Six investing veterans pick their spots for 2019.
Investors can be forgiven for thinking that their mattress—or maybe a money-market fund—isn't such a bad place to stash cash. Global trade tensions and White House turmoil helped fuel market jitters in the year's final quarter, when the S&P 500 tumbled 14% from its September high. For the year, the index closed down 4.4%.
Retreating from a volatile market into cash, though, is a famously losing strategy. Investors who try to time the market often miss out on sharp gains that can follow down periods. Those who maintain a discipline in how they approach the markets, meanwhile, can pounce on promising stocks at lower valuations and potentially profit from others' panic.
Those coolheaded investors are the type of experts who share their views with Bloomberg each quarter, and true to form, our six panelists—while some still sound defensive notes—see promising pockets of opportunity around the globe. These money managers see potential homes for a $10,000 windfall in industries as diverse as oil and European banks, as well as in battered-down areas ranging from the U.S. to emerging markets.
The recent market swings are a good reminder to start the year with a portfolio checkup. Are you diversified across different industries, asset classes and geographies? Do you have at least three months of expenses socked away in safe investments in an emergency fund? Take a look at "The Seven Habits of Highly Effective Investors" for ideas on how to make sure your portfolio enters 2019 in good shape.
Many of the ideas presented by our experts are at work in the mutual funds or investment portfolios they manage. Bloomberg Intelligence ETF analyst Eric Balchunas highlights exchange-traded funds (ETFs) as a rough way to invest around those ideas, and tallies up how his ETF plays performed last quarter.
Filtering out market noise is hard. That's where our experts can help with solid investing ideas, along with well-reasoned reminders, such as that from panelist Joe Davis of Vanguard to simply "stay calm and carry on."
Head for the Oil Patch
Of the casualties in the 2018's fourth-quarter carnage, energy stocks were some of the worst hit. Even after the recent rebound, the three-month rolling return for the U.S. energy sector as of Jan. 10 was -16% (excluding dividends), while the S&P 500 price return was -6%. The rout has left many of these stocks looking cheap, particularly considering the recent stabilization in crude oil prices.
As of the end of December, the S&P 500 energy sector was trading at a multiple of roughly 1.55 to book value (P/B). That's the lowest since early 2016 and about on par with the trough valuation during the financial crisis. Valuations look even cheaper relative to the broader market. The current P/B represents nearly a 50% discount, the largest since at least 1995...