Here are the takeaways from today’s Morning Brief, which you can register to receive every morning in your mailbox accompanied by:
When you don’t even realize that your financial decisions are holding you back from unlocking greater wealth, you actually have the “oh shit” moment that Yahoo Finance’s Akiko Fujita and yours truly had at the Milken Institute conference this week after having spoken with Nuveen. Saira Malik, Director of Investments.
Mailik takes over as chief investment officer of the money management giant, which boasts $1.2 trillion in assets under management. Suffice it to say, she wasn’t on board with my 5% CD or Akiko’s high-yield savings account.
Indeed, we are among those making one of the biggest investing mistakes Mailik continues to see as she travels the world communicating with investors.
“Leaving cash behind (is one of the biggest mistakes),” Malik said. “Studies have shown that when you trade time, you lose money compared to if you just stayed invested. It started last year when everyone was expecting a recession. They keep their cash and their 5% returns. »
“There’s nothing wrong with 5% yields, but when the market is up, multiples of that and even fixed income markets have yields that are higher than that today, ( so) you are losing relative money so I definitely recommend staying invested.”
Malik makes a valid point.
The S&P 500 returned 23% in 2023, including dividends, according to Bernstein data. Municipal bonds returned more than 5%. A 60/40 portfolio of stocks and bonds returned more than 17%.
Money market funds returned only 3%, according to Bernstein.
This year alone, the S&P 500 is up about 10%, regaining momentum after the disappointing jobs report.
Grocery prices have increased nearly 30% since 2019, and here I am touting a seven-month CD of about 5%.
“5% was good in 2014,” Malik told me.
Stupid Sozzi.
Thus, with some $6 trillion currently stored in money market funds (i.e. “cash on the sidelines”), it is reasonable to assume that some of this sum will be used in 2024 in a context of greater clarity on interest rates and the economy.
Not surprisingly, Malik suggests investing in stocks.
She likes defensive stocks that sell infrastructure. Apple and Amazon could also be considered defensive stocks, given their strong fundamentals, Malik says.
Another investment mistake to avoid while I have you: going all-in on the Mag Seven like Tesla (TSLA) and Microsoft (MSFT). Big names in finance, like Marc Rowan of Apollo (APO) (Disclosure: Yahoo Finance is owned by Apollo Global Management) and Marc Lasry of Avenue Capital Management, sounded a cautious note on the Mag Seven trade in interviews with us at Milken.
Now I’m off to Bank of America!
Curious about how to put money to work in tech stocks beyond Mag Seven? Former longtime Cisco (CSCO) CEO turned venture capitalist John Chambers walks us through his investing process in a new edition of the Opening Bid podcast. Listen below.
Brian Sozzi is the editor-in-chief of Yahoo Finance. He is also the host of the show “Opening offer” Podcast. Follow Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Advice on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com. Are you a CEO and want to participate in Yahoo Finance Live? Email Brian Sozzi.
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