Latest news with #MichaelKantrowitz
Business Insider
2 days ago
- Business
- Business Insider
Your ETF investment might be dragging down your portfolio returns — here's why
Buying an ETF is a common recommendation for investors looking for diversification, but the popular investment vehicle might not be doing the job you're expecting it to, according to one Wall Street strategist. Michael Kantrowitz, chief investment officer and head of portfolio strategy at Piper Sandler, isn't a big fan of owning broad indices, especially in today's highly concentrated market. ETFs are supposed to put investing into easy mode, especially for retail investors. Anybody can purchase a basket of securities to diversify their portfolio — just pick a theme, buy the ticker, and wait. While they're definitely a helpful tool for investors, Kantrowitz urges caution. "By buying an index fund today, compared to 15 or 20 years ago, you've got a lot more idiosyncratic company-specific risk today," Kantrowitz told Business Insider. "You think you're buying an index, but you're really just exposed to seven or 10 stocks. If the AI story takes a dip, it doesn't necessarily hit all stocks, but it could really hit those index funds." Indeed, market concentration among the top Big Tech companies is at record highs. According to Apollo's chief economist Torsten Sløk, the top 10 companies in the S&P 500 are trading at a higher valuation than that seen during the dot-com bubble. Investors who buy an S&P 500 fund for diversification are actually getting an over 30% weighting in the Magnificent Seven. Additionally, using sector-specific ETFs to diversify isn't always a good idea either, Kantrowitz added. ETFs can be susceptible to tracking error, meaning that the fund doesn't precisely follow the underlying index. SEC rules stipulate that no more than 25% of a diversified fund's assets can be allocated to a single stock, which often forces sector ETFs to cap their exposure to dominant names like Apple or Nvidia, even if those companies make up a much larger share of the actual index. For example, in 2024 the S&P 500 technology sector posted a 38% gain. However, the Technology Select SPDR Fund (XLK) only rose 25%. This pattern is especially prominent in sectors with high concentration, which include communications services and consumer discretionary, Kantrowitz said. "Because there are concentration issues and weighting schemes in these ETFs, you think you're buying something and it's actually not what you're getting," he said. That doesn't mean all ETFs are prone to this risk. Lean more into active management, Kantrowitz advises, including ETFs and mutual funds, as well as individual stock picks. Kantrowitz also isn't writing off large-cap quality stocks, such as some of the Big Tech names that have dominated the index. But if you're looking for diversification, it's a good idea to look outside of traditional index ETFs.
Yahoo
7 days ago
- Business
- Yahoo
Why this strategist sees a 6–8% market climb over the next year
US stocks (^DJI, ^GSPC, ^IXIC) have rallied from Trump's "Liberation Day" lows, but Piper Sandler chief investment strategist Michael Kantrowitz says the market has even more room to run despite looming uncertainties. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. Michael, it is great to see you, sir, as always. But let's start off, um, maybe bigger picture, Michael. You know, you look at this market, big move off that April low, impressive the mood and the speed of it, Michael. Where do you stand on this market here? When you're talking to clients, are you telling them, listen, we're we're going to move still higher? Well, I think over over time, yeah, over the next 12 months, I I think we could see the market still go up another 6 to 8 percent. Uh, I think it's important to recognize or acknowledge that the last three months moves was largely, uh, pricing out of macro risk, whether you look at PEs, which have rebounded, or credit spreads, which have compressed, it's been a very macro, uh, led tape where kind of a rising tide has lifted all boats. Going forward, we should not expect, uh, we should not extrapolate this or expect, you know, this sustained the same level of returns, of course, every three months. And we'll probably see earnings matter a lot more for stocks than macro, uh, in in the coming months. What about the Trump tariffs, uh, Michael? You know, we were just talking about that. Trump's speaking for a while today. I think nearly two hours, making more news on tariffs. We had some market pros and strategists on the show this week, Michael. And they they looked at those headlines, and honestly, they they kind of said, you know what? Got to take a deep breath. I mean, literally take a deep breath and and just realize that, in their words, it's just it's just a Trump tactic. It's a Trump negotiating strategy. Do you agree with that, Michael, or is that maybe too complacent? Well, I think you you have to somewhat agree with that because that's been the the recent pattern. Uh, I don't think we're going back anywhere near levels we saw earlier this year. The market's already been shocked by tariffs. Uh, I'm not surprised we're obviously still debating it because it's still very much a real issue. I just think it's more, uh, of a of a risk to the downside for specific companies or specific industries rather than systemically a downside risk to the economy or markets. Connectez-vous pour accéder à votre portefeuille
Yahoo
7 days ago
- Business
- Yahoo
Why this strategist sees a 6–8% market climb over the next year
US stocks (^DJI, ^GSPC, ^IXIC) have rallied from Trump's "Liberation Day" lows, but Piper Sandler chief investment strategist Michael Kantrowitz says the market has even more room to run despite looming uncertainties. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
09-07-2025
- Business
- CNBC
Wells Fargo's Darrell Cronk: We see one rate cut in 2025 and one in 2026
Darrell Cronk, chief investment officer at Wells Fargo Wealth and Investment Management, and Michael Kantrowitz, chief investment strategist at Piper Sandler, join CNBC's 'The Exchange' to discuss whether the Fed should cut rates, the pressure on the Fed to ease rates, and more.
CNBC
03-07-2025
- Business
- CNBC
Kelly Evans: The jobs market "recalibrates"
It's clear after today's jobs number that this is not an economy shedding jobs as if we were entering a recession, or anything like that. Not only did we just put up one of the best readings of the past year--adding 147,000 jobs last month--but the weekly filings of new jobless claims dropped as well, to historically low levels. But let's also not pretend that all is well right now. From the "deep malaise" in big tech, where Microsoft is laying off another 9,000 employees, to the downturn in hiring of new college grads, some things in the labor market are clearly amiss. The number of "discouraged workers" soared by a quarter-million last month, the Labor Department noted in its report today. The number of job cuts in the first half of the year was the highest since Covid, according to Challenger Grey. ADP reported flat-out job in the private sector last month, we learned yesterday. So what gives? "I think this is a 'recalibration,' more than a recession," Evan Sohn, the CEO of workforce intelligence company Aura, told us. The DOGE cuts, tariffs, economic uncertainty, and the growing deployment of AI are all factors that he, Challenger, and others have cited for the labor market's turmoil lately. That's exactly how Michael Kantrowitz, the chief investment strategist at Piper Sandler, sees things, too. Even if jobs growth goes he wouldn't take that as a knee-jerk indicator of an economic slowdown, he told us yesterday. There are just too many structural changes going on in the labor force right now. And in fact, a weaker labor market should prod the Federal Reserve to lower interest rates sooner--which could boost the economy and the markets if no real slowdown is taking place. In other words, we are in a sort of "win-win" situation right now, where slower job growth means Fed cuts that could lift stocks, but faster job growth--as we saw this morning--means a resilient economy that should also support stocks. Which is how you get a market that has not just recouped its deep losses from earlier this year, but is now making new highs day after day. We'll see if that changes after the potential snapback of all of those "reciprocal" tariffs next Wednesday. See you on Monday, and Happy Fourth! Kelly Twitter: @KellyCNBC Instagram: @realkellyevans
