etsy buyers shop on the site about three times per year, on average. “They want to be more top-of-mind … Super Bowl ads are notoriously expensive of course, but can be impactful/get noticed.”

    The company’s big focus on Gift Mode, however, could be a risky strategy. How many times a year do consumers look for gifts? And in a note Devnani wrote in October, before the company’s Gift Mode launch, he said that one of the concerns investors have is that Etsy is too niche. “’How often does someone need something special?’ is the rhetoric we hear most often,” he said. Etsy, then, is counting on buyers returning for other items for themselves.

    Etsy CEO Silverman believes buyers will come back again and again to purchase gifts. Naved Khan, a B. Riley Securities analyst, said in a recent note to clients that he believes Gift Mode plays to Etsy’s core strengths, offering “unique goods at reasonable prices” versus the mass-produced products sold on Shein, Temu, Amazon.com Inc.
    AMZN,
    +2.71%    ,
    and other sites.

    Consumer spending has changed, though. At an investor conference in December, Silverman said that consumers are spending on dining out and traveling, instead of buying things.

    But while investors still view Etsy as a niche e-commerce site, some buyers and sellers see it overrun with repetitive, non-relevant ads. Complaints about a decline in search capabilities, reliance on email and chat for support, and constant tech changes are common on seller forums and Facebook groups. AI-generated art offered by newer sellers as a side hustle has also become a thought-provoking, debated issue. And there are complaints about mass-produced items making their way on the site.

    Etsy said that in addition to its human and automated efforts, it also relies on community flags to help take down infringing products that are not allowed on its marketplace, and that community members should contact the company when if they see mass-produced items for sale on the site.

    It also continues to work on search. On its last earnings call, Silverman said the company was moving beyond relevance to the next frontier of search, one “focused on better identifying the quality of each Etsy listing utilizing humans and [machine-learning] technology, so that from a highly relevant result set we bring the very best of Etsy to the top — personalized to what we understand of your tastes and preferences.”

    The pressure could build on the company if its latest moves don’t generate growth. Etsy recently gave a seat on its board to a partner at activist investor Elliott Management, which bought a “sizable” stake in the company in the last few months. Marc Steinberg, who is responsible for public and private investments at Elliott, has also has been on the board at Pinterest
    PINS,
    -9.45%
    since December 2022.

    Elliott Management did not respond to questions. But in a statement last week, Steinberg said he was joining the board because he “believe[s] there is an opportunity for significant value creation.” Some sellers fear that the pressure from investors and Wall Street will lead to Etsy allowing mass-produced products onto the site. In its fall update, Etsy said the number of listings it removed for violating its handmade policy jumped 112% and that it was further accelerating such actions.

    Etsy’s stock before the news of Elliott’s stake was down about 18% this year. Its shares are now off about 3.65% this year, after recently having their best day in seven years on the news that Steinberg joined the board.

    Etsy is a unique marketplace that for many years had a much better reputation than some of its rivals, like eBay
    EBAY,
    +0.98%    .
    But since going public and answering to Wall Street, the need to provide growth and profits for investors has become much more of a driver. The Super Bowl ad and Gift Mode may bring a broader awareness to Etsy, but will it be the right kind of awareness? Sellers like me hope these new efforts will stave off the continuing fight with the likes of Temu and other vendors of mass-produced products, and help Etsy retain the remaining unique aspects of its marketplace.



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  • How to navigate market risk from interest rates, the economy and politics in 2024

    How to navigate market risk from interest rates, the economy and politics in 2024


    As the U.S. Federal Reserve’s three-year reign in the headlines potentially comes to an end, an analysis of this year’s market themes can offer valuable insights for predicting trends and ensuring attractive returns in 2024.

    Beyond the central bank’s actions, pivotal factors shaping the investment landscape this year include fiscal policies, election outcomes, interest rates and earnings prospects.

    Throughout 2023, a prominent theme emerged: that equities are influenced by factors beyond monetary policy. That trend is likely to persist. 

    A decline in interest rates could significantly increase the relative valuations of equities while simultaneously reducing interest expenses, potentially transforming market dynamics. Contrary to consensus estimates, 2023 brought a more robust earnings rebound, leaving analysts optimistic about 2024.

    The 2024 U.S. presidential election, meanwhile, introduces a new element of uncertainty with the potential to cast a shadow over the market during much of the coming year. 

    Choppy trading, modest earnings growth

    Anticipating a choppy first half of the year due to sluggish economic growth, we see a better opportunity for cyclicals and small-cap stocks to rebound in the latter part of the year. As uncertainty around the election and recession fears dissipate, a broad rally that includes previously ignored cyclicals and small-caps should help propel the S&P 500
    SPX
    higher. 

    Broader macroeconomic conditions support mid-single-digit growth in earnings per share throughout 2024. Factors such as moderate economic expansion, controlled inflation and stable interest rates are expected to provide a conducive environment for companies, enabling them to sustain and potentially improve their earnings performance. We estimate EPS growth of 6.5%. This projected growth aligns with the broader market sentiment indicating a steady upward trajectory in earnings for the upcoming year, fostering investor confidence and supporting valuation expectations across various sectors.

    “ If the economy has not been in recession at the time of the first rate cut but enters one within a year, the Dow enters a bear market.”

    When it comes to U.S. stock-market performance around rate cuts, the phase of the economic cycle matters. When there has been no recession, lower rates have juiced the markets, with the Dow Jones Industrial Average
    DJIA
    rallying by an average of 23.8% one year later.

    If the economy has not been in recession at the time of the first cut but enters one within a year, the Dow has entered a bear market every time, declining by an average of 4.9% one year later. Our base case is a soft landing, but history shows how critical avoiding recession is for the bull market as the Fed prepares to ease policy.   

    Big on small-caps

    This past year has posed a hurdle for small-cap stocks due to the absence of a driving force. These stocks typically perform better as the economy emerges from a recession. While they are currently undervalued, their earnings growth has been notably lacking. If concerns about a recession diminish, a normal yield curve could serve as a potential catalyst for small-cap stocks.

    Growth vs. value

    The ongoing outperformance of megacap growth stocks that we saw in 2023 might hinge on their ability to sustain superior earnings growth, validating their current valuations. Defensive sectors in the value category, meanwhile, are notably oversold and might exhibit strong performance, particularly toward the latter part of the first quarter. Should concerns about a recession dissipate, cyclical sectors within the value category could outperform, particularly if broader market conditions turn favorable in the latter half of the year.

    Handling uncertainty

    The Fed’s enduring influence regarding the prospect of a soft landing in 2024 remains a pivotal point in the market’s focus. Considering the themes of the past year and the multifaceted influences on equities beyond monetary policy, investors are advised to navigate through uncertainties stemming from unintended fiscal shifts, upcoming elections and the impact of fluctuating interest rates. While a potentially choppy start to the year is anticipated, it could create opportunities for cyclical and small-cap stocks later in the year.

    Ed Clissold is chief of U.S. strategies at Ned Davis Research.

    Also read: Mortgage rates dip after Fed meeting. Freddie Mac expects rates to decline more.

    More: After the Fed’s comments, grab these CD rates while you still can



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  • Why Donald Trump is unlikely to get his wish for a 2024 U.S. stock-market crash

    Why Donald Trump is unlikely to get his wish for a 2024 U.S. stock-market crash

    Donald Trump is unlikely to get his wish that a U.S. stock-market crash occurs this year.

    I’m referring to the former U.S. president’s comments last week that he hopes the market crashes in 2024, since if he is elected in November and takes office a year from now, he doesn’t want to be another Herbert Hoover. Hoover was President when the stock market crashed in 1929.

    The stock market did plunge in two of the last four presidential-election years, so it’s understandable why one would worry that 2024 could see a repeat. In 2008, in the middle of the Global Financial Crisis, the S&P 500
    SPX
    lost 38.5% for the year. In 2020, as the economy ground to a halt because of the COVID-19 pandemic, the S&P 500 lost 34% in little more than a month’s time.

    It’s possible that a crash could occur at any time, of course, so a crash this year can’t be ruled out. Nevertheless, the odds of one occurring this year are significantly below average. That’s according to the latest “State Street US Froth Forecasts,” which are derived from research on crashes conducted by Robin Greenwood, Professor of Banking and Finance at Harvard Business School.

    In that research, Greenwood and his co-authors found that it’s possible to identify when there is an elevated probability of a crash. In an interview, Greenwood said that “crash probabilities are low” right now, not only for the market as a whole but “across the board” for individual market sectors as well.

    Greenwood’s model is based on a number of factors, such as performance over the trailing two-year period, volatility, share turnover, IPO activity and the price path of the trailing two-year runup. For example, he and his fellow researchers found that when an industry beats the market by 150 or more percentage points over a two-year period, there’s an 80% probability that it will crash — which they define as a drop of at least 40% over the subsequent two years. As you can see from the accompanying chart, State Street is reporting low crash probabilities for all sectors — in each case well below the average forecasted crash probabilities of the past five years.

    These probabilities don’t mean that stocks will have a great year in 2024. A new bear market could begin this year without the decline satisfying the researchers’ definition of a crash.

    Nevertheless, the takeaway from the State Street US Froth Forecasts is that there are bigger things to worry about this year than the possibility of a crash.

    Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

    More: Trump says he hopes market crashes in 2024 under Biden: ‘I don’t want to be Herbert Hoover

    Also read: Iowa caucuses are make-or-break for Donald Trump

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  • The Russell 2000 Index has soared, but you might be better off looking elsewhere for quality small-cap stocks

    The Russell 2000 Index has soared, but you might be better off looking elsewhere for quality small-cap stocks

    The Russell 2000 Index soared 12% in December, which might reflect investors’ exuberance about the state of the U.S. economy — it appears the Federal Reserve has won its battle against inflation.

    But if you are looking to broaden your exposure to the stock market beyond the large-cap S&P 500
    SPX,
    buying shares of a fund that tracks the Russell 2000 Index
    RUT
    might not be the best way to do it. This is because the Russell 2000 isn’t selective — it is made up of the smallest 2,000 companies by market capitalization in the Russell 3000 Index
    RUA,
    which itself is designed to capture about 98% of the U.S. public equity market.

    A better choice might be the S&P Small Cap 600 Index
    SML
    because S&P Global requires companies to show four consecutive quarters of profitability to be initially included in the index, among other criteria.

    Below is a screen of analysts’ favorite stocks among the S&P Small Cap 600, along with another for the Russell 2000.

    Watch for a “head fake”

    Much of the small-cap buying in December might have resulted from covering of short positions by hedge-fund managers. This idea is backed by the timing of trading activity immediately following the Federal Open Market Committee’s announcement on Dec. 13 that it wouldn’t change its interest-rate policy, according to MacroTourist blogger Kevin Muir. The Fed’s economic projections released the same day also indicate three cuts to the federal-funds rate in 2024.

    Heading into the end of the year, a fund manager who had shorted small-caps, and then was surprised by the Fed’s interest-rate projections, might have scrambled to buy stocks it had shorted to close-out the positions and hopefully lock in gains, or limit losses.

    That buying activity and resulting pop in small-cap prices could set up a typical “head fake” for investors as the new year begins, according to Muir.

    The long-term case for quality

    Looking at data for companies’ most recently reported fiscal quarters, 58% of the Russell 2000 reported positive earnings per share, according to data provided by FactSet. In other words, hundreds of these companies were losing money. These might include promising companies facing “binary events,” such as make-or-break drug trials in the biotechnology industry.

    In comparison, 78% of companies among the S&P Small Cap 600 were profitable, and 93% of the S&P 500 were in the black.

    Here are long-term performance figures for exchange-traded funds that track all three indexes:

    ETF

    		 Ticker

    		 2023

    		 3 years

    		 5 years

    		 10 years

    		 15 years

    		 20 years
    iShares Russell 2000 ETF

    		 IWM 17%

    		 7%

    		 61%

    		 99%

    		 428%

    		 365%
    iShares Core S&P Small Cap ETF

    		 IJR 16%

    		 25%

    		 69%

    		 129%

    		 540%

    		 515%
    SPDR S&P 500 ETF Trust

    		 SPY 26%

    		 34%

    		 108%

    		 210%

    		 629%

    		 527%
    Source: FactSet

    An approach tracking the S&P Small Cap 600 has outperformed the Russell 2000 for all periods, with margins widening as you go further back.

    Brett Arends: You own the wrong small-cap fund. How to get into a better one.

    Looking ahead for quality… or not

    For the first screen, we began with the S&P Small Cap 600 and narrowed the list to 385 companies covered by at least five analysts polled by FactSet. Then we cut the list to 92 companies with “buy” or equivalent ratings among at least 75% of the covering analysts.

    Here are the 20 remaining stocks among the S&P Small Cap 600 with the highest 12-month upside potential indicated by analysts’ consensus price targets:

    Company

    		 Ticker

    		 Share “buy” ratings

    		 Dec. 29 price

    		 Consensus price target

    		 Implied 12-month upside potential
    Vir Biotechnology Inc.

    		 VIR,
    +4.47%         		88%

    		 $10.06

    		 $32.00

    		 218%
    Arcus Biosciences Inc.

    		 RCUS,
    +3.04%         		82%

    		 $19.10

    		 $41.00

    		 115%
    Xencor Inc.

    		 XNCR,
    +6.03%         		92%

    		 $21.23

    		 $39.83

    		 88%
    Dynavax Technologies Corp.

    		 DVAX,
    +2.86%         		100%

    		 $13.98

    		 $24.80

    		 77%
    ModivCare Inc.

    		 MODV,
    +0.95%         		100%

    		 $43.99

    		 $75.50

    		 72%
    Xperi Inc

    		 XPER,
    +1.81%         		80%

    		 $11.02

    		 $18.20

    		 65%
    Thryv Holdings Inc.

    		 THRY,
         		100%

    		 $20.35

    		 $32.75

    		 61%
    Ligand Pharmaceuticals Inc.

    		 LGND,
    +1.25%         		100%

    		 $71.42

    		 $114.80

    		 61%
    Green Plains Inc.

    		 GPRE,
    -1.67%         		80%

    		 $25.22

    		 $40.30

    		 60%
    Patterson-UTI Energy Inc.

    		 PTEN,
    +0.28%         		75%

    		 $10.80

    		 $17.00

    		 57%
    Ironwood Pharmaceuticals Inc. Class A

    		 IRWD,
    +8.48%         		83%

    		 $11.44

    		 $17.83

    		 56%
    Catalyst Pharmaceuticals Inc.

    		 CPRX,
    +1.78%         		100%

    		 $16.81

    		 $26.20

    		 56%
    Payoneer Global Inc.

    		 PAYO,
    -3.45%         		100%

    		 $5.21

    		 $8.00

    		 54%
    Helix Energy Solutions Group Inc.

    		 HLX,
    -2.63%         		83%

    		 $10.28

    		 $15.00

    		 46%
    Arlo Technologies Inc.

    		 ARLO,
    -3.05%         		100%

    		 $9.52

    		 $13.80

    		 45%
    Pacira Biosciences Inc.

    		 PCRX,
    -5.16%         		100%

    		 $33.74

    		 $48.40

    		 43%
    Privia Health Group Inc.

    		 PRVA,
    +2.95%         		100%

    		 $23.03

    		 $32.53

    		 41%
    Semtech Corp.

    		 SMTC,
    -1.23%         		92%

    		 $21.91

    		 $30.90

    		 41%
    Talos Energy Inc.

    		 TALO,
    +1.19%         		78%

    		 $14.23

    		 $20.00

    		 41%
    Digi International Inc.

    		 DGII,
    -1.21%         		100%

    		 $26.00

    		 $36.14

    		 39%
    Source: FactSet

    Any stock screen should only be considered a starting point. You should do your own research to form your own opinion before making any investment. one way to begin is by clicking on the tickers for more about each company.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Moving on to the Russell 2000, when we narrowed this group to stocks covered by at least five analysts polled by FactSet, we were left with 936 companies. Among these, 355 have “buy” or equivalent ratings among at least 75% of the covering analysts.

    Among those 355 stocks in the Russell 2000, these 20 have the highest implied upside over the next year, based on consensus price targets:

    Company

    		 Ticker

    		 Share “buy” ratings

    		 Dec. 29 price

    		 Consensus price target

    		 Implied 12-month upside potential
    Karyopharm Therapeutics Inc.

    		 KPTI,
    +4.18%         		75%

    		 $0.87

    		 $6.00

    		 594%
    Rallybio Corp.

    		 RLYB,
    +0.42%         		100%

    		 $2.39

    		 $16.50

    		 590%
    Vor Biopharma Inc.

    		 VOR,
    -0.89%         		100%

    		 $2.25

    		 $15.44

    		 586%
    Tenaya Therapeutics Inc.

    		 TNYA,
    -0.62%         		100%

    		 $3.24

    		 $19.14

    		 491%
    Compass Therapeutics Inc.

    		 CMPX,
    -5.13%         		86%

    		 $1.56

    		 $9.17

    		 488%
    Vigil Neuroscience Inc.

    		 VIGL,
    +2.66%         		88%

    		 $3.38

    		 $18.75

    		 455%
    Trevi Therapeutics Inc.

    		 TRVI,
    -2.99%         		100%

    		 $1.34

    		 $7.33

    		 447%
    Inozyme Pharma Inc.

    		 INZY,
    +1.64%         		100%

    		 $4.26

    		 $21.00

    		 393%
    Gritstone bio Inc.

    		 GRTS,
    +6.86%         		100%

    		 $2.04

    		 $10.00

    		 390%
    Actinium Pharmaceuticals Inc.

    		 ATNM,
    +4.72%         		83%

    		 $5.08

    		 $23.36

    		 360%
    Lineage Cell Therapeutics Inc.

    		 LCTX,
         		86%

    		 $1.09

    		 $4.83

    		 343%
    Century Therapeutics Inc.

    		 IPSC,
    +9.64%         		86%

    		 $3.32

    		 $14.67

    		 342%
    Acrivon Therapeutics Inc.

    		 ACRV,
    +1.83%         		100%

    		 $4.92

    		 $21.13

    		 329%
    Avidity Biosciences Inc.

    		 RNA,
    +1.22%         		100%

    		 $9.05

    		 $37.50

    		 314%
    Longboard Pharmaceuticals Inc.

    		 LBPH,
    +316.25%         		100%

    		 $6.03

    		 $24.17

    		 301%
    Omega Therapeutics Inc.

    		 OMGA,
    -1.33%         		100%

    		 $3.01

    		 $12.00

    		 299%
    Allogene Therapeutics Inc.

    		 ALLO,
    +12.77%         		82%

    		 $3.21

    		 $12.79

    		 298%
    X4 Pharmaceuticals Inc.

    		 XFOR,
    +5.21%         		86%

    		 $0.84

    		 $3.26

    		 289%
    Caribou Biosciences Inc.

    		 CRBU,
    -2.79%         		89%

    		 $5.73

    		 $22.25

    		 288%
    Stoke Therapeutics Inc.

    		 STOK,
    +11.41%         		78%

    		 $5.26

    		 $19.33

    		 268%
    Source: FactSet

    That’s right — this Russell 2000 list is all biotech. And in case you are wondering if any companies are on both lists, the answer is no.

    Don’t miss: 11 dividend stocks with high yields expected to be well supported in 2024 per strict criteria

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  • These 20 stocks soared the most in 2023

    These 20 stocks soared the most in 2023

    (Updated with Friday’s closing prices.)

    The 2023 rally for stocks in the U.S. accelerated as more investors bought the idea that the Federal Reserve succeeded in its effort to bring inflation to heel.

    The S&P 500
    SPX
    ended Friday with a 24.2% gain for 2023, following a 19.4% decline in 2022. (All price changes in this article exclude dividends). Among the 500 stocks, 65% were up for 2023. Below is a list of the year’s 20 best performers in the benchmark index.

    This article focuses on large-cap stocks. MarketWatch Editor in Chief Mark DeCambre took a broader look at all U.S. stocks of companies with market capitalizations of at least $1 billion, to list 10 with gains ranging from 412% to 1,924%.

    The Fed began raising short-term interest rates and pushing long-term rates higher in March 2022 by allowing its bond portfolio to run off. That explains the poor performance for stocks in 2022, as bonds and even bank accounts because more attractive to investors.

    The central bank hasn’t raised the federal-funds rate since moving it to the current target range of 5.25% to 5.50% in July, and its economic projections point to three rate cuts in 2024.

    Investors are anticipating the return to a low-rate environment by scooping up 10-year U.S. Treasury notes
    BX:TMUBMUSD10Y,
    whose yield ended the year at 3.88%, down from 4.84% on Oct. 27 — the day of the S&P 500’s low for the second half of 2023.

    Read: Treasury yields end mostly higher but little changed on year after wild 2023

    Before looking at the list of best-performing stocks of 2023, here’s a summary of how the 11 sectors of the S&P 500 performed, with the full index and three more broad indexes at the bottom:

    Sector or index

    		 2023 price change

    		 2022 price change

    		 Price change since end of 2021

    		 Forward P/E

    		 Forward P/E at end of 2022

    		 Forward P/E at end of 2023
    Information Technology

    		 56.4%

    		 -28.9%

    		 11.5%

    		 26.7

    		 20.0

    		 28.2
    Communication Services

    		 54.4%

    		 -40.4%

    		 -7.6%

    		 17.4

    		 14.3

    		 21.0
    Consumer Discretionary

    		 41.0%

    		 -37.6%

    		 -11.4%

    		 26.2

    		 21.7

    		 34.7
    Industrials

    		 16.0%

    		 -7.1%

    		 8.0%

    		 20.0

    		 18.7

    		 22.0
    Materials

    		 10.2%

    		 -14.1%

    		 -4.9%

    		 19.5

    		 15.8

    		 16.6
    Financials

    		 9.9%

    		 -12.4%

    		 -3.4%

    		 14.6

    		 13.0

    		 16.3
    Real Estate

    		 8.3%

    		 -28.4%

    		 -21.6%

    		 18.3

    		 16.9

    		 24.7
    Healthcare

    		 0.3%

    		 -3.6%

    		 -3.3%

    		 18.2

    		 17.7

    		 17.3
    Consumer Staples

    		 -2.2%

    		 -3.2%

    		 -5.4%

    		 19.3

    		 20.6

    		 21.4
    Energy

    		 -4.8%

    		 59.0%

    		 51.8%

    		 10.9

    		 9.8

    		 11.1
    Utilities

    		 -10.2%

    		 -1.4%

    		 -11.4%

    		 15.9

    		 18.7

    		 20.4
    S&P 500
    SPX     		24.2%

    		 -19.4%

    		 0.4%

    		 19.7

    		 16.8

    		 21.6
    Dow Jones Industrial Average
    DJIA     		13.7%

    		 -8.8%

    		 3.8%

    		 17.6

    		 16.6

    		 18.9
    Nasdaq Composite
    COMP     		43.4%

    		 -33.1%

    		 -3.5%

    		 26.9

    		 22.6

    		 32.0
    Nasdaq-100
    NDX     		53.8%

    		 -33.0%

    		 3.5%

    		 26.3

    		 20.9

    		 30.3
    Source: FactSet

    A look at 2023 price action really needs to encompass what took place in 2022 for context. The broad indexes haven’t moved much from their levels at the end of 2022 (again, excluding dividends). We have included current forward price-to-earnings ratios along with those at the end of 2021 and 2022. These valuations have declined a bit, which may provide some comfort for investors wondering how likely it is for stocks to continue to rally in 2024.

    Biggest price increases among the S&P 500

    Here are the 20 stocks in the S&P 500 whose prices rose the most in 2023:

    Company

    		 Ticker

    		 2023 price change

    		 2022 price change

    		 Price change since end of 2021

    		 Forward P/E

    		 Forward P/E at end of 2022

    		 Forward P/E at end of 2021
    Nvidia Corp.

    		 NVDA,
         		239%

    		 -50%

    		 68%

    		 24.9

    		 34.4

    		 58.0
    Meta Platforms Inc. Class A

    		 META,
    -1.22%         		194%

    		 -64%

    		 5%

    		 20.2

    		 14.7

    		 23.5
    Royal Caribbean Group

    		 RCL,
    -0.37%         		162%

    		 -36%

    		 68%

    		 14.3

    		 14.9

    		 232.4
    Builders FirstSource Inc.

    		 BLDR,
    -1.02%         		157%

    		 -24%

    		 95%

    		 14.2

    		 10.7

    		 13.3
    Uber Technologies Inc.

    		 UBER,
    -2.49%         		149%

    		 -41%

    		 47%

    		 56.9

    		 N/A

    		 N/A
    Carnival Corp.

    		 CCL,
    -0.70%         		130%

    		 -60%

    		 -8%

    		 18.7

    		 41.3

    		 N/A
    Advanced Micro Devices Inc.

    		 AMD,
    -0.91%         		128%

    		 -55%

    		 2%

    		 39.7

    		 17.7

    		 43.1
    PulteGroup Inc.

    		 PHM,
    -0.26%         		127%

    		 -20%

    		 81%

    		 9.1

    		 6.3

    		 6.2
    Palo Alto Networks Inc.

    		 PANW,
    -0.24%         		111%

    		 -25%

    		 59%

    		 50.2

    		 38.0

    		 70.1
    Tesla Inc.

    		 TSLA,
    -1.86%         		102%

    		 -65%

    		 -29%

    		 66.2

    		 22.3

    		 120.3
    Broadcom Inc.

    		 AVGO,
    -0.55%         		100%

    		 -16%

    		 68%

    		 23.2

    		 13.6

    		 19.8
    Salesforce Inc.

    		 CRM,
    -0.92%         		98%

    		 -48%

    		 4%

    		 28.0

    		 23.8

    		 53.5
    Fair Isaac Corp.

    		 FICO,
    -0.46%         		94%

    		 38%

    		 168%

    		 47.1

    		 29.3

    		 28.7
    Arista Networks Inc.

    		 ANET,
    -0.62%         		94%

    		 -16%

    		 64%

    		 32.7

    		 22.3

    		 41.4
    Intel Corp.

    		 INTC,
    -0.28%         		90%

    		 -49%

    		 -2%

    		 26.6

    		 14.6

    		 13.9
    Jabil Inc.

    		 JBL,
    -0.45%         		87%

    		 -3%

    		 81%

    		 13.5

    		 7.9

    		 10.3
    Lam Research Corp.

    		 LRCX,
    -0.81%         		86%

    		 -42%

    		 9%

    		 25.2

    		 13.5

    		 20.2
    ServiceNow Inc.

    		 NOW,
    +0.57%         		82%

    		 -40%

    		 9%

    		 56.0

    		 42.6

    		 90.1
    Amazon.com Inc.

    		 AMZN,
    -0.94%         		81%

    		 -50%

    		 -9%

    		 42.0

    		 46.7

    		 64.9
    Monolithic Power Systems Inc.

    		 MPWR,
    -0.23%         		78%

    		 -28%

    		 28%

    		 49.1

    		 27.3

    		 57.9
    Source: FactSet

    Click on the tickers for more about each company.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Don’t miss: Nvidia tops list of Wall Street’s 20 favorite stocks for 2024

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  • 'Smidcap' companies are becoming a big deal. Here's a look at some of the best.

    'Smidcap' companies are becoming a big deal. Here's a look at some of the best.

    The stocks of long-neglected small companies are finally showing signs of life as the market rally broadens. But these tiny companies still remain vastly undervalued. So, they are one of the best buys in the stock market right now.

    Small- and medium-cap companies, or smidcaps, have not been this cheap since the Great Financial Crisis 15 years ago. “Smidcaps relative to large caps look very attractive,” says says portfolio manager Aram Green, at the ClearBridge Select Fund LBFIX, which specializes in this space.  “Over the long term you will be rewarded.” 

    Green is worth listening to because he is one of the better fund managers in the smidcap arena. ClearBridge Select beats both its midcap growth category and Morningstar U.S. midcap growth index over the past five- and 10 years, says Morningstar Direct. This is no easy feat, in a mutual fund world where so many funds lag their benchmarks. 

    The timing for smidcap outperformance seems about right, since these stocks do well coming out of recessions. Technically, we have not recently had a recession. But there was an economic slowdown in the first half of the year, and the U.S. did have an earnings recession earlier this year. So that may count. 

    To get smidcap exposure, consider the funds of outperforming managers like Green, and if you want to throw in some individual stocks, Green is a great guide on how to find the best names in this space. 

    I recently caught up with him to see what we can learn about analyzing smidcaps. Below are four tactics that contribute to his fund’s outperformance, with nine company examples to consider.  

    1. Look for an entrepreneurial mindset: Green’s background gives him an edge in investing. He’s an entrepreneur who co-founded a software company called iCollege in 1997. It was bought out by BlackBoard in 2001. He knows how to understand innovative trends, identify a good idea, secure capital and quickly ramp up a business. This experience gives him a “private market mindset” that helps him pick stocks to this day. 

    “Founder-run companies regularly outperform.”

    Green looks for managers with an entrepreneurial mindset. You can glean this from company calls and filings, but it helps a lot to meet management — something most individual investors cannot do. But Green offers a shortcut, one which I regularly use, as well. Look for companies that are run by founders. This will give you exposure to managers with entrepreneurial spirit. 

    Here, Green cites the marketing software company HubSpot
    HUBS,
    +0.79%    ,
    a 1.9% fund position as of the end of the third quarter. It was founded by Massachusetts Institute of Technology college buddies Brian Halligan and Dharmesh Shah. They’re on the company’s board, and Shah is chief technology officer. 

    Academic studies confirm founder-run companies regularly outperform. My guess is this is because many founders never lose the entrepreneurial spirit, no matter how easy it would be to quit and sip Mai Tai’s on a beach after making a bundle.  

    In the private market, Green cites Databricks, a data management and analytics company with an AI angle. This competitor of Snowflake
    SNOW,
    -0.92%
    is likely to go public in 2024. If you feel like an outsider because you lack access to private market investing, note that Green says he typically buys more exposure to private companies on the initial public offering (IPO), and then in the market.  “We like to spend time with them when they are private so we can pounce when they are public,” Green says.

    2. Look for organic growth: When companies make acquisitions their stocks often decline, and for good reason. Managers make mistakes in acquisitions because they overestimate “synergies.” Or they get wrapped up in ego-enhancing empire building. 

    “We favor entrepreneurial management teams that do not make a lot of acquisitions to grow, but use their resources to develop new products to keep extending the runway,” says Green. 

    Here, he cites ServiceNow
    NOW,
    +2.62%    ,
    which has grown by “extending the runway” with new offerings developed internally. It started off supporting information technology service desks, and has expanded into operations management of servers and security, onboarding employees, data analytics, and software that powers 911 emergency call systems. Green obviously thinks there is a lot more upside to come, given that this is an overweight position, at 4.6% of the portfolio (the fund’s biggest holding).

    Green also puts the “Amazon.com of Latin America” MercadoLibre
    MELI,
    +0.17%
    in this category, because it continues to expand geographically and in areas such as logistics and payment systems. “They have really morphed into a fintech company,” Green says. He puts HubSpot and the marketing software company Klaviyo
    KVYO,
    -5.73%
    in this category, too. 

    3. Look for differentiated business models: Green likes companies with offerings that are special and different. That means they’ll take market share, and face minimal competition. They’ll also enjoy pricing power. “This leads to high margins. You don’t have someone beating you up on price,” he says. 

    Green cites the decking company Trex
    TREX,
    +0.10%    ,
    which offers composite decking and railing made from recycled materials. This gives it an eco-friendly allure. Compared to wood, composite material lasts longer and requires less maintenance. It costs more up front but less over the long term. Says Green: “The alternative decking market has taken about 20% of the market and that can get to 50%.”

    Of course, entrepreneurs notice success, and try to imitate it. That’s a risk here. But Trex has an edge in its understanding of how to make the composite material. It has a strong brand. And it is building relationships with big-box retailers Home Depot and Lowe’s. These qualities may keep competitors at bay. 

    4. Put some ballast in your portfolio: Green likes to keep the fund’s portfolio balanced by sector, size, and business dynamic. So the portfolio includes the food distributor Performance Food Group
    PFGC,
    -1.69%    .
    The company is posting mid-single digit sale growth, expanding market share and paying down debt. Energy drinks company Monster
    MNST,
    -0.85%
    also offers ballast. Monster’s popular product line up helps the company to take share and enjoy pricing power, Green says.

    It’s admittedly unusual to see a food companies in a portfolio loaded with high-growth tech innovators. But for Green, it’s all part of the game plan. “Rapid growth, disrupting businesses are not going to work year in year out. There are times they fall out of favor, like 2022. So, having that balance is important because it keeps you invested in the equity market.” 

    In other words, keeping some ballast means you’re less likely to get shaken out by sharp declines in high-growth and high-beta tech innovators when trouble strikes the market.

    Michael Brush is a columnist for MarketWatch. At the time of publication, he owned AMZN, TSLA and MELI. Brush has suggested AMZN, TSLA, NOW, MELI, HD and LOW in his stock newsletter, Brush Up on Stocks. Follow him on X @mbrushstocks

    More: Nvidia, Disney and Tesla are among 2023’s buzziest stocks. Can they continue to sizzle in 2024?

    Also read: Presidential election years like 2024 are usually winners for U.S. stocks

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  • Why Sam Altman is a no-brainer for Time’s ‘Person of the Year’

    Why Sam Altman is a no-brainer for Time’s ‘Person of the Year’

    Nothing has changed our lives more this year than the advances made in artificial intelligence — and they have the potential to alter our lives in even more dramatic ways down the road.

    So it’s a no-brainer that Sam Altman, co-founder and recently returned chief executive of the once-little-known OpenAI, should be named “Person of the Year” by Time Magazine when the selection is announced Wednesday.

    Altman has already cracked Time’s shortlist, joining candidates from varied backgrounds, including world leaders like Xi Jinping and entertainment phenomenon Taylor Swift. The selection ultimately comes down to an “individual or group who most shaped the previous 12 months, for better or for worse.”

    But Time has often given “agents of change” its yearly honor — just look at 2021 winner Elon Musk — and Altman certainly fits that bill.

    No other innovation in the past year has had an impact in such disparate realms. OpenAI publicly launched its ChatGPT chatbot late last year, and as the technology grew viral in 2023, it upended the stock market, Silicon Valley and companies that wouldn’t normally be classified as technology businesses. The ensuing product development and surge in generative AI investment revitalized a tech industry that had sunk into the doldrums amid a pandemic hangover.

    Admittedly, it will take time for companies to realize the true financial benefits of AI: Nvidia Corp.
    NVDA,
    -2.68%
    is among the few to generate serious money from the frenzy so far. But market researcher IDC predicted that global spending on AI, including software, hardware and services for AI-centric systems will reach $154 billion this year, up 27% from a year ago. That total could zoom above $300 billion by 2026.

    Also read: One year after its launch, ChatGPT has succeeded in igniting a new era in tech

    And AI isn’t only impacting the corporate world. The technology is already affecting our daily lives, and it will have even deeper effects going forward. Chatbots are getting smarter on websites, facilitating better customer service. They’re starting to alter the workplace as well, spitting out mostly coherent marketing copy, research and even, gasp, news articles — albeit with plenty of errors.

    At first, ChatGPT seemed like a fun way to kill time or get homework help, but the chatbot and its ilk will seriously alter the working world, helping to eliminate perhaps millions of jobs. Morgan Stanley recently predicted that more than 40% of occupations will be affected by generative AI in the next three years.

    Altman himself has been the face of OpenAI in the past year. He’s talked up the technology, but he also appeared at congressional hearings in May to discuss potential regulation of AI, testifying that “if this technology goes wrong, it can go quite wrong.” His recent firing and quick rehiring by OpenAI and its small, nonprofit board late last month fueled a veritable media storm before the Thanksgiving holiday in the U.S.

    Time chooses its persons of the year for their impact, not because they’re saints. And Altman’s own story is not without controversy. The recent brouhaha over his leadership of OpenAI is believed to have been caused by a deep schism over the ethics of AI development. The board seemingly wanted more guardrails and precautions, and feared that rushed development could irrevocably doom mankind.

    Read in the Wall Street Journal: How effective altruism split Silicon Valley and fueled the blowup at OpenAI

    Altman, who also wooed Microsoft Corp.
    MSFT,
    -1.43%
    to become an investor in OpenAI, emerged the victor in the upheaval with his own company’s altruistic board. Had Altman truly been fired from OpenAI, Microsoft was planning to hire him, and nearly every employee at OpenAI was ready to quit and follow him there. While OpenAI faces plenty of competition, including from Alphabet Inc.’s
    GOOG,
    -2.02%

    GOOGL,
    -1.96%
    Google, Altman should continue to be the face of AI development, for good and for bad, even as he has advocated industry regulation.

    The debut and influence of ChatGPT and follow-on AI products are having the biggest impact on tech development since the invention of the iPhone. Altman is at the center of it and leading the charge. Whether he can keep the lid on Pandora’s Box or not depends on many factors, but he and the company he leads are clearly driving a new tech movement that affects us all, whether we like it or not.

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  • Remote workers are flexing their muscle, and the best-run companies won’t fight them

    Remote workers are flexing their muscle, and the best-run companies won’t fight them

    When COVID-19 struck, companies had little choice but to adapt swiftly. Office spaces were replaced by living rooms and in-person meetings transitioned to virtual calls — a temporary solution, or so it was thought.

    But months have turned into years, and now it’s clear this is not just a fleeting phase but a profound transformation in work dynamics.

    The…

    Master your money.

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  • Don’t ruin Thanksgiving by making these rookie mistakes

    Don’t ruin Thanksgiving by making these rookie mistakes

    A friend calls this day “Thanksscrapping.” He may have a point. 

    My favorite Thanksgiving story happened at a dinner on Park Avenue about 20 years ago when a lady with a large bouffant and a genial manner — let’s call her Mrs. Anders — raised a glass. Knowing I grew up in Dublin in a Catholic family, she said: “…and I’d like to raise a glass to Fair Eire and hope that the six counties of Northern Ireland are one day free from the British!” She did not realize that the host’s in-laws were Ulster Protestants. They were not amused.

    …

    Master your money.

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    Access from any device. Anywhere. Anytime.


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  • Here’s why you might not have to pay a 6% commission next time you sell a home

    Here’s why you might not have to pay a 6% commission next time you sell a home

    Going back decades, if you wanted to buy or sell a stock on the open market, you had to pay a 2% commission to buy and a 2% commission to sell. Then the advent of discount brokerage, led by Charles Schwab Corp.
    SCHW,
    +1.64%    ,
    made lower commissions available until eventually, with improved technology and efficiency, the entire industry changed to enable the average investor to avoid commissions completely.

    But the internet hasn’t done much to reduce the cost of selling a home in the U.S. Sellers typically pay a 6% commission to a real-estate agent to list and sell a home, with the seller’s agent splitting that commission with the buyer’s agent. But all of that may change because of a verdict this week in a class-action lawsuit in federal court against the National Association of Realtors.

    Aarthi Swaminathan covers the case, what may happen next and the implications for home sellers and buyers:

    Real-estate advice from the Moneyist


    MarketWatch illustration

    Quentin Fottrell — the Moneyist — works with three readers to answer tricky real-estate questions:

    Economic outlook

    On Wednesday, Federal Reserve Chair Jerome Powell may have bolstered the case that the central bank is finished raising interest rates for this economic cycle. The federal-funds rate was left in its target range of 5.25% to 5.50%.

    Jon Gray, the president of Blackstone Group, spoke with MarketWatch Editor in Chief Mark DeCambre and said he expected the Fed to succeed in bringing down inflation without pushing the U.S. economy into a deep recession.

    Friday employment numbers: Jobs report shows 150,000 new jobs in October as U.S. labor market cools

    Bond-market trend switches again

    The U.S. Treasury yield curve has been inverted for nearly a year.


    FactSet

    Normally, longer-term bonds have higher yields than those with short maturities. But the yield curve has been inverted for nearly a year, with 3-month U.S. Treasury bills
    BX:TMUBMUSD03M
    having higher yields than 10-year Treasury notes
    BX:TMUBMUSD10Y.

    There has been elevated demand for long-term bonds, as investors have anticipated a recession and a reversal in Federal Reserve interest-rate policy. When interest rates decline, bond prices rise and vice versa.

    As you can see on the chart above, the yield curve was narrowing until mid-October. Yields on 10-year Treasury notes were close to 5% on Oct. 19, but they have been falling the past several days as the three-month yield has remained close to 5.5%.

    In this week’s ETF Wrap, Christine Idzelis reports on where all the money is flowing in the bond market.

    In the Bond Report, Vivien Lou Chen summarizes the action as investors react to the Federal Reserve’s decision not to change its federal-funds-rate target range this week and to other economic news.

    For income-seekers looking to avoid income taxes, here’s a deep dive into municipal bonds, with taxable-equivalent yields and a deeper look at those within four high-tax states.

    Ford’s good news — in the bond market

    Ford Motor Co.’s debt rating has been lifted by S&P to investment-grade.


    Getty Images

    Ford Motor Co.’s
    F,
    +4.14%
    credit rating was upgraded to an investment-grade rating by Standard & Poor’s on Monday. This takes about $67 billion in bonds out of the high-yield, or “junk,” market, as Ciara Linnane reports.

    A stock-market warning based on history

    The original Magnificent Seven.


    Courtesy Everett Collection

    By now you have probably heard the term “Magnificent Seven” used to describe stocks of the tremendous tech-oriented companies that have led this year’s rally for the S&P 500
    SPX
    : Apple Inc.
    AAPL,
    -0.52%    ,
    Microsoft Corp.
    MSFT,
    +1.29%    ,
    Amazon.com Inc.
    AMZN,
    +0.38%    ,
    Nvidia Corp.
    NVDA,
    +3.45%    ,
    Alphabet Inc.
    GOOGL,
    +1.26%

    GOOG,
    +1.39%    ,
    Meta Platforms Inc.
    META,
    +1.20%
    and Tesla Inc.
    TSLA,
    +0.66%    .
    With Tesla’s recent decline, that company is now the ninth-largest holding in the portfolio of the SPDR S&P 500 ETF Trust
    SPY,
    which tracks the benchmark index. Here are the top 10 companies held by SPY (11 stocks, including two common-share classes for Alphabet), with total returns through Thursday:

    Company

    		 Ticker

    		 % of SPY portfolio

    		 2023 total return

    		 2022 total return

    		 Total return since end of 2021
    Apple Inc.

    		 AAPL,
    -0.52%         		7.2%

    		 37%

    		 -26%

    		 1%
    Microsoft Corp.

    		 MSFT,
    +1.29%         		7.1%

    		 46%

    		 -28%

    		 5%
    Amazon.com Inc.

    		 AMZN,
    +0.38%         		3.5%

    		 64%

    		 -50%

    		 -17%
    Nvidia Corp.

    		 NVDA,
    +3.45%         		3.0%

    		 198%

    		 -50%

    		 48%
    Alphabet Inc. Class A

    		 GOOGL,
    +1.26%         		2.1%

    		 44%

    		 -39%

    		 -12%
    Meta Platforms Inc. Class A

    		 META,
    +1.20%         		1.9%

    		 158%

    		 -64%

    		 -8%
    Alphabet Inc. Class C

    		 GOOG,
    +1.39%         		1.8%

    		 45%

    		 -39%

    		 -11%
    Berkshire Hathaway Inc. Class B

    		 BRK.B,
    +0.80%         		1.8%

    		 13%

    		 3%

    		 17%
    Tesla Inc.

    		 TSLA,
    +0.66%         		1.7%

    		 77%

    		 -65%

    		 -38%
    UnitedHealth Group Inc.

    		 UNH,
    -0.98%         		1.4%

    		 2%

    		 7%

    		 9%
    Eli Lilly and Company

    		 LLY,
    -2.15%         		1.3%

    		 60%

    		 34%

    		 115%
    Sources: FactSet, State Street (for SPY holdings)

    Five of these stocks (including the two Alphabet share classes) are still down from the end of 2021. SPY itself has returned 14% this year, following an 18% decline in 2022. It is still down 7% from the end of 2021.

    Mark Hulbert makes the case that a decade from now, the Magnificent Seven are unlikely to be among the largest companies in the stock market.

    More from Hulbert: These dividend stocks and ETFs have healthy yields that can lift your portfolio

    A different market opportunity: India is seeing a multidecade growth surge. Here’s how you can invest in it.

    The MarketWatch 50


    MarketWatch

    The MarketWatch 50 series is back, with articles and video interviews starting this week, including:

    PayPal soars after earnings report

    PayPal CEO Alex Chriss.


    MarketWatch/PayPal

    After the market close on Wednesday, PayPal Holdings Inc.
    PYPL,
    +1.89%
    announced quarterly results that came in ahead of analysts’ expectations, and the stock soared 7% on Thursday even though the company lowered its target for improving its operating margin.

    In the Ratings Game column, Emily Bary reports on the positive reaction to PayPal’s new CEO, Alex Chriss.

    A less enthusiastic earnings reaction: EV-products maker BorgWarner’s stock suffers biggest drop in 15 years after downbeat sales outlook

    Consumers drive mixed reactions to earnings results

    Apple Inc. reported mixed quarterly results.


    Mario Tama/Getty Images

    Here’s more of the latest corporate financial results and reactions. First the good news:

    And now the news that may not be so good:

    Harsh verdict for SBF

    FTX founder Sam Bankman-Fried.


    AP

    It might seem that some legal battles never end, but it took only a year from the collapse of FTX for the cryptocurrency exchange’s founder, Sam Bankman-Fried, to be convicted on all seven federal fraud and money-laundering charges brought against him. The charges were connected to the disappearance of $8 billion from FTX customer accounts.

    Here’s more reaction and coverage of the virtual-currency industry:

    Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.

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  • There’s a ton worth streaming in November 2023. So as prices rise, here’s how to avoid breaking the bank.

    There’s a ton worth streaming in November 2023. So as prices rise, here’s how to avoid breaking the bank.

    November offers a false spring for streaming viewers.

    After a slow couple of months, there’s suddenly an abundance of top-tier shows on the way, but don’t be fooled — the streaming scene is going to be largely bleak in the coming months, until productions fully ramp up sometime next year following the strikes that have crippled Hollywood.

    Meanwhile, streaming costs keep rising (Netflix’s top tier is the first to cross the $20 barrier) and consumers are getting less for their money, with fewer new shows and smaller libraries, while streamers push subscribers toward ad-supported tiers that generate more revenue per user while providing a worse viewing experience. Still, all the ad-supported tiers cost less than $10 a month, meaning it may be time for budget-conscious consumers to suck it up and deal with commercials if they don’t want to break the bank.

    Read more: Netflix is raising prices to get you to watch ads, and it will probably work

    That’s why it’s even more important to examine which services you’re really willing to pay for. The days of subscribing to six streaming services — even though you might only regularly watch three — are over. But by adding and canceling services month to month, you can save money while still being able to watch your favorite shows (for example, instead of watching a 12-episode show that drops every week and paying for three months, subscribe for just one month once the show nears its end and binge it all at once).

    Such a churn strategy takes some planning, but it pays off. Keep in mind that a billing cycle starts when you sign up, not necessarily at the beginning of the month.

    Each month, this column offers tips on how to maximize your streaming and your budget, rating the major services as a “play,” “pause” or “stop” — similar to investment analysts’ traditional ratings of buy, hold or sell, and picks the best shows to help you make your monthly decisions.

    Here’s a look at what’s coming to the various streaming services in November 2023, and what’s really worth the monthly subscription fee:

    Apple TV+ ($9.99 a month)

    The price of Apple TV+ has doubled in a little over a year, and in any other month, it’d be easy to argue it has priced itself out of the range of casual viewers. But Apple’s November lineup is so impressive that it’s actually somehow still a good deal.

    The alt-history space drama “For All Mankind” (Nov. 10) returns for its fourth season, with an eight-year time jump after Season 3’s shocking finale. The Mars colony is now thriving, but tensions are rising over the mining of mineral-rich asteroids. Toby Kebbell (“Servant”) joins the cast, along with Daniel Stern and Tyner Rushing, who join holdovers Joel Kinnaman, Krys Marshall, Wrenn Schmidt and Coral Pena. It’s a fantastic and frequently thrilling series, and arguably Apple’s best drama.

    And a challenger to that title is also coming back. “Slow Horses” (Nov. 29), the darkly funny thriller about a group of washed-up spies, returns for its third season. Gary Oldman stars as perpetually disgruntled spymaster Jackson Lamb, leading his team of misfits as they get dragged into an international conspiracy after one of their own is kidnapped. Based on the novels by Mick Herron, “Slow Horses” is smart and cynical, a terrific twist on traditional spy stories.

    Then there’s “Monarch: Legacy of Monsters” (Nov. 17), an action-conspiracy series about a ragtag group trying to expose a secretive organization that knows the truth about Godzilla and other kaiju creatures terrorizing the planet. Kurt Russell stars with his son, Wyatt (who plays his dad in flashbacks), along with Anna Sawai, Ren Watabe and Kiersey Clemons. The series is intended to slide right into the MonsterVerse that includes “Godzilla vs. Kong,” “Kong: Skull Island” and “Godzilla: King of the Monsters,” and for anyone who grew up watching monster movies, this could be a lot of fun.

    Apple
    AAPL,
    +1.87%
    also has “Fingernails” (Nov. 3), a sci-fi romance movie starring Jessie Buckley, Riz Ahmed, Jeremy Allen White and Luke Wilson; “The Buccaneers” (Nov. 8), a “Bridgerton”-esque period drama based on the Edith Wharton novel about a group of rich American girls who hit London in the 1870s looking for suitable husbands; the holiday musical special “Hannah Waddingham: Home for Christmas” (Nov. 22); and a new version of the tear-jerking children’s classic “The Velveteen Rabbit” (Nov. 22).

    Meanwhile, Martin Scorsese’s critically acclaimed “Killers of the Flower Moon” should hit Apple TV+ within the next month or two, after it completes its theatrical run, and Ridley Scott’s historical epic “Napoleon,” starring Joaquin Phoenix, his theaters Nov. 22. It, too, will stream on Apple at an as-yet-undisclosed date in the coming months.

    There are also new episodes every week of “Lessons in Chemistry” (finale Nov. 24), and “The Morning Show” (season finale Nov. 8). If that’s not enough, you could always catch up on “Foundation,” “Swagger,” “Platonic” or discover “Bad Sisters.”

    Who’s Apple TV+ for? It offers a little something for everyone, but not necessarily enough for anyone — although it’s getting there.

    Play, pause or stop? Play. Even though its price has soared, Apple is still cheaper than most, and it delivers value this month. (Remember, you can get three free months of Apple TV+ if you buy a new Apple device.)

    Hulu ($7.99 a month with ads, or $17.99 with no ads)

    After a fallow October, Hulu has a lot more to offer in November, continuing its strong year.

    FX’s “A Murder at the End of the World” (Nov. 14) was pushed back from an August release date due to the Hollywood strikes, but it should fit better in a colder season anyway. From Brit Marling and Zal Batmanglij, the producers of Netflix’s cult favorite sci-fi series “The OA,” the limited series is an Agatha Christie-style murder mystery set at a billionaire’s secluded, snowbound retreat in Iceland. Emma Corrin (“The Crown”) stars as an amateur detective while Clive Owen (“Children of Men”) plays the mysterious tycoon.

    A wintry setting also plays a key role in the fifth season of FX’s “Fargo” (Nov. 22), the latest installment in Noah Hawley’s noirish crime anthology. Juno Temple (“Ted Lasso”) plays a seemingly ordinary Midwestern housewife who’s not at all what she appears to be. She’s joined by an all-star cast that includes Jon Hamm, Jennifer Jason Leigh, Lamorne Morris and Dave Foley. Each season of “Fargo” is a quirky, violent delight, and this one looks no different.

    Also: Disney officially plans to buy remaining Hulu stake from Comcast

    Just to make things confusing, while both “A Murder at the End of the World” and “Fargo” are FX series, “Murder” will stream exclusively on Hulu, while “Fargo” episodes will first air on FX then stream a day later.

    In an interesting experiment, director Baz Luhrmann has recut his 2008 romantic drama “Australia,” starring Nicole Kidman and Hugh Jackman, and turned it into a six-episode miniseries — renamed “Faraway Downs” (Nov. 26) — using extra footage shot during the original filming. The movie flopped in theaters, but Luhrmann says it should work better as a miniseries, saying “episodic storytelling has been reinvigorated by the streaming world.”

    For more: Here’s what’s new on Hulu in November 2023 — and what’s leaving

    Hulu also has “Black Cake” (Nov. 1), a generations-spanning family drama based on the bestselling novel by Charmaine Wilkerson; “Quiz Lady” (Nov. 3), a comedy movie about estranged sisters, starring Awkwafina and Sandra Oh; and a handful of sports documentaries, including “The League” (Nov. 9), about Negro League baseball, and “Brawn: The Impossible Formula 1 Story” (Nov. 15), hosted by Keanu Reeves.

    Fresh off October’s addition of “Moonlighting,” Hulu is adding all eight seasons of another 1980s classic, “L.A. Law” (Nov. 3), along with a ton of holiday fare, including “Adam Sandler’s Eight Crazy Nights” and “Miracle on 34th Street” (both Nov. 1), and “Elf” and “National Lampoon’s Christmas Vacation” (both Nov. 23).

    And don’t forget the season finales of “Welcome to Wrexham” (Nov. 15) and “Goosebumps” (Nov. 17), as well as next-day streams of network shows such as “The Golden Bachelor” and “Bob’s Burgers.”

    Who’s Hulu for? TV lovers. There’s a deep library for those who want older TV series and next-day streaming of many current network and cable shows.

    Play, pause or stop? Pause and think it over. If you’re on the ad-supported plan, it’s well worth it. But for the pricey, $18 ad-free plan, you may want to wait until December and see how some of these new series pan out.

    Netflix ($6.99 a month for basic with ads, $15.49 standard with no ads, $22.99 premium with no ads)

    Netflix just raised some prices again, but for most customers, it’s still a good value.

    The critically acclaimed royal-family drama “The Crown” (Nov. 16) is back for the first half of its sixth and final season (four episodes drop this month, with the final six coming in December). Events pick up in 1997 after the marriage of Prince Charles (Dominic West) and Princess Diana (Elizabeth Debicki) ends, as Queen Elizabeth II (Imelda Staunton) reflects on her legacy. There’s already controversy over how it’ll handle Diana’s tragic death.

    Read more: Here’s what’s new on Netflix in November 2023 — and what’s leaving

    Netflix
    NFLX,
    +2.06%
     also has “The Killer” (Nov. 10) a “slick but conventional” thriller movie from director David Fincher, starring Michael Fassbender as a hit man on the run; “Squid Game: The Challenge” (Nov. 22), a reality competition show putting 456 players through challenges inspired by the hit Korean drama (minus the murders, presumably); “Scott Pilgrim Takes Off” (Nov. 17), an anime version of the graphic novels and cult-favorite movie “Scott Pilgrim vs. the World” (which is also coming Nov. 1); “All the Light We Cannot See” (Nov. 2), a critically panned miniseries about a blind French girl and a German soldier in the final days of WWII, starring Aria Mia Loberti, Louis Hofmann and Mark Ruffalo; Season 5, Part 2 of the popular small-town romantic drama “Virgin River” (Nov. 30); and “The Netflix Cup: Swing to Survive” (Nov. 14), Netflix’s first livestreamed sporting event, with teams of Formula 1 drivers and PGA stars in a match-play golf tournament from Las Vegas.

    There are also fresh episodes of “The Great British Baking Show” every Friday until its season finale Dec. 1.

    Who’s Netflix for? Fans of buzz-worthy original shows and movies.

    Play, pause or stop? Pause. “The Crown” and “The Great British Baking Show” are the top draws, but aside from those, there’s not a lot else to move the needle this month. However, if you can live with commercials, you can find value at $7.

    Paramount+ ($5.99 a month with ads, $11.99 a month with Showtime and no ads)

    Paramount+ has some interesting stuff in November. But is it enough to justify a subscription?

    “Lawmen: Bass Reeves” (Nov. 5), joins the streaming service’s extensive slate of shows produced by Taylor Sheridan, telling the story of one of the Wild West’s most overlooked real-life heroes: Bass Reeves (played by David Oyelowo), who was the first Black U.S. marshal west of the Mississippi and overcame countless hurdles in enforcing the law in the era of Reconstruction. A marksman with something like 3,000 arrests to his name, Reeves was purportedly the inspiration for the story of the Lone Ranger. Say what you will about Sheridan’s formulaic shows, but he knows how to make a good Western. This should be worth a watch.

    There’s also “The Curse“ (Nov. 10), an intriguing new Showtime series starring Nathan Fielder (“Nathan for You”) and Oscar-winner Emma Stone that puts a dark twist to an HGTV-like home-improvement show; and “Good Burger 2” (Nov. 22), a sequel to the 1997 cult-classic fast-food comedy starring Kenan Thompson and Kel Mitchell.

    On the sports side, Paramount has NFL football every Sunday, Big Ten and SEC college football every Saturday, and a full slate of UEFA Champions League soccer.

    Who’s Paramount+ for? Gen X cord-cutters who miss live sports and familiar Paramount Global 
    PARA,
    -0.74%
      broadcast and cable shows.

    Play, pause or stop? Pause. There’s decent value with a couple of promising new shows, especially when factoring in Paramount’s live sports and vast library of movies and network shows.

    Max ($9.99 a month with ads, $15.99 with no ads, or $19.99 ‘Ultimate’ with no ads)

    It’s a very skippable month for Max.

    The Warner Bros. Discovery 
    WBD,
    +1.41%
     streaming service only has a handful of new originals to offer, including Season 2 of Issa Rae’s hip-hop comedy “Rap Sh!t” (Nov. 19), as Shawna (Aida Osman) and Mia (KaMillion) come to a crossroads on their road to fame; Season 2 of the biographical drama “Julia” (Nov. 16), starring Sarah Lancashire as iconic chef Julia Child as she and her husband return from France and face new challenges; “Bookie” (Nov. 30), a new comedy from Chuck Lorre (“Big Bang Theory”) and Nick Bakay about an L.A. bookie looking for new angles as the potential legalization of sports gambling threatens to upend his shady business; and Rob Reiner’s documentary “Albert Brooks: Defending My Life” (Nov. 11), delving into the life of the comedy legend.

    Also: Here’s everything coming to Max in November 2023 — and what’s leaving

    There are also a ton of holiday-themed shows from Food Network, HGTV and OWN; live sports on its free (for now) Bleacher Report tier that includes NBA and NHL games, college basketball and U.S. men’s soccer (Nov. 16 and 20); and new episodes of “The Gilded Age” and “Last Week Tonight with John Oliver.”

    Who’s Max for? HBO fans and movie lovers. And now, unscripted TV fans too, with a slew of Discovery shows.

    Play, pause or stop? Stop. Max still has a great library, but the new offerings fall short. Even the ad tier isn’t worth it — try again another month.

    Amazon’s Prime Video ($14.99 a month, or $8.99 without Prime membership)

    “The Boys” spinoff “Gen V” ends its first season on Nov. 3, but fans of ultra-violent superheroes will be able to slide right into Season 2 of the hit animated series “Invincible” (Nov. 3), which returns to Prime Video after a two-and-a-half-year layoff. Based on the graphic novels by Robert Kirkman, Cory Walker and Ryan Ottley, the very adult series picks up with Mark (Steven Yeun) still reeling from the revelations about his superhero father (J.K. Simmons) at the end of Season 1, while a new villain (voiced by Sterling K. Brown) appears on the scene. Annoyingly, Season 2 will be split in two, with four episodes in November and another four coming in early 2024.

    More: What’s new on Amazon’s Prime Video and Freevee in November 2023

    Amazon’s
    AMZN,
    +2.94%
     streaming service also has “007: Road to a Million” (Nov. 10), an “Amazing Race”-like competition series hosted by Brian Cox where nine teams of two endure James Bond-inspired challenges around the globe to try to win a big cash prize, and “Twin Love” (Nov. 17), a reality dating show involving 10 sets of identical twins split into two houses.

    Who’s Prime Video for? Movie lovers, TV-series fans who value quality over quantity.

    Play, pause or stop? Stop. There’s no a compelling reason to start a relatively pricey subscription now. That even goes for “Invincible” fans, who would be better off waiting until the second half drops and bingeing when all episodes are available. Splitting up eight episodes is ridiculous.

    Disney+ ($7.99 a month with ads, $13.99 with no ads)

    Tim Allen returns for Season 2 of “The Santa Clauses” (Nov. 8), as the jolly one continues his search for a successor. Eric Stonestreet joins the cast as the exiled “Mad Santa,” along with Gabriel Iglesias as Kris Kringle and Tracey Morgan as the Easter Bunny (because, of course!).

    Meanwhile, Lil Rel Howry, Ludacris and Oscar Nunez star in the new family comedy movie “Dashing Through the Snow” (Nov. 17), and Danny Glover will play Santa in the Disney Channel original film “The Naughty Nine” (Nov. 23).

    In non-holiday fare, Disney has three upcoming Doctor Who specials celebrating the iconic sci-fi series’ 60th anniversary. The first, “Doctor Who: The Star Beast” (Nov. 25), reunites David Tennant and Catherine Tate, as the Doctor and Donna Noble battle the villainous Toymaker (Neil Patrick Harris), with the other two specials coming in December, when the 15th Doctor (Ncuti Gatwa of “Sex Education”) will be introduced.

    There’s also 2019’s “Spider-Man: Far From Home” (Nov. 3), and new episodes of “Loki” (finale Nov. 9), “Goosebumps” (finale Nov. 17) and “Dancing With the Stars.”

    Who’s Disney+ for? Families with kids, hardcore “Star Wars” and Marvel fans. For people not in those groups, Disney’s
    DIS,
    -0.64%
     library can be lacking.

    Play, pause or stop? Stop. After a recent price hike, there’s just not enough to justify a subscription (unless your kids will absolutely melt down without it).

    Peacock ($5.99 a month with ads, or $11.99 with no ads)

    It’s a pretty bleak month for Peacock originals, with only the reality dating spinoff “Love Island Games” (Nov. 1); “Please Don’t Destroy: The Treasure of Foggy Mountain” (Nov. 17), the first movie from the “SNL” comedy trio; and Season 2 of the Paris Hilton reality series “Paris in Love” (Nov. 30).

    It’s a bit brighter on the sports side, with Big Ten college basketball starting Nov. 6, Big Ten college football every Saturday, NFL Sunday Night Football and a full slate of English Premier League soccer, golf, motorsports and winter sports.

    And on Thanksgiving (Nov. 23), Peacock will stream the annual Macy’s Thanksgiving Day Parade, the National Dog Show and an NFL game, as the 49ers play the Seahawks.

    Who’s Peacock for? Live sports and next-day shows from Comcast’s 
    CMCSA,
    +1.28%
     NBCUniversal are the main draw, but there’s a good library of shows and movies.

    Play, pause or stop? Stop. The live-sports offerings are the only lure.

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  • Sluggish EV and auto sales could continue next year, based on what these chip makers just said

    Sluggish EV and auto sales could continue next year, based on what these chip makers just said

    A couple of lesser-known chip companies and a battery maker have confirmed growing fears among investors about the slowdown in electric-vehicle and overall auto sales, which appears likely to continue into next year.

    Monday was loaded with bad news from companies that make industrial chips for the auto industry, as earnings reports from On Semiconductor Corp.
    ON,
    -21.77%
    in the morning and Lattice Semiconductor Inc.
    LSCC,
    -4.05%
    in the afternoon disappointed Wall Street with their forecasts.

    If inflation and high interest rates continue into next year, which is feasible, the slump in auto sales is expected to continue.

    “We think it will carry through into the first part of next year, with most cycles running six to nine months,” said David Williams, an analyst with Benchmark who had predicted that the outlook for On Semi would have to be tempered.  “However, the reduced consumer buying power and overall macro backdrop will likely keep buyers on the sidelines for the next couple of quarters.”

    On Semi said that because of the shortfall in an order from one unnamed automotive customer in Europe, it now expects to ship $200 million less this year of its silicon carbide chips, which are used in EVs. The company did not give further details on its customer, but pointed out that at $800 million, its 2023 revenue will still be four times higher than 2022.

    Last year, On Semi touted a new plant in Hudson, N.H., to make chips out of silicon carbide, an energy-efficient semiconductor material made of silicon and carbon, and predicted those chips would exceed $1 billion in sales in 2023.

    “EVs are going to grow,” On Semi Chief Executive Hassane El-Khoury said Monday. “They’re going to grow for us in the fourth quarter as well. It’s just not going to grow in the fourth quarter at the rate that we expected… I think EVs are a long-term growth opportunity — even with the backdrop of a lot of the headlines that we’re seeing, customer designs have not slowed down.”

    Even as company executives spun the positives, investors were rattled and On’s shares tumbled nearly 22%. Lattice Semiconductor also disappointed Wall Street with its outlook for the fourth quarter. Lattice sells chips that are used in advanced driver-assistance systems in cars, and shares tumbled 13% in extended trading after its fourth-quarter outlook came in lower than expected, due to fewer customers in Asia.

    “In the last kind of four to six weeks of Q3, we started to see demand soften from our industrial and automotive customers,” Lattice CEO Jim Anderson told analysts. “I would say that it was really localized to the Asia geography, and we expect that softness we started to see at the end of Q3 extend into the current quarter.”

    In addition, Tesla Inc.’s battery partner, Panasonic Holdings
    6752,
    -8.35%
    of Japan, said it was slashing its production by 60% due to slower sales of some models to Tesla. That fueled a 4.8% drop in Tesla stock
    TSLA,
    -4.79%    ,
    to its lowest close since late May. Investors have been nervous about the EV market, especially after Ford
    F,
    -1.91%
    executives said last week that consumers were unwilling right now to pay a premium for EVs.

    Semiconductor companies are often harbingers of future end-product demand in a wide variety of industries. Now that automakers use so many semiconductors, they can also be a big indicator of auto demand, especially in the hot arena of EVs. And those indicators don’t look good in the short term.

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  • Financial advisers make rich people richer. But is that all there is?

    Financial advisers make rich people richer. But is that all there is?

    In 1989, author Marsha Sinetar wrote a bestselling book, “Do What You Love, The Money Will Follow.” She urges readers to pursue a career that stokes their passion.

    Many advisers take that advice. They love what they do. And the money follows: Median pay for U.S. financial advisers was $95,390 in 2022, according to the Bureau of Labor Statistics.

    Lately, though, the passion is waning for some advisers. They still love the practice of wealth management — customizing financial plans, constructing client portfolios and analyzing the ever-growing menu of investment products.

    They’re just not as enamored of their clients’ wealth. Reassuring wealthy retirees that they can afford to buy a second (or third) vacation home has its merits. But helping them accumulate more and more wealth rings hollow after awhile.

    Steve Oniya, a Houston-based certified financial planner, works with a diverse mix of clients. He enjoys helping them achieve their goals, regardless of their net worth. “It’s more gratifying helping them get over some hurdles to get to the life that they really want,” he said. “You make more of an impact that way.”

    He compares his work to a firefighter’s job. Some days, they rescue people from burning buildings. Other days, they put out a dumpster fire. Yet they’re always driven to excel and perform at a high level.

    Nevertheless, if an adviser serves rich clients who hoard their money, don’t give to charity and lack perspective on what matters most in life, a day at the office can feel dispiriting. “Sometimes advisers may be passionately opposed to certain clients’ values,” Oniya said. “In those instances, end the relationship or limit the scope.”

    Oniya said he does not find clients’ wealth objectionable. He sees his role as an ally who seeks to understand — and not judge — others’ beliefs and values.

    “I like to stay in the neutral camp,” Oniya said. “It’s easy to empathize with another person and see they are a person who needs help just like others. We’re generally here to advise them on how to be more efficient and effective financially in attaining their goals.”

    The arc of an adviser’s career comes into play as well. To build a practice, newly minted financial planners might welcome pretty much anyone with sufficient assets.

    Once they establish a stable book of business, advisers may get picky in deciding whom to serve. Their onboarding process might get more rigorous in an effort to determine if they’re aligned with a potential client’s aspirations, goals and priorities.

    Some advisers shift gears as they gain experience working with different types of clients. They come to realize what they like most about the job and adjust their practice — and the type of clients they serve — accordingly.

    “Everyone evolves,” said Angeli Gianchandani, a professor of marketing at University of New Haven’s Pompea College of Business. “Advisers may see there’s a greater reward and opportunity helping people in a different income bracket.”

    As a self-test, advisers at a career crossroads might want to ask themselves how they’d respond to two clients. The first one says, “You saved me $5 million. Now I want to save $10 million to buy a bigger yacht.”

    The other says, “You helped me pay off my student debt” or “You helped me save enough for a down payment to buy my first house.”

    “You may feel more valued and appreciated as an adviser” if you pave the way for someone who lacks vast wealth to build a nest egg for the future, Gianchandani says.

    Advisers who have misgivings about helping wealthy people attain greater wealth are not alone. Brooke Harrington, a sociology professor at Dartmouth College, interviewed 65 wealth managers between 2007 and 2015. About one-quarter expressed qualms about helping lower ultra-wealthy clients’ tax liabilities.

    Still, another 25% did not feel such qualms. They saw their role as defending their clients from an unjust tax code.

    More: Wall Street legend Byron Wien dies at 90. Here are his ’20 life lessons’

    Also read: The IRS is auditing the rich. Can you fly under the radar if you’re not wealthy?

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  • AI stole the show this year, but earnings will drag Wall Street back to reality

    AI stole the show this year, but earnings will drag Wall Street back to reality

    Nearly a year ago, OpenAI released ChatGPT 3 into the world, and investors got visions of dollar signs in their heads as they imagined the ways that artificial intelligence could make big money for businesses.

    Wall Street’s now coming to terms with the fact that those sorts of paydays are going to take time. As investors have already seen from the past two quarters of earnings, AI has only really delivered financial benefits for a select few hardware companies so far — while spurring new costs for many others.

    “The AI boom has already bifurcated into the contenders and pretenders,” said Daniel Newman, chief executive and principal analyst of Futurum Research. And while Advanced Micro Devices Inc., Intel Corp. and Arm Holdings PLC
    ARM,
    +0.38%
    have stirred up interest, Nvidia Corp.
    NVDA,
    -4.68%
    has established itself as far and away the greatest “contender,” with AI driving strong demand for its chips tuned for AI training.

    Nvidia last quarter reported record earnings, including a 141% jump in revenue for its graphics chips used in AI infrastructure building up data centers. Nvidia, which reports near the end of earnings season on Nov. 21, posted record revenue of $13.5 billion last quarter and is expected to easily top that with $16 billion in the most recent quarter, a surge of 170% versus a year ago. Those estimates include $12.3 billion of revenue coming from data-center sales.

    Other chip companies could post gains from AI as well, but to far lesser extents. Candidates include Broadcom Corp.
    AVGO,
    -2.01%
    and system maker Super Micro Computer Inc.
    SMCI,
    +2.35%    ,
    as well as Marvell Technology Inc.
    MRVL,
    -0.91%    ,
    which last quarter told analysts that it expects to end the year at a revenue run rate of about $800 million this year from cloud/data-center chips related to AI.

    “This is well above what we had outlined last quarter. Put this in perspective: This would put us at the run rate we had previously communicated for all of next year,” Marvel Chief Executive Matthew Murphy told analysts.

    Super Micro is also riding the AI wave with its customized data-center servers that are designed to consume less power. But revenue in the September quarter is forecast to rise just 15% from a year ago and drop on a sequential basis, as supply constraints from Nvidia likely hampered Super Micro’s ability to meet all its demand.

    Much as Advanced Micro Devices Inc.
    AMD,
    -1.24%
    and Intel Corp.
    INTC,
    -1.37%
    want to be in the AI conversations with the graphics chips they hope will be used for AI data-center applications, they won’t see much of an impact yet from AI revenue. Plus, those companies are experiencing a slowdown in PC sales that may overshadow any small benefit from AI chips.

    The AI boom in chips is clearly not providing enough of a boost to lift finances for the overall semiconductor sector, which is forecast to see earnings fall 3.3% in the third quarter and post a revenue decline of 0.6%, according to FactSet. The industry is being dragged down in part by Micron Technology Inc.
    MU,
    -0.12%    ,
    which reported a 40% drop in revenue and a whopping fiscal fourth-quarter loss in late September for the quarter ended Aug. 31, which is included in FactSet’s third-quarter data. Even so, the company called a bottom to the memory-chip downturn.

    Read also: Micron’s AI focused chip won’t help financial results anytime soon.

    “Most of the consumer-based tech is still struggling, [including] PCs, laptops and to a certain extent smartphones,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co. Wall Street has tempered expectations related to the impact of Apple Inc.’s
    AAPL,
    -0.88%
    iPhone 15 launch on the quarter, as estimates call for an overall 1% drop in September-quarter revenue. Last quarter, Apple executives forecast that both Mac and iPad sales would be down by double-digits and that revenue performance would be similar to its June quarter, when revenue fell 1.3%

    In addition, when asked about AI, Apple CEO Tim Cook said the company views AI and machine learning “as core fundamental technologies that are integral to virtually every product that we build.” Those comments, though, can also apply to the bulk of tech companies, where AI is built into software as another layer to improve a product. Internet companies such as Meta Platforms Inc.
    META,
    +0.89%
    and Alphabet Inc.
    GOOG,
    +0.36%

    GOOGL,
    +0.45%
    incorporate AI into their software and algorithms but don’t treat it as a specific, revenue-generating product.

    Other software companies are building AI into their products as separate features or add-ons, but they are still in the early stages of seeing whether or not customers will pay more for them. Take Microsoft Corp.,
    MSFT,
    -0.17%
    which has showed off Copilot, an extra AI feature for customers of Microsoft 365.

    “[Microsoft] can distinguish itself by providing more details around its AI revenue
    ramp since we don’t expect much information from Google, who really doesn’t seem
    to have the monetization plan for Bard and AI-assisted search (SGE) ready to
    articulate yet,” Melius Research analyst Ben Reitzes said in a note to clients this week. He also noted that the cost of offering AI products to consumers is steep, and requires lots of investment.

    “There are sophisticated issues to contend with for Microsoft, including balancing the potential for higher revenue from Copilots with the high costs per query and much-needed investment,” Reitzes said. “The balance of AI adoption vs. cost was implied when Microsoft guided to flat operating margins year over year for fiscal 2024.”

    Earlier this year, the Information reported that OpenAI, the creator of ChatGPT and recipient of a hefty investment from Microsoft, has costs of up to $700,000 a day, because the massive amounts of computing power needed to run queries. In February, OpenAI launched ChatGPT Plus, for $20 a month, a service that will give subscribers access to its AI during peak times and faster response times.

    Another example is Adobe Inc.
    ADBE,
    +1.70%    ,
    which has a few AI offerings, including a subscription service called Generative Credits, tokens that let customers turn text-based prompts into images. Another is Firefly, a generative AI service for images, and an AI option in Photoshop, currently called Photoshop Beta AI, to help users fill in images and other collaborative tools. Adobe did not provide any forecasts on potential revenue generation during its analyst day earlier this month.

    Toni Sacconaghi, a Bernstein Research analyst, said AI could drive a massive increase in enterprise productivity, and companies could dramatically increase IT spending on servers in order to invest in productivity-enhancing AI. “However, we note that enterprise adoption appears to be in early stages,” he said in a recent note to clients, adding that it was feasible that spending on AI infrastructure could take money away from other IT projects in process. “We do worry that projected AI infrastructure build out may be occurring too quickly, necessitating a digestion period, which could result in a commensurate stock pullback in AI-related names.”

    Overall, the information-technology sector itself is expected to see anemic revenue growth this quarter. The consensus on FactSet forecasts a meager 1.35% revenue uptick in the third quarter, with earnings growth of 4.65%. FactSet’s estimates for IT companies exclude internet companies like Meta and Alphabet, which are under the category of communications/interactive media services. That sector is expected to see sales growth of 12%, and earnings growth of 51%, thanks to a 116% boost in Meta’s net income, after it hit a low point in the year-ago quarter.

    Amazon.com Inc.
    AMZN,
    -0.81%    ,
    in the category of consumer discretionary/broadline retail, is forecast to see earnings growth of 109%, and revenue growth of 11%. Amazon’s cloud services business, AWS, is expected to also see a potential uplift from customers spending money on AI projects, according to a TD Cowen & Co. survey, in which 41% of respondents said they were “highly considering” allocating a budget for generative AI.

    “This trend could bode well for Amazon’s AWS,” TD Cowen analyst John Blackledge said in a recent report, adding that he expects AWS revenue growth to reaccelerate in the second half of this year and in 2024, boosted by the move of additional workloads to the cloud, possibly including generative AI.

    As companies build up their infrastructure, or their spending on cloud computing to add or improve AI capabilities, they are seeing higher costs, which is affecting margins — especially if revenue has slowed down, as it has in some sectors. Across both the broader S&P 500
    SPX,
    and the IT sector, earnings are lower than a year ago.

    As Newman of Futurum pointed out, “AI stole the budget this year.” And that is a mixed bag for tech.

    Source link

  • These are the biggest money mistakes we make in our 20s, 30s and 40s

    These are the biggest money mistakes we make in our 20s, 30s and 40s

    Financial literacy peaks at age 54, according to a 2022 study. That’s around the time you’ve gained enough knowledge and experience to make sound money decisions — and before your cognitive ability might start to ebb.

    “As we get older, we seem to rely more on past experience, rules of thumb, and intuitive knowledge about which products and strategies are better,” said Rafal Chomik, an economist in Australia who led the study.

    If people in their mid-50s tend to make smart financial moves, where does that leave younger generations?

    Advisers often educate clients at different stages of life to avoid money mistakes. While those in their 50s usually demonstrate optimal prudence  in navigating investments and savings, advisers keep busy helping others — from twentysomethings to mid-career professionals — avoid costly financial blunders:

    Navigate your 20s

    Perhaps the biggest blunder for young earners is spending too much and saving too little. They may also lack the long-term perspective that encourages long-range planning.

    “The mistake is not establishing the saving habit early, and not appreciating the power of compounding” over time, said Mark Kravietz, a certified financial planner in Melville, N.Y.

    Similarly, it’s common for young workers to delay enrolling in an employer-sponsored retirement plan. Not participating from the get-go comes with a steep long-term cost.

    “ Better to prioritize debt with the highest interest rate, which can result in paying less interest over the long run. ”

    People in their 20s process incoming information quickly. But their high level of fluid intelligence can work against them. Cursory research into a consumer trend or hot sector of the stock market can spur them to make rash investments. Such impulsive moves might backfire.

    “It’s important to resist the hype,” Kravietz said. “Don’t chase fads or try to make fast money” by timing the market.

    Many young adults with student debt juggle multiple loans. Eager to chip away at their debt, they fall into the trap of choosing the wrong loan to tackle first, says Megan Kowalski, an adviser in Boca Raton, Fla.

    Rather than pay off the highest-interest rate loan first (so-called avalanche debt), they mistakenly focus on the smallest loan (a.k.a. snowball debt). It’s better to prioritize debt with the highest interest rate, which can result in paying less interest over the long run.

    Navigate your 30s

    “ Resist the temptation to lower your 401(k) contribution to boost your take-home pay. ”

    By your 30s, insurance grows in importance. You want to protect what you have — now and in the future. But many people in this age group neglect their insurance needs. Or they misunderstand which coverages matter most.

    “If you have a life partner and kids, get the proper life insurance while in your 30s,” Kravietz said. 

    It’s easy to get caught up in your career and assume you can put off life insurance. But even low odds of your untimely death doesn’t mean you can ignore the risk of leaving your loved ones without a cash cushion.

    Another common blunder involves disability insurance. If your employer offers short-term disability insurance as an employee perk, you may think you’re all set.

    However, the real risk is how you’d earn income if you suffer a serious and lasting illness or injury. Don’t confuse short-term disability insurance (which might cover you for as long as one year) with long-term disability coverage that pays benefits for many years.

    Assuming you were wise enough to enroll in your employer-sponsored retirement plan from the outset, don’t slough off in your 30s. Resist the temptation to lower your 401(k) contribution to boost your take-home pay.

    “You want to give till it hurts,” Kravietz said. “Keep putting money away” in your 401(k) or other tax-advantaged plan until you feel a sting. Weigh the minor pain you feel now against the major relief of having a much bigger nest egg decades from now.

    Navigate your 40s

    “ ‘The 40s are often the most expensive in anyone’s life. Life is getting more complicated.’”

    For Kravietz, the 40s represent a decade of heavy spending pressures. Mid-career professionals face a mortgage and mounting tuition bills for their children.

    “The 40s are often the most expensive in anyone’s life,” he said. “Life is getting more complicated.”

    As a result, it’s easy to overlook seemingly minor financial matters like updating beneficiaries on your 401(k) plan or completing all the appropriate estate documents such as a will.

    “People in their 40s sometimes fail to update beneficiaries,” Kravietz said. For example, a new marriage might mean changing the beneficiary from a prior partner or current parent to the new spouse.

    It’s also easy to get complacent about your investments, especially if you’re the conservative type who favors a set-it-and-forget-it strategy. Instead, think in terms of tax optimization.

    “In your 40s, you want to take advantage of what the government gives you,” Kravietz said. “If you have a lot of money in a bank money market account and you’re in a top tax bracket, shifting some of that money into municipal bonds can make sense” depending on your state of residence and other factors.

    If you’re saving for a child’s college tuition using a 529 plan — and you have parents who also want to chip in — work together to strategize. Don’t make assumptions about how much (or how little) your parents might contribute to your kid’s education.

    “Rather than assume you’ll have to pay a certain amount for educational expenses, coordinate between generations of parents and grandparents” on how much they intend to give, Kowalski said. “That way, you’re not duplicating efforts and you won’t put extra funds in a 529 plan.”

    More: 7 more ways to save that you may not have considered

    Also read: ‘We live a rather lavish lifestyle’: My wife and I are 33, live in New York City and earn $270,000. Can we retire at 55?

    Source link

  • These are the biggest money mistakes we make in our 20s, 30s and 40s

    These are the biggest money mistakes we make in our 20s, 30s and 40s

    Financial literacy peaks at age 54, according to a 2022 study. That’s around the time you’ve gained enough knowledge and experience to make sound money decisions — and before your cognitive ability might start to ebb.

    “As we get older, we seem to rely more on past experience, rules of thumb, and intuitive knowledge about which products and strategies are better,” said Rafal Chomik, an economist in Australia who led the study.

    If people in their mid-50s tend to make smart financial moves, where does that leave younger generations?

    Advisers often educate clients at different stages of life to avoid money mistakes. While those in their 50s usually demonstrate optimal prudence  in navigating investments and savings, advisers keep busy helping others — from twentysomethings to mid-career professionals — avoid costly financial blunders:

    Navigate your 20s

    Perhaps the biggest blunder for young earners is spending too much and saving too little. They may also lack the long-term perspective that encourages long-range planning.

    “The mistake is not establishing the saving habit early, and not appreciating the power of compounding” over time, said Mark Kravietz, a certified financial planner in Melville, N.Y.

    Similarly, it’s common for young workers to delay enrolling in an employer-sponsored retirement plan. Not participating from the get-go comes with a steep long-term cost.

    “ Better to prioritize debt with the highest interest rate, which can result in paying less interest over the long run. ”

    People in their 20s process incoming information quickly. But their high level of fluid intelligence can work against them. Cursory research into a consumer trend or hot sector of the stock market can spur them to make rash investments. Such impulsive moves might backfire.

    “It’s important to resist the hype,” Kravietz said. “Don’t chase fads or try to make fast money” by timing the market.

    Many young adults with student debt juggle multiple loans. Eager to chip away at their debt, they fall into the trap of choosing the wrong loan to tackle first, says Megan Kowalski, an adviser in Boca Raton, Fla.

    Rather than pay off the highest-interest rate loan first (so-called avalanche debt), they mistakenly focus on the smallest loan (a.k.a. snowball debt). It’s better to prioritize debt with the highest interest rate, which can result in paying less interest over the long run.

    Navigate your 30s

    “ Resist the temptation to lower your 401(k) contribution to boost your take-home pay. ”

    By your 30s, insurance grows in importance. You want to protect what you have — now and in the future. But many people in this age group neglect their insurance needs. Or they misunderstand which coverages matter most.

    “If you have a life partner and kids, get the proper life insurance while in your 30s,” Kravietz said. 

    It’s easy to get caught up in your career and assume you can put off life insurance. But even low odds of your untimely death doesn’t mean you can ignore the risk of leaving your loved ones without a cash cushion.

    Another common blunder involves disability insurance. If your employer offers short-term disability insurance as an employee perk, you may think you’re all set.

    However, the real risk is how you’d earn income if you suffer a serious and lasting illness or injury. Don’t confuse short-term disability insurance (which might cover you for as long as one year) with long-term disability coverage that pays benefits for many years.

    Assuming you were wise enough to enroll in your employer-sponsored retirement plan from the outset, don’t slough off in your 30s. Resist the temptation to lower your 401(k) contribution to boost your take-home pay.

    “You want to give till it hurts,” Kravietz said. “Keep putting money away” in your 401(k) or other tax-advantaged plan until you feel a sting. Weigh the minor pain you feel now against the major relief of having a much bigger nest egg decades from now.

    Navigate your 40s

    “ ‘The 40s are often the most expensive in anyone’s life. Life is getting more complicated.’”

    For Kravietz, the 40s represent a decade of heavy spending pressures. Mid-career professionals face a mortgage and mounting tuition bills for their children.

    “The 40s are often the most expensive in anyone’s life,” he said. “Life is getting more complicated.”

    As a result, it’s easy to overlook seemingly minor financial matters like updating beneficiaries on your 401(k) plan or completing all the appropriate estate documents such as a will.

    “People in their 40s sometimes fail to update beneficiaries,” Kravietz said. For example, a new marriage might mean changing the beneficiary from a prior partner or current parent to the new spouse.

    It’s also easy to get complacent about your investments, especially if you’re the conservative type who favors a set-it-and-forget-it strategy. Instead, think in terms of tax optimization.

    “In your 40s, you want to take advantage of what the government gives you,” Kravietz said. “If you have a lot of money in a bank money market account and you’re in a top tax bracket, shifting some of that money into municipal bonds can make sense” depending on your state of residence and other factors.

    If you’re saving for a child’s college tuition using a 529 plan — and you have parents who also want to chip in — work together to strategize. Don’t make assumptions about how much (or how little) your parents might contribute to your kid’s education.

    “Rather than assume you’ll have to pay a certain amount for educational expenses, coordinate between generations of parents and grandparents” on how much they intend to give, Kowalski said. “That way, you’re not duplicating efforts and you won’t put extra funds in a 529 plan.”

    More: 7 more ways to save that you may not have considered

    Also read: ‘We live a rather lavish lifestyle’: My wife and I are 33, live in New York City and earn $270,000. Can we retire at 55?

    Source link

  • Dividend stocks are dirt cheap. It may be time to back up the truck.

    Dividend stocks are dirt cheap. It may be time to back up the truck.

    The stock market always overreacts, and this year it seems as if investors believe dividend stocks have become toxic. But a look at yields on quality dividend stocks relative to the market underlines what may be an excellent opportunity for long-term investors to pursue growth with an income stream that builds up over the years.

    The current environment, in which you can get a yield of more than 5% yield on your cash at a bank or lock in a yield of 4.57% on a10-year U.S. Treasury note
    BX:TMUBMUSD10Y
    or close to 5% on a 20-year Treasury bond
    BX:TMUBMUSD20Y
    seems to have made some investors forget two things: A stock’s dividend payout can rise over the long term, and so can it is price.

    It is never fun to see your portfolio underperform during a broad market swing. And people have a tendency to prefer jumping on a trend hoping to keep riding it, rather than taking advantage of opportunities brought about by price declines. We may be at such a moment for quality dividend stocks, based on their yields relative to that of the benchmark S&P 500
    SPX.

    Drew Justman of Madison Funds explained during an interview with MarketWatch how he and John Brown, who co-manage the Madison Dividend Income Fund, BHBFX MDMIX and the new Madison Dividend Value ETF
    DIVL,
    use relative dividend yields as part of their screening process for stocks. He said he has never seen such yields, when compared with that of the broad market, during 20 years of work as a securities analyst and portfolio manager.

    Dividend stocks are down

    Before diving in, we can illustrate the market’s current loathing of dividend stocks by comparing the performance of the Schwab U.S. Equity ETF
    SCHD,
    which tracks the Dow Jones U.S. Dividend 100 Index, with that of the SPDR S&P 500 ETF Trust
    SPY.
    Let’s look at a total return chart (with dividends reinvested) starting at the end of 2021, since the Federal Reserve started its cycle of interest rate increases in March 2022:


    FactSet

    The Dow Jones U.S. Dividend 100 Index is made up of “high-dividend-yielding stocks in the U.S. with a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios,” according to S&P Dow Jones Indices.

    The end results for the two ETFs from the end of 2021 through Tuesday are similar. But you can see how the performance pattern has been different, with the dividend stocks holding up well during the stock market’s reaction to the Fed’s move last year, but trailing the market’s recovery as yields on CDs and bonds have become so much more attractive this year. Let’s break down the performance since the end of 2021, this time bringing in the Madison Dividend Income Fund’s Class Y and Class I shares:

    Fund

    		 2023 return

    		 2022 return

    		 Return since the end of 2021
    SPDR S&P 500 ETF Trust

    		 14.9%

    		 -18.2%

    		 -6.0%
    Schwab U.S. Dividend Equity ETF

    		 -3.8%

    		 -3.2%

    		 -6.9%
    Madison Dividend Income Fund – Class Y

    		 -4.7%

    		 -5.4%

    		 -9.9%
    Madison Dividend Income Fund – Class I

    		 -4.7%

    		 -5.3%

    		 -9.7%
    Source: FactSet

    Dividend stocks held up well during 2022, as the S&P 500 fell more than 18%. But they have been left behind during this year’s rally.

    The Madison Dividend Income Fund was established in 1986. The Class Y shares have annual expenses of 0.91% of assets under management and are rated three stars (out of five) within Morningstar’s “Large Value” fund category. The Class I shares have only been available since 2020. They have a lower expense ratio of 0.81% and are distributed through investment advisers or through platforms such as Schwab, which charges a $50 fee to buy Class I shares.

    The opportunity — high relative yields

    The Madison Dividend Income Fund holds 40 stocks. Justman explained that when he and Brown select stocks for the fund their investible universe begins with the components of the Russell 1000 Index
    RUT,
    which is made up of the largest 1,000 companies by market capitalization listed on U.S. exchanges. Their first cut narrows the list to about 225 stocks with dividend yields of at least 1.1 times that of the index.

    The Madison team calculates a stock’s relative dividend yield by dividing its yield by that of the S&P 500. Let’s do that for the Schwab U.S. Equity ETF
    SCHD
    (because it tracks the Dow Jones U.S. Dividend 100 Index) to illustrate the opportunity that Justman highlighted:

    Index or ETF

    		 Dividend yield

    		 5-year Avg. yield 

    		 10-year Avg. yield 

    		 15-year Avg. yield 

    		 Relative yield

    		 5-year Avg. relative yield 

    		 10-year Avg. relative yield 

    		 15-year Avg. relative yield 
    Schwab U.S. Dividend Equity ETF

    		 3.99%

    		 3.41%

    		 3.20%

    		 3.16%

    		 2.6

    		 2.1

    		 1.8

    		 1.6
    S&P 500

    		 1.55%

    		 1.62%

    		 1.79%

    		 1.92%
    Source: FactSet

    The Schwab U.S. Equity ETF’s relative yield is 2.6 — that is, its dividend yield is 2.6 times that of the S&P 500, which is much higher than the long-term averages going back 15 years. If we went back 20 years, the average relative yield would be 1.7.

    Examples of high-quality stocks with high relative dividend yields

    After narrowing down the Russell 1000 to about 225 stocks with relative dividend yields of at least 1.1, Justman and Brown cut further to about 80 companies with a long history of raising dividends and with strong balance sheets, before moving further through a deeper analysis to arrive at a portfolio of about 40 stocks.

    When asked about oil companies and others that pay fixed quarterly dividends plus variable dividends, he said, “We try to reach out to the company and get an estimate of special dividends and try to factor that in.” Two examples of companies held by the fund that pay variable dividends are ConocoPhillips
    COP,
    -0.29%
    and EOG Resources Inc.
    EOG,
    +0.52%    .

    Since the balance-sheet requirement is subjective “almost all fund holdings are investment-grade rated,” Justman said. That refers to credit ratings by Standard & Poor’s, Moody’s Investors Service or Fitch Ratings. He went further, saying about 80% of the fund’s holdings were rated “A-minus or better.” BBB- is the lowest investment-grade rating from S&P. Fidelity breaks down the credit agencies’ ratings hierarchy.

    Justman named nine stocks held by the fund as good examples of quality companies with high relative yields to the S&P 500:

    Company

    		 Ticker

    		 Dividend yield

    		 Relative yield

    		 2023 return

    		 2022 return

    		 Return since the end of 2021
    CME Group Inc. Class A

    		 CME,
    +0.47%         		2.04%

    		 1.3

    		 31%

    		 -23%

    		 1%
    Home Depot, Inc.

    		 HD,
    -0.39%         		2.79%

    		 1.8

    		 -3%

    		 -22%

    		 -25%
    Lowe’s Cos., Inc.

    		 LOW,
    +0.27%         		2.17%

    		 1.4

    		 3%

    		 -21%

    		 -19%
    Morgan Stanley

    		 MS,
    -1.54%         		4.24%

    		 2.7

    		 -3%

    		 -10%

    		 -13%
    U.S. Bancorp

    		 USB,
    -0.25%         		5.89%

    		 3.8

    		 -22%

    		 -19%

    		 -37%
    Medtronic PLC

    		 MDT,
    -4.32%         		3.62%

    		 2.3

    		 1%

    		 -23%

    		 -22%
    Texas Instruments Inc.

    		 TXN,
    -0.21%         		3.30%

    		 2.1

    		 -3%

    		 -10%

    		 -12%
    United Parcel Service Inc. Class B

    		 UPS,
    -0.16%         		4.17%

    		 2.7

    		 -8%

    		 -16%

    		 -23%
    Union Pacific Corp.

    		 UNP,
    +1.52%         		2.52%

    		 1.6

    		 2%

    		 -16%

    		 -15%
    Source: FactSet

    Click on the tickers for more about each company, fund or index.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Now let’s see how these companies have grown their dividend payouts over the past five years. Leaving the companies in the same order, here are compound annual growth rates (CAGR) for dividends.

    Before showing this next set of data, let’s work through one example among the nine stocks:

    • If you had purchased shares of Home Depot Inc.
      HD,
      -0.39%
      five years ago, you would have paid $193.70 a share if you went in at the close on Oct. 10, 2018. At that time, the company’s quarterly dividend was $1.03 cents a share, for an annual dividend rate of $4.12, which made for a then-current yield of 2.13%.

    • If you had held your shares of Home Depot for five years through Tuesday, your quarterly dividend would have increased to $2.09 a share, for a current annual payout of $8.36. The company’s dividend has increased at a compound annual growth rate (CAGR) of 15.2% over the past five years. In comparison, the S&P 500’s weighted dividend rate has increased at a CAGR of 6.24% over the past five years, according to FactSet.

    • That annual payout rate of $8.36 would make for a current dividend yield of 2.79% for a new investor who went in at Tuesday’s closing price of $299.22. But if you had not reinvested, the dividend yield on your five-year-old shares (based on what you would have paid for them) would be 4.32%. And your share price would have risen 54%. And if you had reinvested your dividends, your total return for the five years would have been 75%, slightly ahead of the 74% return for the S&P 500 SPX during that period.

    Home Depot hasn’t been the best dividend grower among the nine stocks named by Justman, but it is a good example of how an investor can build income over the long term, while also enjoying capital appreciation.

    Here’s the dividend CAGR comparison for the nine stocks:

    Company

    		 Ticker

    		 Five-year dividend CAGR

    		 Dividend yield on shares purchased five years ago

    		 Dividend yield five years ago

    		 Current dividend yield

    		 Five-year price change

    		 Five-year total return
    CME Group Inc. Class A

    		 CME,
    +0.47%         		9.46%

    		 2.44%

    		 1.55%

    		 2.04%

    		 20%

    		 42%
    Home Depot Inc.

    		 HD,
    -0.39%         		15.20%

    		 4.32%

    		 2.13%

    		 2.79%

    		 54%

    		 75%
    Lowe’s Cos, Inc.

    		 LOW,
    +0.27%         		18.04%

    		 4.14%

    		 1.81%

    		 2.17%

    		 91%

    		 109%
    Morgan Stanley

    		 MS,
    -1.54%         		23.16%

    		 7.62%

    		 2.69%

    		 4.24%

    		 80%

    		 108%
    U.S. Bancorp

    		 USB,
    -0.25%         		5.34%

    		 3.60%

    		 2.78%

    		 5.89%

    		 -39%

    		 -26%
    Medtronic PLC

    		 MDT,
    -4.32%         		6.65%

    		 2.90%

    		 2.10%

    		 3.62%

    		 -20%

    		 -9%
    Texas Instruments Inc.

    		 TXN,
    -0.21%         		11.04%

    		 5.24%

    		 3.10%

    		 3.30%

    		 59%

    		 82%
    United Parcel Service Inc. Class B

    		 UPS,
    -0.16%         		12.23%

    		 5.56%

    		 3.12%

    		 4.17%

    		 33%

    		 56%
    Union Pacific Corp.

    		 UNP,
    +1.52%         		10.20%

    		 3.37%

    		 2.07%

    		 2.52%

    		 34%

    		 49%
    Source: FactSet

    This isn’t to say that Justman and Brown have held all of these stocks over the past five years. In fact, Lowe’s Cos.
    LOW,
    +0.27%
    was added to the portfolio this year, as was United Parcel Service Inc.
    UPS,
    -0.16%    .
    But for most of these companies, dividends have compounded at relatively high rates.

    When asked to name an example of a stock the fund had sold, Justman said he and Brown decided to part ways with Verizon Communications Inc.
    VZ,
    -0.94%
    last year, “as we became concerned about its fundamental competitive position in its industry.”

    Summing up the scene for dividend stocks, Justman said, “It seems this year the market is treating dividend stocks as fixed-income instruments. We think that is a short-term issue and that this is a great opportunity.”

    Don’t miss: How to tell if it is worth avoiding taxes with a municipal-bond ETF

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  • Here’s the real reason the stock market is so horrid. And, yes, it’s rather spooky.

    Here’s the real reason the stock market is so horrid. And, yes, it’s rather spooky.

    Some say it’s the fear of stagflation.

    Some say it’s chaos on Capitol Hill.

    Some say it’s turmoil in the Middle East.

    But we all know the real reason the stock market is so crummy, right?

    It’s October! Of course stocks are down!

    It is a bizarre, inexplicable, and yet undeniable, fact that, throughout history, Wall Street has produced almost all of its gains during the winter months of the year — from Nov. 1 to April 30. It is an even more bizarre, inexplicable and yet undeniable fact that the rest of the world’s stock markets have done the same thing.

    The so-called summer months, meaning the half of the year from May 1 to Halloween, have generally given you bupkis or worse. 

    Around the world, over the course of centuries of recorded financial history, stock-market returns have averaged four full percentage points higher from November to April than from May to October, report researchers Ben Jacobsen at Tilburg University and Cherry Yi Zhang at Nottingham University’s Business School in China. This so-called Halloween Effect seems “remarkably robust,” they concluded, after studying the financial returns of 114 different countries going back as far as they could find reliable monthly data — starting with the stock market in 1693 London. 

    Even more extreme: In the 65 countries for which they had extensive data both about the stock market and about short-term interest rates, it’s fair to say you would have been better off selling your stocks on May 1, putting the money in the bank, then taking it out again at the end of October and buying back your stocks (ignoring fees and taxes, of course).

    “In none of the 65 countries for which we have total returns and short-term interest rates available — with the exception of Mauritius — can we reject a Sell in May effect based on our new test. Only for Mauritius do we find evidence of significantly positive excess returns during summer.”

    Italics mine. Mauritius? 

    The Dow Jones Industrial Average
    DJIA
    is now lower than it was at the end of April. So is the Russell 2000
    RUT
    index of small-cap U.S. stocks. The benchmark international stock index, the MSCI EAFE, is down about 6%. Japan’s Nikkei
    NIY00,
    +1.90%
    is slightly up, as the yen has tanked.

    The S&P 500
    SPX
    is hanging on to a small gain, but that is only because of the early summer gains of a few tech titans. The average S&P stock is down about 2.5% since the end of April — while an investment in no-risk Treasury bills is up more than 2%.

    Meanwhile, let the record show that, over the same period, according to the record keepers at MSCI, the stock market in Mauritius is up 12%.

    Booyah!

    Every time I write about this Halloween or “sell in May” effect, I make the same two points, and I make no apologies for repeating them here, because they are unavoidable.

    The first is that, every spring, after looking at this data, I am tempted to sell all my stocks at the end of April, and every year I don’t, because I think it’s absolutely ridiculous. (And someone on Wall Street who is much smarter than me usually persuades me not to.) And most years I end up kicking myself for not doing it.

    The second is to recall the old economists’ joke: “I don’t care if it works in practice! Does it work in theory?” Selling in May — or, sure, the Halloween Effect — has absolutely no reason that anyone can find for working in theory. But apparently, it works in practice — which is pretty much where we are now.

    Does this mean stocks are going to rally? It’s anyone’s guess. It would be crazy if it were that simple. But, then, the whole Halloween Effect is crazy.

    If history is any guide, now is the time to buy stocks, not sell them, because the next six months are likely to be the time when they make you money. And if history isn’t any guide, well, aren’t we all sunk anyway?

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  • These 20 stocks in the S&P 500 are expected to soar after rising interest rates have pushed down valuations

    These 20 stocks in the S&P 500 are expected to soar after rising interest rates have pushed down valuations

    Two things investors can be sure about: Nothing lasts forever and the stock market always overreacts. The spiking of yields on long-term U.S. Treasury securities has been breathtaking, and it has led to remarkable declines for some sectors and possible bargains for contrarian investors who can commit for the long term.

    First we will show how the sectors of the S&P 500

    have performed. Then we will look at price-to-earnings valuations for the sectors and compare them to long-term averages. Then we will screen the entire index for companies trading below their long-term forward P/E valuation averages and narrow the list to companies most favored by analysts.

    Here are total returns, with dividends reinvested, for the 11 sectors of the S&P 500, with broad indexes below. The sectors are sorted by ascending total returns this year through Monday.

    Sector or index

    		 2023 return

    		 2022 return

    		 Return since end of 2021

    		 1 week return

    		 1 month return
    Utilities

    		 -18.4%

    		 1.6%

    		 -17.2%

    		 -11.1%

    		 -9.6%
    Real Estate

    		 -7.1%

    		 -26.1%

    		 -31.4%

    		 -3.0%

    		 -8.8%
    Consumer Staples

    		 -5.4%

    		 -0.6%

    		 -6.0%

    		 -2.2%

    		 -4.4%
    Healthcare

    		 -4.2%

    		 -2.0%

    		 -6.1%

    		 -1.7%

    		 -3.3%
    Financials

    		 -2.5%

    		 -10.5%

    		 -12.7%

    		 -2.5%

    		 -4.7%
    Materials

    		 1.3%

    		 -12.3%

    		 -11.2%

    		 -1.9%

    		 -7.0%
    Industrials

    		 3.5%

    		 -5.5%

    		 -2.1%

    		 -1.8%

    		 -7.3%
    Energy

    		 4.0%

    		 65.7%

    		 72.4%

    		 -1.9%

    		 -1.4%
    Consumer Discretionary

    		 27.0%

    		 -37.0%

    		 -20.0%

    		 -0.6%

    		 -5.2%
    Information Technology

    		 36.5%

    		 -28.2%

    		 -2.0%

    		 0.8%

    		 -5.9%
    Communication Services

    		 42.5%

    		 -39.9%

    		 -14.3%

    		 1.1%

    		 -1.3%
    S&P 500
    		 13.1%

    		 -18.1%

    		 -7.4%

    		 -1.1%

    		 -4.9%
    DJ Industrial Average
    		 2.5%

    		 -6.9%

    		 -4.5%

    		 -1.7%

    		 -4.0%
    Nasdaq Composite Index
    COMP     		28.0%

    		 -32.5%

    		 -13.7%

    		 0.3%

    		 -5.1%
    Nasdaq-100 Index
    		 36.5%

    		 -32.4%

    		 -7.7%

    		 0.5%

    		 -4.2%
    Source: FactSet

    Returns for 2022 are also included, along with those since the end of 2021. Last year’s weakest sector, communications services, has been this year’s strongest performer. This sector includes Alphabet Inc.
    GOOGL
    and Meta Platforms Inc.
    META,
    which have returned 52% and 155% this year, respectively, but are still down since the end of 2021. To the right are returns for the past week and month through Monday.

    On Monday, the S&P 500 Utilities sector had its worst one-day performance since 2020, with a 4.7% decline. Investors were reacting to the jump in long-term interest rates.

    Here is a link to the U.S. Treasury Department’s summary of the daily yield curve across maturities for Treasury securities.

    The yield on 10-year U.S. Treasury notes

    jumped 10 basis points in only one day to 4.69% on Monday. A month earlier the 10-year yield was only 4.27%. Also on Monday, the yield on 20-year Treasury bonds

    rose to 5.00% from 4.92% on Friday. It was up from 4.56% a month earlier.

    Market Extra: Bond investors feel the heat as popular fixed-income ETF suffers lowest close since 2007

    The Treasury yield curve is still inverted, with 3-month T-bills

    yielding 5.62% on Monday, but that was up only slightly from a month earlier. An inverted yield curve has traditionally signaled that bond investors expect a recession within a year and a lowering of interest rates by the Federal Reserve. Demand for bonds pushes their prices down. But the reverse has happened over recent days, with the selling of longer-term Treasury securities pushing yields up rapidly.

    Another way to illustrate the phenomenon is to look at how the Federal Reserve has shifted the U.S. money supply. Odeon Capital analyst Dick Bove wrote in a note to clients on Friday that “the Federal Reserve has not deviated from its policy to defeat inflation by tightening monetary policy,” as it has shrunk its balance sheet (mostly Treasury securities) to $8.1 trillion from $9 trillion in March 2022. He added: “The M2 money supply was $21.8 trillion in March 2022; today it is $20.8 trillion. You cannot get tighter than these numbers indicate.”

    Then on Tuesday, Bove illustrated the Fed’s tightening and the movement of the 10-year yield with two charts:


    Odeon Capital Group, Bloomberg

    Bove said he believes the bond market has gotten it wrong, with the inverted yield curve reflecting expectations of rate cuts next year. If he is correct, investors can expect longer-term yields to keep shooting up and a normalization of the yield curve.

    This has set up a brutal environment for utility stocks, which are typically desired by investors who are seeking dividend income. In a market in which you can receive a yield of 5.5% with little risk over the short term, and in which you can lock in a long-term yield of about 5%, why take a risk in the stock market? And if you believe that the core inflation rate of 3.7% makes a 5% yield seem paltry, keep in mind that not all investors think the same way. Many worry less about the inflation rate because large components of official inflation calculations, such as home prices and car prices, don’t affect everyone every year.

    We cannot know when this current selloff of longer-term bonds will end, or how much of an effect it will have on the stock market. But sharp declines in the stock market can set up attractive price points for investors looking to go in for the long haul.

    Screening for lower valuations and high ratings

    A combination of rising earnings estimates and price declines could shed light on potential buying opportunities, based on forward price-to-earnings ratios.

    Let’s look at the sectors again, in the same order, this time to show their forward P/E ratios, based on weighted rolling 12-month consensus estimates for earnings per share among analysts polled by FactSet:

    Sector or index

    		 Current P/E to 5-year average

    		 Current P/E to 10-year average

    		 Current P/E to 15-year average

    		 Forward P/E

    		 5-year average P/E

    		 10-year average P/E

    		 15-year average P/E
    Utilities

    		 82%

    		 86%

    		 95%

    		 14.99

    		 18.30

    		 17.40

    		 15.82
    Real Estate

    		 76%

    		 80%

    		 81%

    		 15.19

    		 19.86

    		 18.89

    		 18.72
    Consumer Staples

    		 93%

    		 96%

    		 105%

    		 18.61

    		 19.92

    		 19.30

    		 17.64
    Healthcare

    		 103%

    		 104%

    		 115%

    		 16.99

    		 16.46

    		 16.34

    		 14.72
    Financials

    		 88%

    		 92%

    		 97%

    		 12.90

    		 14.65

    		 14.08

    		 13.26
    Materials

    		 100%

    		 103%

    		 111%

    		 16.91

    		 16.98

    		 16.42

    		 15.27
    Industrials

    		 88%

    		 96%

    		 105%

    		 17.38

    		 19.84

    		 18.16

    		 16.56
    Energy

    		 106%

    		 63%

    		 73%

    		 11.78

    		 11.17

    		 18.80

    		 16.23
    Consumer Discretionary

    		 79%

    		 95%

    		 109%

    		 24.09

    		 30.41

    		 25.39

    		 22.10
    Information Technology

    		 109%

    		 130%

    		 146%

    		 24.20

    		 22.17

    		 18.55

    		 16.54
    Communication Services

    		 86%

    		 86%

    		 94%

    		 16.41

    		 19.09

    		 19.00

    		 17.43
    S&P 500
    		 94%

    		 101%

    		 112%

    		 17.94

    		 19.01

    		 17.76

    		 16.04
    DJ Industrial Average
    		 93%

    		 98%

    		 107%

    		 16.25

    		 17.49

    		 16.54

    		 15.17
    Nasdaq Composite Index
    		 92%

    		 102%

    		 102%

    		 24.62

    		 26.71

    		 24.18

    		 24.18
    Nasdaq-100 Index
    		 97%

    		 110%

    		 126%

    		 24.40

    		 25.23

    		 22.14

    		 19.43

    There is a limit to how many columns we can show in the table. The S&P 500’s forward P/E ratio is now 17.94, compared with 16.79 at the end of 2022 and 21.53 at the end of 2021. The benchmark index’s P/E is above its 10- and 15-year average levels but below the five-year average.

    If we compare the current sector P/E numbers to 5-, 10- and 15-year averages, we can see that the current levels are below all three averages for four sectors: utilities, real estate, financials and communications services. The first three face obvious difficulties as they adjust to the rising-rate environment, while the real-estate sector reels from continuing low usage rates for office buildings, from the change in behavior brought about by the COVID-19 pandemic.

    Your own opinions, along with the pricing for some sectors, might drive some investment choices.

    A broader screen of the S&P 500 might point to companies for you to research further.

    We narrowed the S&P 500 as follows:

    • Current forward P/E below 5-, 10- and 15-year average valuations. For stocks with negative earnings-per-share estimates for the next 12 months, there is no forward P/E ratio so they were excluded. For stocks listed for less than 15 years, we required at least a 5-year average P/E for comparison. This brought the list down to 138 companies.

    • “Buy” or equivalent ratings from at least two-thirds of analysts: 41 companies.

    Here are the 20 companies that passed the screen, for which analysts’ price targets imply the highest upside potential over the next 12 months.

    There is too much data for one table, so first we will show the P/E information:

    Company

    		 Ticker

    		 Current P/E to 5-year average

    		 Current P/E to 10-year average

    		 Current P/E to 15-year average
    SolarEdge Technologies Inc.

    		 SEDG 89%

    		 N/A

    		 N/A
    AES Corp.

    		 AES 66%

    		 75%

    		 90%
    Insulet Corp.

    		 PODD 18%

    		 N/A

    		 N/A
    United Airlines Holdings Inc.

    		 UAL 42%

    		 50%

    		 N/A
    Alaska Air Group Inc.

    		 ALK 51%

    		 57%

    		 N/A
    Tapestry Inc.

    		 TPR 39%

    		 49%

    		 70%
    Albemarle Corp.

    		 ALB 39%

    		 50%

    		 73%
    Delta Air Lines Inc.

    		 DAL 60%

    		 63%

    		 21%
    Alexandria Real Estate Equities Inc.

    		 ARE 59%

    		 68%

    		 N/A
    Las Vegas Sands Corp.

    		 LVS 96%

    		 78%

    		 53%
    Paycom Software Inc.

    		 PAYC 61%

    		 N/A

    		 N/A
    PayPal Holdings Inc.

    		 PYPL 33%

    		 N/A

    		 N/A
    SBA Communications Corp. Class A

    		 SBAC 27%

    		 N/A

    		 N/A
    Advanced Micro Devices Inc.

    		 AMD 58%

    		 39%

    		 N/A
    LKQ Corp.

    		 LKQ 92%

    		 44%

    		 78%
    Charles Schwab Corp.

    		 SCHW 75%

    		 54%

    		 73%
    PulteGroup Inc.

    		 PHM 94%

    		 47%

    		 N/A
    Lamb Weston Holdings Inc.

    		 LW 71%

    		 N/A

    		 N/A
    News Corp Class A

    		 NWSA 93%

    		 73%

    		 N/A
    CVS Health Corp.

    		 CVS 75%

    		 61%

    		 67%
    Source: FactSet

    Click on the tickers for more about each company or index.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    News Corp
    NWSA
    is on the list. The company owns Dow Jones, which in turn owns MarketWatch.

    Here’s the list again, with ratings and consensus price-target information:

    Company

    		 Ticker

    		 Share “buy” ratings

    		 Oct. 2 price

    		 Consensus price target

    		 Implied 12-month upside potential
    SolarEdge Technologies Inc.

    		 SEDG 74%

    		 $122.56

    		 $268.77

    		 119%
    AES Corp.

    		 AES 79%

    		 $14.16

    		 $25.60

    		 81%
    Insulet Corp.

    		 PODD 68%

    		 $165.04

    		 $279.00

    		 69%
    United Airlines Holdings Inc.

    		 UAL 71%

    		 $41.62

    		 $69.52

    		 67%
    Alaska Air Group Inc.

    		 ALK 87%

    		 $36.83

    		 $61.31

    		 66%
    Tapestry Inc.

    		 TPR 75%

    		 $28.58

    		 $46.21

    		 62%
    Albemarle Corp.

    		 ALB 81%

    		 $162.41

    		 $259.95

    		 60%
    Delta Air Lines Inc.

    		 DAL 95%

    		 $36.45

    		 $58.11

    		 59%
    Alexandria Real Estate Equities Inc.

    		 ARE 100%

    		 $98.18

    		 $149.45

    		 52%
    Las Vegas Sands Corp.

    		 LVS 72%

    		 $45.70

    		 $68.15

    		 49%
    Paycom Software Inc.

    		 PAYC 77%

    		 $260.04

    		 $384.89

    		 48%
    PayPal Holdings Inc.

    		 PYPL 69%

    		 $58.56

    		 $86.38

    		 48%
    SBA Communications Corp. Class A

    		 SBAC 68%

    		 $198.24

    		 $276.69

    		 40%
    Advanced Micro Devices Inc.

    		 AMD 74%

    		 $103.27

    		 $143.07

    		 39%
    LKQ Corp.

    		 LKQ 82%

    		 $49.13

    		 $67.13

    		 37%
    Charles Schwab Corp.

    		 SCHW 77%

    		 $53.55

    		 $72.67

    		 36%
    PulteGroup Inc.

    		 PHM 81%

    		 $73.22

    		 $98.60

    		 35%
    Lamb Weston Holdings Inc.

    		 LW 100%

    		 $92.23

    		 $123.50

    		 34%
    News Corp Class A

    		 NWSA 78%

    		 $20.00

    		 $26.42

    		 32%
    CVS Health Corp.

    		 CVS 77%

    		 $69.69

    		 $90.88

    		 30%
    Source: FactSet

    A year may actually be a short period for a long-term investor, but 12-month price targets are the norm for analysts working for brokerage companies.

    Don’t miss: This fund shows that industry expertise can help you make a lot of money in the stock market

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