|
Proprietary Data Insights Top Software Application Stock Searches This Month
|
|||||||||||||||||||||
Biden Or Trump: Who’s Better For The Stock Market? |
At the end of today’s email, we give our politically-fueled two cents as they relate to how the stock market will do in 2024. Right after those thoughts, there’s a link to give feedback to The Juice. Use it to tell us how you think the November elections will impact stocks. Irrespective of the old man who occupies the White House come 2025, we see two big trends for 2024 and beyond. One continuing and another (re)emerging:
To illustrate the first point, let’s use two of our biggest stock picks of 2022 and 2023, that, as of mid-November, continued to crush it with huge 81% and 103% YTD gains. Don’t look now, but, as of mid-December, Uber Technologies (UBER) and DoorDash (DASH) are up 146% and 110% YTD. Yes, you read that right. Since we last checked in on UBER and DASH, they’ve tacked on respective gains of around 19% and 13%. Thanks, in part, to the announcement that UBER will become part of the S&P 500, starting on December 18th, and DASH’s addition to the Nasdaq 100, also effective on December 18th. Lots of index funds have to buy these stocks now, which helps explain some of the upside. Though, not all. Everybody knows about Apple (AAPL), Amazon.com (AMZN), Meta Platforms (META), Nvidia (NVDA), Tesla (TSLA), Microsoft (MSFT) and Google (GOOG). A mix of AI plays, household names and well-positioned companies in their spaces. Take Tesla, for example, who’s better positioned to transition to EVs? A well-established EV pure play or a Ford (F) or General Motors (GM) who just lost a labor battle? The market looks forward. And it buys the leaders in mindshare with consumers and emerging areas, be it AI, EVs or something else. All of the above names have dominated and will continue to dominate the market (though, maybe not quite as impressively) going forward. For the record, over the last month, UBER and DASH have trounced the returns of Magnificent Seven. Some of the seven have even lost ground recently. YTD, only NVDA and META have outperformed UBER and DASH, with their upsides of 226% and 160%. TSLA outperformed DASH, but not UBER so far with its roughly 122% gain. We didn’t need an index addition to tell us that UBER and DASH are the real thing. And that’s what forward-looking investors want. The real thing. Companies that dominate consumer markets by leveraging tech the way Starbucks (SBUX) — another one of our top stock suggestions — does via its mobile and digital platforms. These are the types of stocks to buy and hold for the long-term. To the second point, if interest rates come down, as we expect them to. Though, there’s no guarantee. But we’ll just jump on the consensus bandwagon and say they do. If they do, we think that not only mortgage interest rates, but deposit account, treasury bill and other savings-related interest rates will as well. If so, this could mean a return to dividend-paying stocks. After a solid 2022, dividend stocks fell out of favor in 2023, thanks not only solid savings rates, but lackluster increases from the companies paying dividends. As Morningstar noted in July: The Morningstar Dividend Composite Index—a broad measure of dividend stock performance—has risen 7.7% through July. That’s less than half of the wider market’s 20.6% gain as measured by the Morningstar US Market Index. Meanwhile, the Morningstar High Dividend Yield Index, which focuses on the higher-yielding half of the U.S. dividend-paying market, is up just 3.9% for the period. In addition, the Morningstar Dividend Leaders Index—a collection of the 100 highest-yielding stocks with a consistent history of paying their dividends and a demonstrated ability to sustain their dividends going forward—has mostly flatlined, up only 0.9% for the same period. And as Kiplinger observed in September: No question, U.S. cash dividends are in a rut, with 2023 increases running at a 4% pace – half last year’s rate. Cash-rich and profitable companies including Apple (AAPL) and lithium king Albemarle (ALB), despite its 29 straight years of hikes, only granted quarterly boosts of 1 cent and half a cent, respectively … Mark Barnes, of FTSE Russell, notes that 18 months ago, banks and money market funds paid zero or barely above, so a 2% dividend was decent. Now cash is competition, with risk-free yields exceeding those of nearly all common and preferred stocks, as well as corporate bonds. What goes around comes around. If and when the interest rate environment changes, we think there’s a return to dividend-paying and, specifically dividend growth stocks. Not only because they pay dividends, but because many companies with relatively stable dividends and high yields (which can indicate relative instability) are also household names. For example, while Ford scares us as a long-term play after the aforementioned labor deal and its clunky and uneven, if not impossibly difficult EV transition, we love the yield, which currently sits at 5.4%. But you always have to balance yield with stock price (if it drops, yield rises, which is nice until it’s not nice anymore) and the possibility of a dividend cut (the not nice anymore part). Under $11 and closer to $10, we might like F to collect the dividend (if we’re confident in its stability) and collect covered call income. We’ll see about that. The Bottom Line: We think the market crushes it in 2024. No matter what happens with the other thing we’re going to see about. The 2024 Presidential Election. If we can agree on anything, maybe we can agree that, by and large, politicians, particularly at the national level, are all assholes in some way, shape or form. Both guys running for President are too old and a few fries short of a Happy Meal. We deserve more and better choices as a nation. And while one appears weak, the other is considerably more unhinged. So, Biden or Trump? Who’s better for stocks? Probably doesn’t matter beyond a little volatility if things get too uncertain in November. |
|
News & Insights |
Freshly Squeezed |
|
Want to get content like this directly to your inbox? Then we urge you to sign up for our newsletter here |