Are you looking for a smart and profitable way to invest your money in the stock market? If so, you might want to pay attention to what BlackRock, the world’s largest asset manager, has to say about U.S. equities. BlackRock has recently upgraded its view on U.S. stocks, giving them an overweight rating, which means that they expect them to outperform other regions and asset classes in the next 6 to 12 months. In this article, we’ll explain why BlackRock is so bullish on U.S. stocks, and how you can follow their lead and benefit from their optimistic outlook.
What BlackRock Said
About U.S. Stocks
BlackRock is a global investment firm that
manages over $9 trillion in assets, making it the largest and most influential
asset manager in the world. BlackRock has a team of experts and analysts that
monitor and evaluate the market conditions and trends, and provide guidance and
recommendations for investors of all types and sizes.
On October 5, 2023, BlackRock published its
quarterly global outlook report, where it shared its views and expectations for
the global economy and the financial markets for the fourth quarter of 2023 and
beyond. In the report, BlackRock announced that it had upgraded its view on
U.S. equities from neutral to overweight, meaning that it expects U.S. stocks
to perform better than other regions and asset classes in the next 6 to 12
months.
BlackRock cited several reasons for its
bullish stance on U.S. stocks, such as:
·
Strong economic growth: BlackRock expects the U.S. economy to
grow by 5.5% in 2023, which is above the global average of 4.9%. BlackRock
believes that the U.S. economy has shown resilience and adaptability in the
face of the pandemic and its challenges, and that it will continue to benefit
from the fiscal and monetary stimulus, the vaccination progress, the reopening
of businesses and activities, and the consumer spending and confidence.
·
Robust earnings growth: BlackRock expects the U.S. corporate
earnings to grow by 35% in 2023, which is also above the global average of 28%.
BlackRock attributes this to the strong recovery and expansion of the U.S.
businesses, especially in the sectors that were hit hard by the pandemic, such
as travel, leisure, entertainment, and retail. BlackRock also notes that the
U.S. companies have been able to improve their profitability and efficiency, by
cutting costs, increasing productivity, and investing in innovation and
technology.
·
Attractive valuation: BlackRock acknowledges that the U.S.
stocks are not cheap, as they trade at a premium compared to other regions and
asset classes. However, BlackRock argues that the U.S. stocks are not
overvalued, as they reflect the superior quality and growth potential of the
U.S. companies. BlackRock also points out that the U.S. stocks offer a higher
return on equity, a lower debt-to-equity ratio, and a higher dividend yield
than other regions and asset classes, which make them more appealing and rewarding
for investors.
Why BlackRock Is
Optimistic About U.S. Economy and Earnings
BlackRock’s positive outlook on U.S. stocks is
based on its optimistic view on the U.S. economy and earnings, which are the
two main drivers of the stock market performance. BlackRock believes that the
U.S. economy and earnings are well-positioned to overcome the risks and
challenges that the market faces, such as:
·
The pandemic and its variants: BlackRock recognizes that the
pandemic and its variants are still a threat to the global health and economy,
and that they could cause new waves of infections, lockdowns, and disruptions.
However, BlackRock also believes that the U.S. has made significant progress in
containing and mitigating the impact of the virus, thanks to the high
vaccination rate, the availability of treatments and tests, and the adoption of
safety measures and protocols. BlackRock expects that the U.S. will be able to
achieve a high level of immunity and normalcy by the end of 2023, and that the
pandemic will become less severe and less relevant for the market.
·
The inflation and its pressures: BlackRock acknowledges that the
inflation has been rising and exceeding the expectations and the targets of the
central banks and the markets, and that it could pose a challenge to the
economic and earnings growth. However, BlackRock also believes that the
inflation is mostly transitory, meaning that it will fade away as the economy
recovers from the pandemic and the supply chain bottlenecks are resolved.
BlackRock expects that the inflation will peak in the fourth quarter of 2023,
and that it will moderate and stabilize in 2024, and that the central banks
will be able to manage and control it without causing a disruption or a shock
to the market.
·
The policy and its uncertainty: BlackRock admits that the policy
and its uncertainty are a source of risk and volatility for the market, as they
could affect the economic and earnings outlook and sentiment. However,
BlackRock also believes that the policy and its uncertainty are manageable and
predictable, as they are driven by the political and economic cycles and
dynamics. BlackRock expects that the U.S. will be able to avoid a fiscal cliff
and a debt default, by reaching a compromise and a solution on the budget and
the debt ceiling issues. BlackRock also expects that the U.S. will be able to
maintain a supportive and accommodative monetary policy, by tapering its bond
purchases gradually and carefully, and by raising its interest rates slowly and
cautiously.
How to Invest in U.S. Stocks
According to BlackRock
If you agree with BlackRock’s bullish outlook
on U.S. stocks, and you want to follow their lead and benefit from their
optimistic outlook, you might be wondering how to invest in U.S. stocks
according to BlackRock. Here are some tips and recommendations that BlackRock
provides for investors who want to invest in U.S. stocks:
·
Have a diversified portfolio: BlackRock suggests that investors
should have a diversified portfolio, which means having a mix of different
types of stocks that can perform well in different scenarios and conditions.
For example, BlackRock recommends having some growth stocks, which are the
stocks of the companies that have high earnings and revenue growth potential,
such as the tech and the biotech stocks. BlackRock also recommends having some
value stocks, which are the stocks of the companies that have low valuations
and stable earnings, such as the industrial and the financial stocks. BlackRock
also recommends having some defensive stocks, which are the stocks of the
companies that provide essential goods and services that are in demand
regardless of the economic cycle, such as the utility and the consumer staple
stocks.
·
Have a long-term perspective: BlackRock advises that investors
should have a long-term perspective, which means having the ability to look
beyond the short-term fluctuations and focus on the long-term trends and
opportunities. BlackRock says that investors should not panic or overreact to
the news and the events, but rather trust the fundamentals and the analysis.
BlackRock also says that investors should not trade or speculate, but rather
invest and hold, as the market tends to reward the long-term investors who have
a clear vision and a conviction.
·
Have a balanced risk appetite: BlackRock recommends that
investors should have a balanced risk appetite, which means having the
willingness to take some risks, but also the prudence to limit and manage them.
BlackRock says that investors should not be too greedy or too fearful, but
rather be realistic and rational. BlackRock also says that investors should not
put all their eggs in one basket, but rather spread and diversify them.
BlackRock also says that investors should not rely on luck or hope, but rather
on research and strategy.
Conclusion
In conclusion, BlackRock, the world’s largest
asset manager, has upgraded its view on U.S. stocks, giving them an overweight
rating, which means that they expect them to outperform other regions and asset
classes in the next 6 to 12 months. BlackRock cites strong economic growth and
earnings prospects as the main reasons for its bullish stance on U.S. stocks,
and believes that the U.S. economy and earnings are well-positioned to overcome
the risks and challenges that the market faces, such as the pandemic, the
inflation, and the policy uncertainty.
We have explained why BlackRock is so bullish
on U.S. stocks, and how you can follow their lead and benefit from their
optimistic outlook. We have also given you some tips on how to invest in U.S.
stocks according to BlackRock, such as having a diversified portfolio, a
long-term perspective, and a balanced risk appetite.
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