Dinar Detectives - Iraqi Dinar Recaps from Dinar Guru and Intel
  • Home
  • News
  • Dinar Guru
    • Judy Byington
    • MarkZ
    • Ninja
    • TNT
    • FRANK26
    • Bruce
    • KTFA
    • Mnt Goat
    • Pimpy
    • Militia Man
    • Nader
  • Video
  • Audio
  • Contact
No Result
View All Result
Dinar Detectives - Iraqi Dinar Recaps from Dinar Guru and Intel
  • Home
  • News
  • Dinar Guru
    • Judy Byington
    • MarkZ
    • Ninja
    • TNT
    • FRANK26
    • Bruce
    • KTFA
    • Mnt Goat
    • Pimpy
    • Militia Man
    • Nader
  • Video
  • Audio
  • Contact
No Result
View All Result
Dinar Detectives - Iraqi Dinar Recaps from Dinar Guru and Intel
No Result
View All Result
  • Home
  • News
  • Dinar Guru
  • Video
  • Audio
  • Contact
Home US Stock Market

Why large-cap stocks are a better bet for the rest of 2023 — and 10 you want to own

September 12, 2023
in US Stock Market
Share on FacebookShare on Twitter

Seasonal tendencies for the U.S. stock market between now and the end of the year will favor large-cap stocks over small caps.

That has to be particularly disappointing for beleaguered investors in small caps, who have been underperforming the large caps for several months now. In contrast to the 17.4% year-to-date gain of the large-cap-dominated S&P 500 SPX, for example, the iShares Russell 2000 ETF IWM ] has gained 6.1% while the iShares Micro-Cap ETF IWC ] has lost 2.3%.

Small-cap underperformance is likely to continue for several more months due to the compensation incentives under which institutional investors operate. Many managers will receive a year-end bonus if they finish the year ahead of the S&P 500. So as Dec. 31 gets nearer, they have a powerful incentive to start making their portfolios look increasingly like the S&P 500 — thereby locking in positive year-to-date outperformance. These managers will be tempted to avoid the small caps even if they think those stocks represent good value at current prices, since the risk of their year-to-date gain falling below the S&P 500 is too great.

This relationship between compensation incentives and the market was discovered in a 2003 study in the Journal of Business Finance & Accounting, by Lucy Ackert, a professor of finance at Kennesaw State University, and George Athanassakos, a professor of finance at the University of Western Ontario. Two years ago they updated their original study in the Journal of Risk and Financial Management and found that the pattern persists.

Once January rolls around, institutional investors’ compensation incentives shift in the small-caps’ favor.

The professors’ theory does contain some good news for small-cap investors, provided they are patient: Once January rolls around, institutional investors’ compensation incentives shift in the small-caps’ favor. That’s when their appetite for risk is the highest it will be throughout the calendar year.

The accompanying chart shows that stock market history accords nicely with the professors’ theory. Since 1926 small-cap relative strength, which is highest in January, declines steadily as the year progresses.

There are several ways in the stock market to lean on large-cap relative strength between now and the end of the year. Perhaps the simplest would be to invest in an S&P 500 index fund, such as the SPDR S&P 500 ETF SPY. A market-neutral way of betting on that strength would be to invest in SPY while simultaneously shorting an equal dollar amount of a small-cap fund, such as the iShares Micro-Cap ETF. This latter approach would turn a profit even if the market falls between now and year end, so long as small caps fall by more than the large caps.

If you want to bet on individual large-cap stocks, below are the 10 largest-cap stocks currently recommended for purchase by at least three of the investment newsletters that my auditing firm monitors:

Stocks Market Cap ($ billions)
Apple Inc (AAPL) $2,858
Microsoft Corp (MSFT) $2,466
Alphabet Inc (GOOG) $1,652
JPMorgan Chase & Co (JPM) $1,101
Bank Amer Corp (BAC) $844
Morgan Stanley (MS) $470
Pfizer Inc (PFE) $217
Disney Walt Co (DIS) $198
CVS Health Corp (CVS) $150
Medtronic Plc (MDT) $124

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

https://www.marketwatch.com/story/why-large-cap-stocks-are-a-better-bet-for-the-rest-of-2023-and-10-you-want-to-own-e5a491a4?mod=stocks

Tags: 2023andarebetbetterforlarge-capmarketMarkzownreststockstocksthewantwhyyou
Previous Post

Bitcoin Rebounds. But It Might Not Be Able to Overcome Momentum.

Next Post

Bitcoin (BTC) to $70,000: Arthur Hayes Shares Epic New Essay

Related Posts

Dow Jones, Nasdaq, S&P 500 weekly preview: How far can this rally go?

Dow Jones, Nasdaq, S&P 500 weekly preview: How far can this rally go?

February 26, 2024
U.S. stocks edge higher, consolidating ahead of key inflation data

U.S. stocks edge higher, consolidating ahead of key inflation data

February 26, 2024

Wall St notches second lower close as 2024 starts with profit-taking

January 3, 2024

U.S. stocks lower at close of trade; Dow Jones Industrial Average down 0.76%

January 3, 2024

US stocks slip lower; Tesla down on increased Chinese competition

January 2, 2024

S&P 500 at 5400 is ‘probable and even conservative’ – Oppenheimer

January 2, 2024

At Dinar Detectives, we provide daily dinar updates and dinar recaps, featuring insights from popular dinar gurus. Stay informed with our comprehensive coverage of the latest dinar chronicles and gain valuable insights from dinar guru opinions.

Links

  • Home
  • News
  • Video
  • Audio

Useful

  • Privacy Policy
  • Disclaimer
  • Resources

Investment Indicator
Dinar Tube
Crypto Recaps

  • Privacy Policy
  • Disclaimer
  • Resources

© Dinar Detectives. All Rights Reserved

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • News
  • Dinar Guru
    • Judy Byington
    • MarkZ
    • Ninja
    • TNT
    • FRANK26
    • Bruce
    • KTFA
    • Mnt Goat
    • Pimpy
    • Militia Man
    • Nader
  • Video
  • Audio
  • Contact

© Dinar Detectives. All Rights Reserved