Stock market ‘casino’ closed


New York
CNN Business

Investors have learned a lot of hard lessons so far in 2022. stock market Not always up. Factors like economics, earnings, and valuations sound like quaint relics of a bygone era, and they’re still relevant even in a world seemingly dominated by memes and Reddit boards.

Picking successful stocks isn’t easy, especially these days The Fed is raising interest rates and Inflation is starting to hurt consumers and the wider economy.stock of many speculative tech company Shares are currently falling due to concerns about weak fundamentals and an unsustainable share price.

But that’s not necessarily the worst news for the market. Investors just need to do more homework again to find good bargains.

“Casinos are closed,” said Peter Maluk, president and CEO of wealth management firm Creative Planning.

“The days of stimulus are over. This is more of a market for thinking people now. Total speculation is dead,” Malook said, adding that traders can no longer pass blank checks on SPAC stocks, cryptocurrencies, Unprofitable tech companies and other VCs are like hot potatoes and hope others want to grab them.

Stock picking seems a lot easier when the Fed is doing all it can to stimulate the economy. When central banks raise interest rates to cool off, many investors have no experience navigating markets.

“The world is realizing that zero rates are done,” said Max Wasserman, co-founder of Miramar Capital. “Rates are really low and people are taking too much risk because the Fed will cut rates whenever the stock market pulls back. The message is the dips. Buy because the Fed has your back. But the party is over.”

Some of the investors who got Covid stimulus money last year and chased memes like GameStop

(GME)
and AMC

(AMC)
May not be optimistic about individual stocks right now.

“In the meme stock trading phenomenon of early 2021, the excitement of stock picking and an aggressive approach to investing strategies has reached new levels of popularity,” Ally chief market and currency strategist Lindsey Bell said in a note late last week indicated in. “Right now, the stock market decline has some investors unhappy with this strategy.”

But Bell noted that investors who have done their homework can still “make smart investment decisions” as long as they maintain a “very hands-on investing style” and don’t panic.

“When stocks are down, a bear market is imminent, and volatility is high, hindsight is normal,” she wrote.

Stock picking itself isn’t dead, Wasserman said. It’s just that now is the time for investors to look for quality companies, even as interest rates rise, the economy could slow as a result.

This means doing more than buying tech-intensive products S&P 500 Index, This is liked by the big Nasdaq apple leader

(apple)
Tesla

(Tesla)
Google owner Alphabet

(Google)
and the Facebook parent meta platform

(FB)
.

“You can’t just keep throwing money in the air and expect everything to go up. When you buy an ETF, you’re just buying a basket of stocks, and everyone’s buying the same basket,” Wasserman said. “We’re not after what other people are after. There’s more volatility ahead and we’re hoping to take advantage of that.”

Wasserman specifically recommends blue-chip stocks with stable dividends and believes investors’ portfolios should be spread across sectors.

With that in mind, stocks he owns include branding giant UPS

(UPS)
Coca Cola

(KO)
and Pepsi

(political public figure)
to dividend-paying tech companies like Corning

(GLW)
Microsoft

(Microsoft)
and Texas Instruments

(Texas)
. Wasserman said VF Corp., owner of Timberland, The North Face and Vans.

(VFC)
Medtronic, a leader in medical devices

(MDT)
and gold miner newmont

(New Economic Model)
Also solid values.

The good news — if you want to say that — is that the current market turmoil doesn’t mean a long-term bear market is necessarily ahead.

“It could be a bump, but not a crash. The whole turbulence could last less than a year and is already underway,” Malook said. “It’s not like 2000 or 2009. It’s a normal bear market.”

“The best place to build long-term wealth remains the stock market,” Malook added. “If you buy today, you might just have to hold your nose.”