Tags: Guerrera | stock | picker | market

WSJ's Guerrera: Now It's Truly a Stock Picker's Market

By    |   Wednesday, 16 April 2014 08:58 AM

Whenever trading conditions get tough in the stock market, many investors reflexively say it's a stock picker's market. But now that's really true, says Wall Street Journal financial editor Francesco Guerrera.

It's not that the market's five-year rally is necessarily over. "I don't think this is the end of the bull market, but we are probably in the sixth or seventh inning," James McCaughan, CEO of Principal Global Investors, tells Guerrera.

But the Federal Reserve's tapering of its quantitative easing has changed things, the columnist explains.

Editor’s Note:
5 Shocking Reasons the Dow Will Hit 60,000

"The recent fall in U.S. equities has highlighted their gradual untethering from the one big driver of performance since the financial crisis: the central bank's easy-money policies," he writes.

Wednesday, the Standard & Poor's 500 index rose 19.33 points, or 1.1 percent, to 1,862.31.
The Dow Jones industrial average added 162.29 points, or 1 percent, to 16,424.85. The Nasdaq composite rose 52.06 points, or 1.3 percent, to 4,086.22.

The three major stock indexes are each up for the week, but remain down for the month after several days of choppy trading. This week's three-day rise in stock prices helped push the S&P 500 index up 0.8 percent so far this year.

Until recently, it was either risk-on or risk-off for stocks, Guerrera notes. But stocks' correlation with each other has slipped over the past month or so.

"This is creating a stock-picking environment," Matthew Rubin, director of investment strategy at Neuberger Berman Group, tells Guerrera.

Fund managers will have to "search through the dumpster for a playbook they had discarded long ago," Nicholas Colas, chief market strategist at ConvergEx Group, quips.

"The breakdown in these long-held relationships will force fund managers to work harder to pick winners and losers. Aping an index, as so-called passive funds do, or even a sector, like many exchange-traded funds, will be less viable options," Guerrera notes.

The market has been volatile recently, falling last week, but rebounding this week.

"Stocks are having meaningful moves in both directions because people are nervous on both sides," Michael James, managing director of equity trading at Wedbush Securities, tells Bloomberg.

"Subjectivity plays such a pivotal role, and emotions, in what's been going on in this market that it's hard to pinpoint what causes a turn in the direction."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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Whenever trading conditions get tough in the stock market, many investors reflexively say it's a stock picker's market. But now that's really true, says Wall Street Journal financial editor Francesco Guerrera.
Guerrera, stock, picker, market
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2014-58-16
Wednesday, 16 April 2014 08:58 AM
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