Latest news with #bearmarket
Globe and Mail
14-07-2025
- Business
- Globe and Mail
The Nasdaq Just Entered a New Bull Market. Is It Too Late to Buy the Invesco QQQ ETF?
Key Points The tech-heavy Nasdaq-100 index plunged into a bear market in April, after President Trump announced his "Liberation Day" tariffs. The index has since recovered and recently set a fresh record high, so a new bull market has officially begun. The Invesco QQQ Trust tracks the performance of the Nasdaq-100, and its stellar track record suggests it's not too late for long-term investors to buy. 10 stocks we like better than Invesco QQQ Trust › The Nasdaq-100 is home to 100 of the largest non-financial companies listed on the Nasdaq stock exchange. It's typically used as a yardstick for the performance of the technology industry because some of its top holdings include powerhouses like Nvidia, Microsoft, and Apple. The Nasdaq-100 plunged into bear market territory in April after losing 23% of its peak value, driven by President Donald Trump's "Liberation Day" tariffs, which threatened to derail the global economy. But most of America's trading partners are now at the negotiating table, so the president placed his most aggressive import penalties on hold. As a result, the index has recovered and is now trading at a new record high, which means a fresh bull market is underway. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » The Invesco QQQ Trust (NASDAQ: QQQ) is an exchange-traded fund (ETF) that tracks the performance of the Nasdaq-100, so it offers a simple way for investors to own a slice of the entire index. Did investors miss their opportunity to buy the dip earlier this year, or is more upside on the way? Read on. The "Magnificent Seven" pulled the Nasdaq out of its slump The " Magnificent Seven" is a group of companies that lead different segments of the technology industry. They earned the name for their incredible size and their ability to consistently outperform the rest of the stock market. The seven companies represent an eye-popping 42.1% of the Nasdaq-100 index and, by extension, the Invesco QQQ ETF: Stock Invesco ETF Portfolio Weighting Nvidia 9.12% Microsoft 8.68% Apple 7.55% Amazon 5.55% Alphabet 4.80% Meta Platforms 3.68% Tesla 2.73% Data source: Invesco. Portfolio weightings are accurate as of July 2, 2025, and are subject to change. The Nasdaq-100 set its bear-market bottom on April 8, and it has since climbed by almost 34%. But the Magnificent Seven stocks have delivered average and median returns of 35% over the same period. Data by YCharts. Nvidia and Microsoft are the only two stocks in the Magnificent Seven to set a new record high since April, so the group might still have room for upside from here. Most of the seven companies also have solid fundamentals that support further gains, mainly because they are leaders in different areas of the artificial intelligence (AI) race. Nvidia supplies graphics processing units (GPUs) for data centers, which are the most powerful chips for developing AI. Microsoft, on the other hand, is successfully commercializing an advanced AI assistant called Copilot, and the company also offers a growing portfolio of AI services through its Azure cloud platform. Amazon and Alphabet are Microsoft's biggest competitors in the AI cloud space, and they have each developed their own AI assistants, too. Then there is Meta Platforms, which created the Llama open-source large language models (LLMs), in addition to its own chatbot called Meta AI. But the Invesco ETF is home to several other prominent AI companies outside of the Magnificent Seven. In the semiconductor space, there are Broadcom, Advanced Micro Devices, and Micron Technology. Then on the AI software side, the ETF holds Palantir Technologies, Palo Alto Networks, CrowdStrike, Atlassian, and Datadog. This could be a great time to buy the Invesco QQQ ETF The Nasdaq-100 has experienced seven bear markets since the Invesco QQQ ETF was established in 1999. Nevertheless, the ETF has still delivered a compound annual return of 10.1% over the last 26 years, which highlights the benefits of taking a long-term approach and holding through volatility. The ETF has also generated an accelerated annual return of 18.7% over the last 10 years, thanks to the proliferation of technologies like smartphones, advanced semiconductors, cloud computing, enterprise software, and now, AI. It's difficult to predict which companies will unlock the most value from AI over the long run because the industry is moving so fast, having spawned several trillion-dollar opportunities already. In 2023, Bloomberg estimated that generative AI would become a $1.3 trillion industry by 2032. But in May of this year, Salesforce CEO Mark Benioff predicted agentic AI -- which wasn't even a mainstream concept until a few months ago -- could become a $12 trillion market on its own. In the hardware space, Nvidia CEO Jensen Huang thinks data center operators will be spending $1 trillion per year to build AI infrastructure by 2028. Investors who buy the Invesco QQQ ETF won't have to separate the winners from the losers, because they will own a slice of the biggest players in each segment of the AI industry. This will probably be a very effective strategy, so even though the ETF just set a new record high, it's likely still a great buy for anyone willing to hold onto it for the next five to 10 years (or more). Should you invest $1,000 in Invesco QQQ Trust right now? Before you buy stock in Invesco QQQ Trust, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $976,677!* Now, it's worth noting Stock Advisor 's total average return is1,060% — a market-crushing outperformance compared to180%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 7, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Atlassian, CrowdStrike, Datadog, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, Salesforce, and Tesla. The Motley Fool recommends Broadcom, Nasdaq, and Palo Alto Networks and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Forbes
08-07-2025
- Business
- Forbes
Quietly Profit From Wall Street's Latest Panic With These Bonds
Recession or bear market conditions Maybe you've heard some variation on this fear in the last few years: A lot of American companies are going to default on their debts. I know I have. Frankly, pushing back on it was among the most contrarian calls I've made during my investment career. And it was tough to stick with. I've been in plenty of conversations with bankers, hedge fund managers and other Wall Street types who thought a default wave was right around the corner. But it wasn't. And it isn't now—even though the fear remains. And we're going to tap this ongoing misconception for a cheap (but getting less cheap every day) 8.6% dividend in just a second. What I think many people tend to forget about this default panic is that it was once so prevalent that, in 2022 and most of 2023, it caused the market to heavily mark down high-yield corporate bonds (a.k.a. junk bonds). It never came to pass. As a result, we saw corporate bonds surge at the end of 2023, as you can see in the benchmark SPDR Bloomberg High Yield Bond ETF (JNK) above. And that surge in JNK has kept rolling, despite the April tariff selloff. That's put longer-term investors in a great spot. Junk? Not to them! Not only did defaults not rise—they stayed in what I consider the 'safe zone,' helping fuel demand for high-yield bonds. Delinquency Rates Since COVID, we've seen business-loan delinquencies at around 1%, rising to around 1.3% over the last year. That rise is pretty much insignificant, historically speaking. Defaults were lower in the mid-2010s, but interest rates were near zero then. Yet in the last few years, rates soared, then started to move lower—and corporate defaults still stayed relatively low. And if you look at just the default rate for speculative-grade bonds—the worst-rated and most uncertain corner of the corporate-bond universe—defaults have been falling for a while now. Analysts expect them to fall even further throughout the rest of the year. That's in large part due to an expected decline in rates, strong corporate profits and a surprisingly resilient US economy. That positive outlook has, in turn, helped keep demand for high-yield corporates so high that they've spent most of 2025 outperforming the S&P 500—a rare feat indeed. And they've done it while showing almost no volatility. With the stock market now fully recovered and starting to outperform high-yield bonds, it's only natural to worry if this trade has gotten a bit crowded. But some new data from the New York Federal Reserve suggests that, in fact, risk in the corporate-bond market is near an all-time low. Distressed Index The Corporate Bond Market Distress Index (CMDI) isn't well-known among most investors, but insiders know it as a reliable indicator of bond weakness. After a recent small spike due to the tariffs, the CMDI is falling again and is at a historic low as of this writing. The New York Fed says this 'improvement in market functioning is reflected in both the investment-grade and the high-yield CMDI sectors.' In other words, both low-risk and high-risk bonds are in a much healthier position than they used to be. Many fund managers have known this for a while, so they've been buying up corporate bonds. Wealth managers have realized this, too, and have jumped in—helping shrink discounts for corporate-bond closed-end funds (CEFs). Today, bond CEFs have a 4.1% average discount to net asset value (NAV, or the value of their underlying portfolios) far below their average of around 7.5%. A (Still) Cheap High-Yield Bond Fund Paying 8.6% Some high-yield bond CEFs are bucking the trend with wider discounts. One is the Western Asset Inflation-Linked Opportunities & Income Fund (WIW), which has a 10% discount that's been narrowing—moving closer to that 7.5% bond CEF average. That narrowing discount isn't the only thing the fund has going for it; with an 8.6% yield and 325 holdings, WIW has two other key strengths: broad diversification and a huge income stream. WIW lowers risks even more than the typical CEF, which will likely shrink its discount further. One factor at play here is the fund's focus on inflation-linked bonds. The vast majority of its holdings (now about 80%) are in TIPS, a kind of US government bond that pays out more income if inflation rises. Now, hang on a second, you might be wondering. What about all of that corporate-bond risk? Exactly. Since WIW only holds about 20% of its portfolio in corporate bonds, it isn't at risk if the corporate bond market suddenly worsens. And if it does worsen, WIW may attract a flood of income investors seeking a safe haven—like US government bonds. That really should already be happening, since WIW's total NAV return (the best measure of management's talents) has been beating the corporate bond market and the S&P 500 in 2025: WIW Beats Bonds and Stocks in 2025 These are a couple of reasons why WIW's discount should shrink further. But even if that doesn't happen, its portfolio value should keep rising as investors look for safety. And if we see a tariff-driven rise in inflation, WIW should benefit again, since its cash flow rises with inflation. As a result, the fund is positioned to rise regardless of how the market moves, yet it trades at a discount more than double the average CEF bond fund! This situation can't last. The fact that it still exists makes WIW a great place to invest while the market catches up—and collect an 8.6% dividend while you wait. Michael Foster is the Lead Research Analyst for Contrarian Outlook. For more great income ideas, click here for our latest report 'Indestructible Income: 5 Bargain Funds with Steady 10% Dividends.' Disclosure: none
Yahoo
03-07-2025
- Business
- Yahoo
4 reasons forecasters are bullish on the market's smallest stocks after years of underperformance
Forecasters are growing bullish on small-cap stocks, one of the weakest areas of the market in 2025. The Russell 2000 is down just under 1% this year, underperforming the S&P 500. There are a handful of reasons market pros think bigger returns for small caps are coming. Stock forecasters can't stop talking about the market's smallest and least impressive stocks. They're referring to the small-cap sector, an area of the stock market that strategists have been bullish on, despite underperforming the overall market in recent years. The Russell 2000, which slipped into a bear market over the first half of the year, has recouped most of its losses in recent months. But the index of small-cap US firms is still down about 1% year-to-date, lagging the S&P 500's 5% gain. On a five-year horizon, the Russell 2000 has yielded a 53% return — underwhelming compared to the S&P 500's 98% climb. But there are a few reasons some forecasters remain bullish on the sector. Here's what strategists are saying. There's reason to believe that more small, private companies are gearing up to go public in the near term, according to analysts at Janus Henderson. Small private firms have typically relied on private equity investors to get fresh capital, but many private loans are structured over a 5- to 7-year time horizon, analysts said, and companies will likely be looking for new sources of money once the debt matures. Interest rates are also higher than they were in the past decade, which could make it more challenging to attract private investors, they added. "That's why going public could become a more attractive path for companies needing refinancing or private equity sponsors looking for an exit," analysts said, pointing to the surge in IPOs over the first half of 2025 compared to the prior year. "A reopening IPO market typically benefits the entire small-cap asset class as quality companies tend to go public first and generate positive momentum across the space." Small-cap stocks have historically performed well after bear markets, according to an analysis from Royce Investment Partners. The Russell 2000 fell into a bear market earlier this year, falling 21% from January to April 8, and historically, stocks in the index have seen healthy growth following a trough. In 2020, the Russell 2000 plunged more than 30% peak-to-trough amid the broader coronavirus-fueled sell-off, but value and growth stocks in the index more than doubled in value in the year following the event, according to Francis Gannon, the co-chief investment officer at Royce. Over the last 20 years, small-caps gained an average 60% in the year following a bear market, Gannon added in a note. Valuations in the sector also remain attractive. "We see the small-cap market as fundamentally healthy. The disconnect between large caps and small caps reflects market sentiment rather than underlying business performance," analysts at Janus Henderson said. According to Jill Hall, the head of US small and mid-cap strategy at Bank of America, small-cap stocks should also benefit from a handful of bullish themes unfolding in the broader economy. Here are some of the tailwinds Hall sees: Reshoring. The economy moving more of its manufacturing activity back to the US could be a boon for small public companies. In a note last year, Morgan Stanley estimated that restoring could unlock as much as $10 trillion in value for the US economy over the next decade. Capital expenditures. The US is in the midst of a big capex cycle, which could also benefit small firms, Hall suggested. US private fixed investment clocked in around $4.2 trillion in the first quarter of 2024, according to data from the Bureau of Economic Analysis De-globalization. The US decreasing its reliance on supply chains abroad could also support small domestic firms. "Overall, I do think that over the long-term, there is still greater potential for outperformance of small-caps, given where valuations are, and given some of the multi-year themes," Hall said, speaking to CNBC this week. The Trump administration's push for an America-first economy should also benefit small public firms, according to Peter Kraus, the CEO of the asset manager Aperture Investors. Kraus pointed to the GOP tax and spending bill, which includes proposals like extending Trump's 2017 tax cuts and bigger tax breaks for some businesses and workers. "Congress is going to focus on the domestic economy, and I do think domestically oriented companies, principally mid-cap and small-cap companies, are going to benefit. And they've been the laggards in the last five years," Kraus said, speaking to CNBC on Tuesday. Read the original article on Business Insider Sign in to access your portfolio
Yahoo
03-07-2025
- Business
- Yahoo
4 reasons forecasters are bullish on the market's smallest stocks after years of underperformance
Forecasters are growing bullish on small-cap stocks, one of the weakest areas of the market in 2025. The Russell 2000 is down just under 1% this year, underperforming the S&P 500. There are a handful of reasons market pros think bigger returns for small caps are coming. Stock forecasters can't stop talking about the market's smallest and least impressive stocks. They're referring to the small-cap sector, an area of the stock market that strategists have been bullish on, despite underperforming the overall market in recent years. The Russell 2000, which slipped into a bear market over the first half of the year, has recouped most of its losses in recent months. But the index of small-cap US firms is still down about 1% year-to-date, lagging the S&P 500's 5% gain. On a five-year horizon, the Russell 2000 has yielded a 53% return — underwhelming compared to the S&P 500's 98% climb. But there are a few reasons some forecasters remain bullish on the sector. Here's what strategists are saying. There's reason to believe that more small, private companies are gearing up to go public in the near term, according to analysts at Janus Henderson. Small private firms have typically relied on private equity investors to get fresh capital, but many private loans are structured over a 5- to 7-year time horizon, analysts said, and companies will likely be looking for new sources of money once the debt matures. Interest rates are also higher than they were in the past decade, which could make it more challenging to attract private investors, they added. "That's why going public could become a more attractive path for companies needing refinancing or private equity sponsors looking for an exit," analysts said, pointing to the surge in IPOs over the first half of 2025 compared to the prior year. "A reopening IPO market typically benefits the entire small-cap asset class as quality companies tend to go public first and generate positive momentum across the space." Small-cap stocks have historically performed well after bear markets, according to an analysis from Royce Investment Partners. The Russell 2000 fell into a bear market earlier this year, falling 21% from January to April 8, and historically, stocks in the index have seen healthy growth following a trough. In 2020, the Russell 2000 plunged more than 30% peak-to-trough amid the broader coronavirus-fueled sell-off, but value and growth stocks in the index more than doubled in value in the year following the event, according to Francis Gannon, the co-chief investment officer at Royce. Over the last 20 years, small-caps gained an average 60% in the year following a bear market, Gannon added in a note. Valuations in the sector also remain attractive. "We see the small-cap market as fundamentally healthy. The disconnect between large caps and small caps reflects market sentiment rather than underlying business performance," analysts at Janus Henderson said. According to Jill Hall, the head of US small and mid-cap strategy at Bank of America, small-cap stocks should also benefit from a handful of bullish themes unfolding in the broader economy. Here are some of the tailwinds Hall sees: Reshoring. The economy moving more of its manufacturing activity back to the US could be a boon for small public companies. In a note last year, Morgan Stanley estimated that restoring could unlock as much as $10 trillion in value for the US economy over the next decade. Capital expenditures. The US is in the midst of a big capex cycle, which could also benefit small firms, Hall suggested. US private fixed investment clocked in around $4.2 trillion in the first quarter of 2024, according to data from the Bureau of Economic Analysis De-globalization. The US decreasing its reliance on supply chains abroad could also support small domestic firms. "Overall, I do think that over the long-term, there is still greater potential for outperformance of small-caps, given where valuations are, and given some of the multi-year themes," Hall said, speaking to CNBC this week. The Trump administration's push for an America-first economy should also benefit small public firms, according to Peter Kraus, the CEO of the asset manager Aperture Investors. Kraus pointed to the GOP tax and spending bill, which includes proposals like extending Trump's 2017 tax cuts and bigger tax breaks for some businesses and workers. "Congress is going to focus on the domestic economy, and I do think domestically oriented companies, principally mid-cap and small-cap companies, are going to benefit. And they've been the laggards in the last five years," Kraus said, speaking to CNBC on Tuesday. Read the original article on Business Insider 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
Yahoo
02-07-2025
- Business
- Yahoo
How Volatility Indexes Can Help Investors Gauge Bear Market Bottoms
Investors of all types prepare for potential pullbacks differently than they prepare for bullishness. Namely, they're willing to pay a premium for options, which are an effective means of playing defense. This demand for defensive option positions, however, often peaks right as the market's making a buy-worthy bottom. 10 stocks we like better than CBOE S&P 500 Volatility Index › Most experienced investors will agree that timing the market is difficult to do very well for very long. Eventually, you're just going to be thrown an unexpected curveball that unwinds all of your success. Not even most pros can do it with any consistency. Standard & Poor's reports that in any given year, on average, more than three-fourths of actively managed large-cap mutual funds available to U.S. investors underperform their S&P 500 (SNPINDEX: ^GSPC) benchmark. That's why buying and holding index funds into and through bear markets is such a popular strategy -- it's the one that's most likely to yield the biggest net returns. What if, however, investors just aren't using the right market-timing tools the right way? Well, this may be the case. The so-called volatility indexes actually offer reliable hints of when the stock market is near or at a buy-worthy low. You just need to understand how to read these clues, and appreciate that they're only an odds-making tool that isn't laser-precise. Here's what you need to know. A volatility index is simply a measure of prices for a basket of put and call options. Both call and put option prices tend to rise in anticipation of near-term volatility, so when a volatility index rises, it's a hint that investors -- professional and individual alike -- expect the market to become more erratic in the foreseeable future. And there are two key ones: the S&P 500 Volatility Index, or VIX, and the Nasdaq Volatility Index, or VXN. (The underlying stock options used to determine each of their ever-changing values is pretty clear.) Except, that's not quite how the use of either volatility index has evolved over the last few decades. When market volatility is working bullishly in stocks' favor, the VIX and VXN tend to remain at low levels. Curiously, as it turns out, they only tend to rise to unusually high levels when investors are fearful of a market pullback, and are hedging against that pullback using options. That's why the S&P 500 Volatility Index has since come to be known as the fear gauge. And this nuance makes for a powerful market-timing tool. See, the VXN and VIX tend to reach unusually high levels when investor fear is peaking at a major market low. As the old adage goes, a picture is worth a thousand words. Three pictures are worth even more. Take a look at the first image below, comparing the S&P 500 to the VIX between 1997 and 1999. This period, of course, includes the sizable panic-driven sell-off in July and August of 1998, when Russia's government defaulted on its debts. That development created a ripple effect that swept across the global economy, upending stocks as a result. While it was a terrifying time, as you can see, it was also a short-lived setback. Also note how the VIX was behaving around that same time. In July of that year, the VIX reached a record high, suggesting that almost all would-be sellers were already flushed out. We saw similar action between 2000 and 2003, when the bear market following the dot-com craze of the late-1990s took hold and wouldn't let go. The VIX finally jumped to a multiyear high in mid-2002, and the S&P 500 started laying the groundwork for a reversal of the then-bear market shortly thereafter. And the Nasdaq's volatility index has been just as telling. Although the Nasdaq Composite (NASDAQINDEX: ^IXIC) remained in bear market mode for the entirety of 2022, note that its volatility index's upward thrusts that year didn't get progressively higher. It was a subtle hint that the selling wasn't going to persist for nearly as long as it felt like it might at the time. And the VXN was also particularly telling in April this year, soaring to a multiyear high at the same time the composite itself was making a major low. What gives? These charts underscore the argument that most traders just aren't great at short-term market-timing. They were making their most bearish and defensive option-based bets right before or right at the market's major capitulations. While it's clearly capable of being a powerful market-timing tool, you must understand the big downside of using the volatility indexes in this manner. That's the fact that it requires some subjective interpretation. See, there is no absolute VIX or VXN level that's "too high." The 40 mark seems to be one the VXN regularly reaches at buy-worthy bottoms, while the S&P 500 often makes key lows when the VIX gets near 30. There are some huge exceptions to these numbers, though, like 2009's low. The VIX jumped to nearly 80 before that bottom was in. It also jumped months before that. While most of the bear market was already in the rearview mirror by that point, that could have been a scary few more months to simply sit on stocks. As mentioned earlier, volatility indexes aren't unfailingly precise. They'll probably never flag the exact market low, in fact, and even when they do, that won't become clear until after the fact. In most instances you'll be making some sort of judgment call on a volatility index, taking a leap of faith as a result. Nevertheless, the Nasdaq Volatility Index as well as the S&P 500 Volatility Index are both powerful additions to an investor's odds-making toolkit. That is to say, if you understand that a clear spike to an unusually high level is often seen at points of capitulation, the VIX and VXN can certainly help confirm other clues that a sell-off has run most -- if not all -- of its course. And when it comes to investing, even gaining a small edge is a pretty big deal. Before you buy stock in CBOE S&P 500 Volatility Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and CBOE S&P 500 Volatility Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $722,181!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $968,402!* Now, it's worth noting Stock Advisor's total average return is 1,069% — a market-crushing outperformance compared to 177% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. How Volatility Indexes Can Help Investors Gauge Bear Market Bottoms was originally published by The Motley Fool
