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An improving economy and strong profits could keep stocks climbing, despite
higher prices.
Fidelity Viewpoints
– 08/27/2014
In 2014, stock markets have continued the run that started in 2009, with the
S&P 500 Index® notching dozens of all-time highs and breaking through
the 2,000 level for the first time as the economy has shown signs of
strength and corporate profits have continued to creep higher. But amid all
the good news, some investors have grown nervous that the markets are due
for a correction or that stocks have reached the kind of heights that
preceded the major bear markets of 2001 and 2008.
While no one knows what could happen in the short term, Fidelity growth
managers Sonu Kalra, who manages the Fidelity® Blue Chip Growth Fund (
FBGKX | Get Prospectus
A different market
Investors who are worried that stocks are overvalued may look back at
previous highs nervously. The S&P 500® Index was around 1,500 before
each of the last two major pullbacks, well below recent levels of 1,960. But
things have changed since those previous highs. A key difference has to do
with corporate earnings. Back in 2000, the S&P produced $57 in profits per
share; today, that level has risen to $114 per share.
In fact, earnings increases have outpaced stock gains, causing valuations to
drop compared with previous peaks. For instance, in 2000 the S&P price-to-
earnings (P/E) ratio was more than 30, while in July 2014 it was 17. Still,
it is hard to make the case that stocks are cheap today. The average P/E
ratio since 1926 has been about 15, and in 2009 the S&P traded close to 12.
“Valuation remains pretty close to historical norms, above the historical
average but not dramatically above it,” says Kalra. “I would describe the
market overall as fairly valued—but that doesn’t mean we can’t continue
to see gains. The U.S. economy continues to grow at a slow but steady pace
and, historically, bull markets have ended with a slowdown in the economy.
But given that we are in the fifth year of a bull market, I do think you
need to be selective about what you own and look for real opportunities.”
New highs once again
Past performance is no guarantee of future results. Source: Fidelity Asset
Management (FAM), Factset. Data as of 6/30/14. EPS—Earnings Per Share. P/E
—Price to Earnings.
The economic backdrop
Ultimately, stock market returns tend to follow corporate earnings. Today,
there are some reasons for optimism regarding the outlook for corporations.
Revenues have continued to grow in a slow and steady fashion, up 4.3% in the
June quarter, compared to last year. At the same time, while mild inflation
has been keeping input costs low, and low interest rates have reduced debt
burdens and capital costs for many corporations.
Corporations look healthy
All this has translated into higher profit margins, with the S&P 500
delivering 8% net earnings growth in Q2 2014 compared with the same period a
year ago. At the same time, many companies have taken advantage of low
rates to decrease the cost of debts. As that cash has dropped to the bottom
line, companies have stockpiled nearly $2 trillion in cash that may benefit
investors through share buybacks, dividends, or reinvestment.
“If you look at what has happened since the 2009 bottom, revenues for the S
&P 500 are up about 23 percent, while profits are actually up six times in
that time frame,” says Kalra. “So corporations have really focused
internally on improving operations and margins.”
Riding a recovering economy
The housing recovery looks sustainable
While the economy is far from red hot, the slow, steady gains that have been
made may provide some wind at the backs of corporations. GDP rebounded from
a lackluster winter, with 4% growth in the second quarter of this year,
along with strong hiring reports for the job market. The economy has been
benefiting from improvements in the housing market, which have the potential
to be an enduring change due to pent-up demand, affordable prices, and a
lack of supply. (See the chart right.) The economy has also been benefiting
from big reductions in energy costs, thanks to new production techniques in
the United States, and a resurgence in domestic manufacturing.
Strategies to look for growth
With stocks fairly valued and the economy expanding, albeit slowly,
investors may want to consider seeking pockets of growth that are outpacing
the economy overall. Historically, the market has rewarded companies that
have been able to produce double-digit growth.
“I think we’re going to see more change in the next twenty years then we
have seen in the last fifty years,” says Baker. “It is a great time to be
alive and a great time to be a growth investor.”
Company growth has driven stock performance
This chart illustrates the performance of a hypothetical $10,000 investment
. Figures do not reflect the effect of any applicable sales charges, taxes,
or redemption fees, which would lower these figures. Based on the annual
performance of companies in the S&P 500. This chart is not intended to imply
any future performance. Past performance is no guarantee of future results.
It is not possible to invest directly in an index. All market indexes are
unmanaged, and are not intended to represent the performance of any Fidelity
fund. Not inclusive of reinvestment of capital gains or dividends. Source:
Fidelity Investments and FactSet as of 12/31/2013
Where to look for growth
Here are some corners of the market where our experts have found
opportunities.
E-commerce—The share of retail purchases made online is just around 10%
today, but could grow rapidly in coming years. This may provide a tailwind
for online retailers, payment providers, companies that help local
businesses create an online presence, and others.
For more, read Viewpoints: How to invest in the global Internet
Cloud computing—Companies are moving away from the dominant computer model
of the last decade to the cloud—where remote servers house applications and
data. This shift may create huge potential, particularly for companies that
offer software as a service (SaaS).
For more, read Viewpoints: Where to find opportunities in tech stocks
Internet advertising—American’s media habits have shifted, with more and
more time spent online. But advertisers haven’t kept up. In fact, a
significant gap exists between how much time people spend online and the
portion of advertising dollars spent there. As this gap decreases, online
advertisers and content creators may benefit.
For more, read Viewpoints: Three growth trends to watch
Health and wellness—Consumers have shown an increasing appetite for
products connected to health and wellness, including organic foods and
active wear.
For more, read Viewpoints: How to invest in healthy living
Personalized medicine—Over the past decade, the cost to decode the human
genome has come down precipitously. As knowledge from this research spreads,
a wave of innovative medicines has arrived, many of which target diseases
and patients more precisely.
For more, read Viewpoints: Biotech: dip or bubble?
The dangers of market timing
Stock investing can be nerve racking. When things are bad, you may wonder if
things are going to take another step down. When things are good, you may
wonder when the other shoe will drop. But trying to time the market to avoid
corrections or short-term losses is difficult at best.
Indeed, as the chart below shows, if you do leave the market and miss out on
the best days, it can be hard to make up that time.
Market timing has proven risky
This hypothetical example assumes an investment that tracks the returns of
the S&P 500® Index that includes dividend reinvestment but does not
reflect the impact of taxes, which would lower these figures. There is
volatility in the market and a sale at any point in time could result in a
gain or loss. Your own investment experience will differ, including the
possibility of losing money. You cannot invest directly in an index. The S&P
500® Index, a market capitalization–weighted index of common stocks,
is a registered service mark of The McGraw-Hill Companies, Inc., and has
been licensed for use by Fidelity Distributors Corporation. Source: FMRCo (
AART), as of 12/31/13.
It may be better to stick with your asset mix, rebalance at least once a
year, stay diversified, and—if you are inclined to make more tactical bets
—tilt toward corners of the equity market where you find growth
opportunities.
Learn more
Sonu Kalra manages Fidelity® Blue Chip Growth Fund (FBGKX | Get
Prospectus
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Gavin Baker manages Fidelity® OTC Portfolio (FOCPX | Get Prospectus
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Find individual stocks, mutual funds, and ETFs.
Was this helpful? Yes No93% who voted found this helpful
Past performance is no guarantee of future results.
The information presented reflects the opinions of Sonu Kalra and Gavin
Baker as of August 19, 2014. These opinions do not necessarily represent the
views of Fidelity or any other person in the Fidelity organization and are
subject to change at any time based on market or other conditions. Fidelity
disclaims any responsibility to update such views. These views may not be
relied on as investment advice and, because investment decisions for a
Fidelity fund are based on numerous factors, may not be relied on as an
indication of trading intent on behalf of any Fidelity fund.
As with all your investments through Fidelity, you must make your own
determination as to whether an investment in any particular security or fund
is consistent with your investment objectives, risk tolerance, financial
situation, and your evaluation of the investment option. Fidelity is not
recommending or endorsing any particular investment option by mentioning it
in this article or by making it available to its customers. This information
is provided for educational purposes only, and you should bear in mind that
laws of a particular state and your particular situation may affect this
information.
Indexes are unmanaged. It is not possible to invest directly in an index.
The S&P 500 Index is a market capitalization–weighted index of 500 common
stocks chosen for market size, liquidity, and industry group representation
to represent U.S. equity performance.
Stock markets are volatile and can fluctuate significantly in response to
company, industry, political, regulatory, market, or economic developments.
Investing in stock involves risks, including the possible loss of principal.
Keep in mind that investing involves risk. The value of your investment will
fluctuate over time and you may gain or lose money.
Votes are submitted voluntarily by individuals and reflect their own opinion
of the article's helpfulness. A percentage value for helpfulness will
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Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street,
Smithfield, RI 02917
695725.4.0 | M****n
发帖数: 411 | 2 mark
despite
the
★ 发自iPhone App: ChineseWeb 8.0.1
【在 N*****d 的大作中提到】
: https://www.fidelity.com/viewpoints/investing-ideas/case-for-stocks-now?
: ccsource=email_weekly
: An improving economy and strong profits could keep stocks climbing, despite
: higher prices.
: Fidelity Viewpoints
: – 08/27/2014
: In 2014, stock markets have continued the run that started in 2009, with the
: S&P 500 Index® notching dozens of all-time highs and breaking through
: the 2,000 level for the first time as the economy has shown signs of
: strength and corporate profits have continued to creep higher. But amid all
| x**********g
发帖数: 327 | 3 For Fidelity, there is ALWAYS a case fr stocks for sure.
despite
the
all
【在 N*****d 的大作中提到】
: https://www.fidelity.com/viewpoints/investing-ideas/case-for-stocks-now?
: ccsource=email_weekly
: An improving economy and strong profits could keep stocks climbing, despite
: higher prices.
: Fidelity Viewpoints
: – 08/27/2014
: In 2014, stock markets have continued the run that started in 2009, with the
: S&P 500 Index® notching dozens of all-time highs and breaking through
: the 2,000 level for the first time as the economy has shown signs of
: strength and corporate profits have continued to creep higher. But amid all
| m*********h
发帖数: 5449 | | N*****d
发帖数: 9872 | 5 不排除枪手发文来托盘的可能。金融看着挺弱的，迟迟不来新高。不知道会调整到哪，
如果有调整的话。 |
|
