While GARP is an effective, all-weather style, it can struggle when inflation is accelerating. Year-to-date, GARP names have performed in line with the market. For example, one way to measure this attribute is with a PEG ratio, which divides the P/E of a company by the expected growth rates the lower the PEG ratio, the more attractive the stock. It’s a designation for companies that typically lie between so-called pure value and growth stocks. Value stocks tend to be the cheapest based on metrics like price-to-book or price-to-earnings, while growth stocks experience the fastest earnings growth. To get there, investors should look to an investment style known as GARP - growth at a reasonable price. With equity markets continuing to struggle and a lack of viable hedges available, a sensible strategy is to make your portfolio more resilient. The economy will likely slow, making earnings growth harder to come by. Recession fears are now competing with inflation for investors’ attention.
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To see if you can check off all the tips on how to build a solid financial foundation, take a look at “ The 7 Habits of Highly Effective Investors.” You don’t want to be forced to sell off stocks during a downturn. In such an uncertain time, it pays to make sure that you have enough cash or access to liquid investments to cover surprise expenses or loss of income if a recession were to put pressure on your industry. They’ve also come up with alternative investment ideas for where they would spend $10,000 if it fell into their lap: pre-booking 2023 travel to Hong Kong and Macau at current reduced prices, or buying art such as California plein air oil paintings.įor investors who like to invest using exchange-traded funds, Bloomberg Intelligence ETF analyst James Seyffart provides suggestions for rough proxies for the ideas laid out by the experts.
Some say investors should seek out US consumer companies, while others point to areas such as European aerospace and defense firms. Our panelists have some competing ideas about which types of stocks are set up to perform well in an environment of relatively high inflation and slowing economic growth. In the face of such gloom, we turned to five veteran investment advisers to ask where they see pockets of opportunity. To say that investors face daunting challenges today is an understatement. Soaring inflation and rising interest rates have dealt a powerful punch to stock market valuations, recession is a word you hear more on more people’s lips and Russia’s invasion of Ukraine is entering an even more uncertain phase. Get our new personal finance newsletter delivered weekly to your inbox.
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