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Central Banks Eye Higher Rates: Should You Rethink Your Investment Strategies?

Published 06/20/2023, 09:49 AM
  • After an intense week of central banks, it is time to rethink investment strategies
  • And in a volatile environment, it is essential to have a diversified portfolio
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  • More hikes and a continued hawkish tone from the U.S. Federal Reserve (Fed) and European Central Bank (ECB) this year are supposed to bring down inflationary pressures.

    Central banks have clarified that cutting interest rates is unlikely this year. Still, the equity markets have done well so far.

    Experts warn that the Fed's restrictive monetary policy and the tightening measures implemented by central banks in Europe may push the U.S. and European economies into a recession by late 2023 or early 2024.

    With inflation still high and the possibility of a hawkish monetary policy-induced recession looming, investors must prioritize sound risk management and focus on resilient stocks and sectors to ensure a diversified portfolio.

    Access to accurate and timely market information is vital to navigating this volatile and uncertain market environment. InvestingPro provides firsthand data and insights on market factors that can impact stocks.

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    Ideas

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    With InvestingPro, you can actively search for aspects related to portfolio turnover, i.e., the speed at which fund managers buy or sell securities within a fund.

    Holding - Portfolio

    Source: InvestingPro

    If you prefer to find bets by investor type, InvestingPro allows you to search by different profiles: advisors, brokers, private equity funds, banks, etc.

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    The InvestingPro professional tool also allows you to search for stocks by applying various filters, depending on the type of strategy.

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    Strategies

    Source: InvestingPro

    InvestingPro can search for stocks with a strong upward trend using Benjamin Graham's formula. It also provides options to identify stocks with strong dividend and earnings yields.

    You can use InvestingPro to search for technology companies with upward trends, high ROE (Return on Equity) and ROIC (Return on Invested Capital), positive cash flow, and profit margins.

    Strategies

    Source: InvestingPro

    Another investment strategy search option offered by InvestingPro is to find stocks near 52-week lows with low debt and high return on capital and stocks with a good Altman Z-score (a credit risk metric), positive cash flow, and growing earnings.

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    Strategies

    Source: InvestingPro

    Are you thinking of restructuring your investment strategy, adding new stocks to your portfolio, or getting rid of stocks you think are no longer profitable?

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    Disclaimer: This article was written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel, or recommendation to invest, nor is it intended to encourage the purchase of assets in any way.

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