Getting ahead of an economic rebound — Trading Tesla's S&P 500 debut — From community college to Wall Street

Advertisement
Getting ahead of an economic rebound — Trading Tesla's S&P 500 debut — From community college to Wall Street
Bloomberg TV

Dear Readers,

After bottoming out in historic fashion this past spring, the US economy has nowhere to go but up ... Right?

Not so fast. As COVID-19 infection rates have surged globally, Wall Street's biggest institutions are walking back their economic-growth forecasts for the near term.

Advertisement

In fact, JPMorgan recently went as far as to become the first A-list firm to forecast negative US GDP in the first quarter of 2021. And while Goldman Sachs doesn't yet see a full-fledged contraction unfolding, it also trimmed its expectations for the next two quarters.

But if the economists on Wall Street are getting cold feet, it's safe to say investment strategists are looking through the near-term noise and expecting a strong cyclical recovery through full-year 2021. And that expectation is informing loads of new recommendations as market internals twist and turn.

If you aren't yet a subscriber to Insider Investing, you can sign up here.

Advertisement

Morgan Stanley's investment chief is imploring traders to start betting on a roaring economy right now. In an exclusive interview with Business Insider, Mike Wilson gave us 5 parts of the stock market to buy, and detailed why this bull market will be different from the last few.

Goldman Sachs has observed the ongoing rotation into discounted value stocks and determined that companies offering strong cash-flow growth will win in 2021. To that end, it's identified 14 picks set to surge along with the economy.

And Deutsche Bank has been busy figuring out how Europe-focused investors can get in on the action. The firm is bullish on what COVID-19 vaccine progress will mean for the economy, and sees these 6 companies in particular offering huge upside.

Advertisement

For more, see below Business Insider's best Investing stories of the week, which include a wide array of additional recommendations, strategies, and tips for navigating uncertainty.

Thanks for reading!

-- Joe

Advertisement

A near risk-free strategy for playing Tesla's S&P 500 inclusion

Since news of Tesla's December inclusion into the S&P 500 index came out on Monday, the electric-car maker's stock has surged. The company's mega-entrance shows how index fund managers tend to "buy high and sell low," which is the focal point of a 2018 research paper by investing pioneer Rob Arnott.

In an interview, Arnott explains now new index additions have historically traded, and offers a "near risk-free" arbitrage strategy that investors can take advantage of with a small part of their portfolios.

Advertisement

Read the full story here:

Investing pioneer Rob Arnott told us a near risk-free strategy for investors to win big from Tesla joining the S&P 500 — and explained how the company's inclusion will lead index fund managers to 'buy high and sell low'

A CIO who rose from community college to Wall Street shares volatility-trading strategies

Kris Sidial is the co-chief investment officer at The Ambrus Group, a volatility arbitrage-focused hedge fund founded in 2018. With a gift for trading and through relentless networking, he overcame the shackles of a tough upbringing and community college to land an internship on Wall Street.

Advertisement

After a stint at a small hedge fund, he helped manage a $1.5 billion book at a big Canadian bank and then left to set up his own volatility shop with his partner. Sidial breaks down his two-pronged approach to managing his firm's volatility strategies and shares what retail investors should bear in mind now.

Read the full story here:

A 28-year-old hedge fund co-investing chief shares how he advanced from community college to Wall Street — and breaks down his two-pronged approach to managing the fund's volatility strategies

2 strategies one expert used to build a real estate empire

Advertisement

Ashley Wilson, the cofounder of Bar Down Investments and HouseItLook and author of "The Only Woman in the Room," found her way into the real-estate investment realm through an inherent distrust of the stock market.

Wilson tested a plethora of strategies, including short-term rentals, house hacking, and long-term rentals, before starting a flipping business. In total, Wilson has flipped nearly 20 properties and oversees 600 units spread across Texas and Ohio.

Read the full story here:

Advertisement

600 units and almost 20 flips: How Ashley Wilson created a real-estate investment empire leveraging just 2 simple strategies

Stock pick central

Seeking experts who are willing to name names? Look no further:

Quote of the week

"We recommend investors seek stocks with strong operating leverage to an above trend economic growth (i.e., cyclicals and reopening beneficiaries) and growth stocks with reasonable valuations (GARP) given our view for higher interest rates."

-- Mike Wilson, chief investment officer and chief US equity strategist at Morgan Stanley, summarizing an economy-dependent stock-market recommendation shared by many Wall Street experts

Advertisement
{{}}