'It's really easy to navigate' this stock market, says a BofA star strategist. Here's what she says to do

Dow Jones2021-09-23

Head of U.S. equity and quantitative strategy at Bank of America, Savita Subramanian offered her best strategy for navigating financial markets that have seemed topsy-turvy in recent weeks as the U.S. economy attempts to mount a sustained recovery from COVID-19.

"I think it is really easy to navigate these markets -- and I'm going to tell you how," Subramanian said on CNBC Wednesday afternoon, following a closely watched rate decision by the Federal Reserve.

The BofA strategist said the Fed has created an environment in which assets boasting inflation-protected yields are the most desirable for investors within equities.

She pointed to small-capitalization stocks as an area where investors could identify such assets, which would benefit from a solid U.S. economic recovery and offer consistent yields at a comparatively attractive price.

She said that small-caps are trading at a lower valuation compared with large-caps, so you get "more earnings yield for the same price."

Within that area, she pegged energy and financials, which incidentally were big contributors to Wednesday's gains, as solid plays because they "benefit from inflation rather than being hurt."

The S&P 500's energy sector surged 3.2% on Wednesday and financials soared 1.6%. Overall, the S&P 500 index and the Dow Jones Industrial Average rose 1% on Wednesday for the best one-day gain for the benchmarks in about two months. The technology-laden Nasdaq Composite Index also closed up 1% for its best day since Aug. 27.

Meanwhile, small-capitalization Russell 2000 index rose 1.5% and posted its best daily gain since Aug. 27.

On Wednesday, the Federal Reserve signaled that it is nearing a tapering announcement for its bond-buying program and might even move up its timetable for raising interest rates to 2022, reflecting a strong conviction the economy is on the path to full recovery.

The Fed maintained its forecast that inflation would fade back toward 2.2% by next year. Meanwhile, the central bank expects the rate of inflation to top out around 4.2% in 2021, according to its new projections.

However, many economists are doubtful inflation will fall as quickly as Fed officials expect and even some senior officials at the central bank are skeptical.

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Comments

  • koolgal
    2021-09-25
    koolgal
    It is never easy to trade the market.  If it is that easy everybody would be doing so. Even the financial gurus get it wrong sometimes! It is up to the individual investor to find his risk to reward comfort zone and trade accordingly. ??
    • koolgal
      Good advice.  Thanks for sharing ?????
    • RDPD富爸穷爸
      Trading is never easy. Investment (buy and hold) have a better win rate if you own fundamentally good companies like Warren Buffett
    • Wayneqq
      Trading is easy if you are not concern about losing… it will just be gambling, bet on anything and hope for the best… trading to gain is most difficult… there is a lot of work involved
    • koolgal
      Thanks ??
    • 滚股怪
      You are right , i agree
  • HENRYCSC
    2021-09-23
    HENRYCSC
    [LOL] 
  • DragonKC
    2021-09-23
    DragonKC
    Ha,  when stock market just recover, very fast talk about earning.  Few days ago when market down,  talk about correction down 10% to 20%. All these strategists analysis are a joke to me. 
    • LimLS
      Yes, we are better off not listening to them. They are just trying to earn their salary by throwing sales pitches to the public, based on what agenda their banks are pushing for.
    • bernardtayet
      Read for information but don't take it seriously. Make our own decisions.
      Agreed with what you said.
  • Abbas99m
    2021-09-23
    Abbas99m
    Woww
  • Lestersaul
    2021-09-23
    Lestersaul
    indians... [噴血] 
  • ShadowBan
    2021-09-23
    ShadowBan
    hmm
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