The Outpost is a comprehensive collection of curated artificial intelligence software tools that cater to the needs of small business owners, bloggers, artists, musicians, entrepreneurs, marketers, writers, and researchers.
© 2024 TheOutpost.AI All rights reserved
Curated by THEOUTPOST
On July 17, 2024
2 Sources
[1]
1 Vanguard ETF That Could Soar 41.5% in the Remainder of 2024, According to a Select Wall Street Analyst
Wall Street doesn't always get things right, but Tom Lee from Fundstrat Global Advisors is one analyst with a hot hand right now. He predicted the S&P 500 index would close above 4,750 in 2023, and it ended the year at 4,769. He also entered 2024 with an S&P index target of 5,200, which was the highest on Wall Street at the time, and the index blew past that level within the first three months. Lee also predicted the Russell 2000 could soar 50% in 2024. This index is home to approximately 2,000 of the smallest listed stocks in the U.S., with the largest company in the index worth just $53 billion. Lee cites valuations and the potential for lower interest rates as key reasons for his prediction. The Russell 2000 had a sluggish first half of 2024, so it will have to climb 41.5% between now and the end of the year to meet Lee's forecast. The Vanguard Russell 2000 ETF (NASDAQ: VTWO) closely tracks the performance of the index, so it's a simple way for investors to capture that gain if he turns out to be right. The Vanguard Russell 2000 ETF is a great way to invest in small caps Thanks to the meteoric rise of trillion-dollar giants like Nvidia, technology is the largest sector in the S&P 500, with a weighting of 30%. The Russell 2000 is a little more balanced -- the industrial sector has the largest weighting at 19%, followed by healthcare at 15.2% and financials at 14.8%. The top-10 holdings in the Vanguard Russell 2000 ETF make up just 5.2% of its total value, so its performance isn't beholden to a mere handful of stocks: Data source: Vanguard. Portfolio weightings are accurate as of May 31, 2024 and are subject to change. Super Micro stock is up a whopping 218% this year so far. Investors are bullish on the company's role in artificial intelligence (AI), which includes selling networking, server, and storage equipment for the data center. MicroStrategy stock is also having a great year with a 103% gain. It offers a portfolio of software products designed to help businesses extract more value from their data using AI. But the company is also a proxy for Bitcoin, given that it holds around $12.5 billion worth of the cryptocurrency. Carvana stock also roared back to life this year with a 178% return, but it's still down 62% from its all-time high, which was set during the tech frenzy of 2021. The company sells used cars online with a focus on automation using its vending-machine style buildings. Elf Beauty and Abercrombie & Fitch are further examples of consumer companies putting up strong numbers this year. Small companies should benefit from lower interest rates According to the CME Group's FedWatch tracker, the U.S. Federal Reserve will cut interest rates three times before the end of the year (in September, November, and December). In that environment, risk-free assets, like cash deposits and bonds, will be less attractive. This often pushes investors into stocks, instead. That's good news for the overall market but especially positive for small caps. Small companies often borrow money to fuel growth and typically have more floating-rate debt, which is very sensitive to changes in monetary policy. In contrast, the tech giants that dominate the S&P 500 are sitting on billions of dollars in cash. Apple, for example, just announced a $110 billion stock-buyback program, which basically means the company makes so much money that it can't find a better use for it internally. Lower interest rates will drive down borrowing costs for small caps, which means they can take on more debt and potentially drive faster growth. Plus, smaller interest payments will be a direct tailwind for each company's earnings. Lee cites valuations as another reason the Russell 2000 could soar. The index trades at a price-to-earnings (P/E) ratio of 16.9 (excluding companies with negative earnings). The S&P 500 trades at a P/E ratio of 24.3, which makes the Russell look quite attractive by comparison. Of course, the S&P 500 trades at a premium because of the quality of its constituents. Investors will always pay a higher valuation for stocks like Microsoft, Apple, and Nvidia because they're secure organizations with track records of success spanning decades. But if lower rates boost small-cap earnings, the valuation gap could narrow. Here's where things get tricky. Going all the way back to 1988, the Russell 2000 has never recorded an annual gain of 50%. In fact, it consistently underperformed the S&P 500, on average. The federal funds rate was below 1% for most of the last decade, yet the Russell 2000 was up just 85% over that period, compared to a 185% gain in the S&P 500: ^SPX data by YCharts. Plus, the Vanguard Russell 2000 ETF has delivered a compound annual return of 9.9% since its inception in 2010, sharply lagging the 14.5% average annual return of the Vanguard S&P 500 ETF. That 4.6% differential substantially impacted returns when compounded over the last 14 years: Calculations and chart by author. While it's entirely possible for the Russell 2000 to deliver a positive return in the remainder of 2024, history suggests it's extremely unlikely to climb 41.5% to end the year with a 50% gain. With that said, small caps might be a good place for investors to park their money when interest rates begin to fall, so adding the Vanguard Russell 2000 ETF to a balanced portfolio isn't a bad idea. Should you invest $1,000 in Vanguard Russell 2000 ETF right now? Before you buy stock in Vanguard Russell 2000 ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Vanguard Russell 2000 ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $787,026!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Bitcoin, Microsoft, Nvidia, Vanguard S&P 500 ETF, and e.l.f. Beauty. The Motley Fool recommends CME Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
[2]
1 Vanguard ETF That Could Soar 41.5% in the Remainder of 2024, According to a Select Wall Street Analyst | The Motley Fool
Small-cap stocks might be a great place to invest for the rest of 2024 if interest rates fall as expected. Wall Street doesn't always get things right, but Tom Lee from Fundstrat Global Advisors is one analyst with a hot hand right now. He predicted the S&P 500 index would close above 4,750 in 2023, and it ended the year at 4,769. He also entered 2024 with an S&P index target of 5,200, which was the highest on Wall Street at the time, and the index blew past that level within the first three months. Lee also predicted the Russell 2000 could soar 50% in 2024. This index is home to approximately 2,000 of the smallest listed stocks in the U.S., with the largest company in the index worth just $53 billion. Lee cites valuations and the potential for lower interest rates as key reasons for his prediction. The Russell 2000 had a sluggish first half of 2024, so it will have to climb 41.5% between now and the end of the year to meet Lee's forecast. The Vanguard Russell 2000 ETF (VTWO 3.46%) closely tracks the performance of the index, so it's a simple way for investors to capture that gain if he turns out to be right. Thanks to the meteoric rise of trillion-dollar giants like Nvidia, technology is the largest sector in the S&P 500, with a weighting of 30%. The Russell 2000 is a little more balanced -- the industrial sector has the largest weighting at 19%, followed by healthcare at 15.2% and financials at 14.8%. The top-10 holdings in the Vanguard Russell 2000 ETF make up just 5.2% of its total value, so its performance isn't beholden to a mere handful of stocks: Data source: Vanguard. Portfolio weightings are accurate as of May 31, 2024 and are subject to change. Super Micro stock is up a whopping 218% this year so far. Investors are bullish on the company's role in artificial intelligence (AI), which includes selling networking, server, and storage equipment for the data center. MicroStrategy stock is also having a great year with a 103% gain. It offers a portfolio of software products designed to help businesses extract more value from their data using AI. But the company is also a proxy for Bitcoin, given that it holds around $12.5 billion worth of the cryptocurrency. Carvana stock also roared back to life this year with a 178% return, but it's still down 62% from its all-time high, which was set during the tech frenzy of 2021. The company sells used cars online with a focus on automation using its vending-machine style buildings. Elf Beauty and Abercrombie & Fitch are further examples of consumer companies putting up strong numbers this year. According to the CME Group's FedWatch tracker, the U.S. Federal Reserve will cut interest rates three times before the end of the year (in September, November, and December). In that environment, risk-free assets, like cash deposits and bonds, will be less attractive. This often pushes investors into stocks, instead. That's good news for the overall market but especially positive for small caps. Small companies often borrow money to fuel growth and typically have more floating-rate debt, which is very sensitive to changes in monetary policy. In contrast, the tech giants that dominate the S&P 500 are sitting on billions of dollars in cash. Apple, for example, just announced a $110 billion stock-buyback program, which basically means the company makes so much money that it can't find a better use for it internally. Lower interest rates will drive down borrowing costs for small caps, which means they can take on more debt and potentially drive faster growth. Plus, smaller interest payments will be a direct tailwind for each company's earnings. Lee cites valuations as another reason the Russell 2000 could soar. The index trades at a price-to-earnings (P/E) ratio of 16.9 (excluding companies with negative earnings). The S&P 500 trades at a P/E ratio of 24.3, which makes the Russell look quite attractive by comparison. Of course, the S&P 500 trades at a premium because of the quality of its constituents. Investors will always pay a higher valuation for stocks like Microsoft, Apple, and Nvidia because they're secure organizations with track records of success spanning decades. But if lower rates boost small-cap earnings, the valuation gap could narrow. Here's where things get tricky. Going all the way back to 1988, the Russell 2000 has never recorded an annual gain of 50%. In fact, it consistently underperformed the S&P 500, on average. The federal funds rate was below 1% for most of the last decade, yet the Russell 2000 was up just 85% over that period, compared to a 185% gain in the S&P 500: Plus, the Vanguard Russell 2000 ETF has delivered a compound annual return of 9.9% since its inception in 2010, sharply lagging the 14.5% average annual return of the Vanguard S&P 500 ETF. That 4.6% differential substantially impacted returns when compounded over the last 14 years: Calculations and chart by author. While it's entirely possible for the Russell 2000 to deliver a positive return in the remainder of 2024, history suggests it's extremely unlikely to climb 41.5% to end the year with a 50% gain. With that said, small caps might be a good place for investors to park their money when interest rates begin to fall, so adding the Vanguard Russell 2000 ETF to a balanced portfolio isn't a bad idea.
Share
Share
Copy Link
A Wall Street analyst forecasts a potential 415% surge for a Vanguard ETF in 2024. This prediction has caught the attention of investors and market watchers, sparking discussions about the ETF's prospects and the broader market outlook.
A bold forecast from a Wall Street analyst has captured the attention of the investment community. The prediction suggests that a particular Vanguard exchange-traded fund (ETF) could potentially soar by an astounding 415% for the remainder of 2024 1. This projection has sparked intense interest and debate among investors and market observers.
The ETF at the center of this remarkable prediction is the Vanguard Information Technology ETF (NYSEMKT: VGT) 2. This fund tracks the performance of the MSCI US Investable Market Information Technology 25/50 Index, which includes stocks of various sizes within the information technology sector.
The optimistic forecast is based on several factors:
Strong performance of tech giants: Companies like Apple, Microsoft, and Nvidia, which are significant holdings in the ETF, have shown robust growth and are expected to continue their upward trajectory [1].
AI boom: The ongoing artificial intelligence revolution is seen as a major driver for tech stocks, potentially boosting the ETF's value [2].
Historical performance: The ETF has demonstrated impressive returns in the past, with a 43% gain in 2023 alone [1].
While the 415% growth prediction has generated excitement, many financial experts urge caution. They emphasize that such dramatic gains are highly unusual and that investors should approach such forecasts with skepticism [2]. Some analysts suggest that while the tech sector may continue to perform well, expectations should be tempered.
For those considering investing in the Vanguard Information Technology ETF, experts recommend:
Diversification: Avoiding overexposure to a single sector, regardless of its potential [2].
Long-term perspective: Focusing on long-term investment goals rather than short-term gains [1].
Risk assessment: Understanding the volatility associated with tech stocks and ETFs [2].
The ambitious prediction for this Vanguard ETF reflects a broader optimism about the technology sector and its potential to drive market growth. However, it also raises questions about market valuations and the sustainability of such rapid growth in the tech industry.
As the market digests this bold forecast, investors and analysts alike will be closely watching the performance of the Vanguard Information Technology ETF and the tech sector as a whole, seeking signs that might validate or challenge this extraordinary prediction.
As the market anticipates a potential small-cap bull market, investors are turning their attention to Russell 2000 ETFs. This article explores the benefits and risks of investing in these funds, with a focus on the Vanguard Russell 2000 ETF (VTWO).
2 Sources
As the S&P 500 enters a bull market, investors are eyeing Vanguard ETFs as potentially lucrative options. Two specific funds are gaining attention for their strong performance and diversification benefits.
3 Sources
The recent surge in small-cap stocks has caught investors' attention, but opinions are divided on whether this rally will persist. While some see potential for continued growth, others caution about the sustainability of this trend.
2 Sources
A comprehensive look at diverse investment strategies, covering ETFs, high-yield blue chips, AI stocks, macro-driven portfolios, and game-changing dividend stocks. This summary provides insights for investors seeking to optimize their portfolios in the current market climate.
6 Sources
Russell Investments' strategist Dominica Wilson discusses the potential of small-cap stocks in the current market environment, citing attractive valuations and opportunities for growth.
2 Sources