2 months ago • 1 min
With inflation easing way off and the economy expected to hold its own, Goldman Sachs says big-picture macro conditions might finally take a back seat in 2024. And that’ll put company-specific factors back in the driver’s seat. More simply: this could be prime time for savvy stock-pickers to get down to the brass tacks of company fundamentals and snag some standout returns.
Goldman’s analysts have been busy crunching numbers in search of the best opportunities in Europe (but to be fair, it’s reasonable to expect similar results in other regions). They’ve looked at the extent to which stocks in a sector move in sync (i.e. your pairwise correlation) versus the extent to which they just do their own thing (i.e. your intra-sector return dispersion).
Low correlation (that is, when stocks move independently) plus high dispersion (when they have a wide range of performance among them) equals a stock-picker’s paradise.
So where should the stock-savvy be casting their lines if they want to reel in the big one? The numbers point toward telecoms, healthcare, industrial goods and services, travel and leisure, and tech.
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