From Yahoo! Finance
In a market more sensitive to the Federal Reserve than fundamentals, what’s the right move for investors? In a sideways market, the classic answer is smarter stock picking.
Yet, investors face more challenges today than ever before because they’re fighting the wake of the Fed, credit bubble bursting and even remnants of the tech bubble bursting.
What does this mean for past “go to” investment styles?
- Growth and value styles have struggled to differentiate from each other, leaving investors looking elsewhere. For more, see “Step 2: Don’t be fooled by investing “styles” – how to tell spin from substance.”
- Industry leaders change frequently, often too frequently for an investor to change gears. Good news, peering into fundamentals by industry sector with “flag charts” provides powerful pointers to value. For more, see “Step 3: Industry Plays Not for Investors.”
- Cyclical approaches, even more than industry plays, require careful adjustments. Great if you have time and skill, but not for investors who rebalance semi-annually or annually to avoid short-term gains taxes.
- Stable price approaches can protect against short term swings, that’s goodness. But, is there something better? Focusing on stable earnings as does Zacks Earnings Certain Proxy outperforms the other standard styles. For more, see “Step 2: Don’t be fooled by investing “styles” – how to tell spin from substance.”
What does this lead? This progression of data insights is a glimpse of the opportunities that can be found by using today’s data analytics to probe today’s fundamentals. More broadly, this opens up the world of business model-based investing.