After several years of big swings in the market and the U.S. economy, investors may want to buckle down and focus on individual stocks rather than make bold predictions about 2024. A resilient economy in 2023 proved widespread projections of an imminent recession wrong, and the economic consensus is murkier heading into the new year. Most economists and Wall Street pros see growth slowing, but whether that becomes a recession or a soft landing is still a key point of contention. The equity outlook is also split heading into 2024, according to CNBC’s Market Strategist Survey , with projections for the S & P 500 in 12 months ranging from 4,200 to 5,200. But those macro projections may best serve as background noise. Tony DeSpirito, global chief investment officer for fundamental equities at BlackRock, said at an outlook event in December that whether or not the economy tips into a recession shouldn’t be of huge concern to investors. “In a slow growth to recessionary environment, quality historically has absolutely [performed well]. It’s only when you’re in the middle of that recession, or coming out of the recession, that’s when lower quality — for lack of a better word — does really well,” DeSpirito said. That scenario of an economy exiting a recession seems far away as the calendar turns to 2024 with the U.S. labor market still growing. “I think you really need to be aware of those two time periods, and which of those two that you’re in,” DeSpirito added. BlackRock’s call for the new year is for investors to lean into a more active stock picking approach that can use bottom-up analysis to find those high quality stocks instead of trying to nail an economic prediction. The exact definition of a “quality” stock can be different from one portfolio manager to another, and in different market cycles. But typically, the term refers to companies with strong cash flow, relatively low debt levels and a predictable revenue path in the years ahead. That same approach…
2023-12-30 06:35:00
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