This is a stock picker market.
“This environment will create an important backdrop for active investing,” Ken McAtamney, head of William Blair’s global equities team, said in a report.
“Understanding companies with differentiated business models, unique cultures and enduring competitive advantages will be increasingly crucial in determining return on investment in this complex environment,” he added, noting that “the dynamic shift of corporate winners and losers remains a constant”.
One of the biggest mistakes an investor can make is assuming that all stocks in a given sector should go up and down at the same time. That is an overly simplistic and binary view of the world.
Instead, investors should do their homework and find companies with strong business models and healthy fundamentals.
“Not all businesses are created equal,” said Paul Moroz, chief investment officer at Mawer Investment Management.
What emotion is driving the actions? Check out the fear and greed index
“First-quarter results so far underscore our view that investors need to be selective,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a report this week.
Haefele added that “Tesla’s record earnings underscore growing global demand for electric vehicles” and also noted that “Netflix’s disappointing result should not obscure the strong outlook for subscription services.”
Netflix’s big mistake could end up being a company-specific problem. It is not necessarily a reason to avoid all other FAANG.
Of course, investors are still willing to flock to companies that are reporting strong results. Tesla’s success shows that traders aren’t afraid of the high-priced stocks that value investing gurus like Warren Buffett tend to avoid.
Yes, Tesla is expensive when you look at traditional price-to-earnings ratios and compare Tesla to the rest of the auto industry. But as long as Tesla lives up to the hype, that may not matter.
“Tesla’s ability to achieve a trillion-dollar valuation … is confirmation that paying for future earnings potential remains a rational investment with the right business model,” said Louis Navellier, founder of Navellier & Associates. , in a report on Thursday.