June 18, 2024

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How the market’s forgotten stocks could lead a ‘once-in-a-generation’ buying opportunity

2 min read

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  • A once-in-a-generation opportunity is coming for the stock market, according to investment chief Richard Bernstein.

  • That’s because profits are about to accelerate for companies throughout the stock market.

  • It could usher in a decade of sagging returns for current market leaders, and huge gains for the rest of the market.

Brace for a big investing opportunity that’s about to come for stocks — and not in an area of the market investors may be expecting.

That’s according to Richard Bernstein, the CIO of Richard Bernstein Advisors, a $16 billion asset manager.

He argues that while the Magnificent Seven mega-cap firms have dominated the S&P 500’s gains in 2023, less high-profile stocks are now primed to see big returns over the next decade.

That coming pendulum swing in market leadership is a “once-in-a-generation” buying opportunity brewing among forgotten and under-loved areas of the market, Bernstein says. Speaking with Insider, Bernstein said he sees it similar to a period like the 2000s, when the biggest leaders in the S&P 500 shed value while underdog sectors like energy and emerging markets saw “monster returns.”

“Despite profits growth becoming more abundant, investors generally continue to focus on the so-called Magnificent 7 stocks. Such narrow leadership seems totally unjustified and their extreme valuations suggest a once-in-a-generation investment opportunity in virtually anything other than those 7 stocks,” he wrote in a note this week.

So what makes this time different from other periods of changing market leadership?

Bernstein — who was previously the chief investment strategist at Merrill Lynch — says his expectation for a stock boom isn’t to be mistaken with something like the two years of the pandemic market rally, which featured narrow leadership by so-called reopening names, similar to what’s now happening with the Magnificent 7. His thesis hinges on a broader swath of the market getting a lift by a resilient economy and…

2023-11-04 16:15:01

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