With the earnings season in full swing, a broader diversification in the market has become evident. M&G Investments Chief Investment Officer Fabiana Fedeli joined Yahoo Finance to discuss her perspective on why markets should be analyzed on a stock-by-stock basis.
Fedeli points out that in 2023, the market was hyper-focused on the 'Magnificent Seven' stocks. However, in 2024, "none of those Magnificent Seven are making it into the top 10 of the world's best-performing stocks." She notes due to these stocks having such a significant market share, even a small outperformance from any of them can significantly impact market indexes.
Fedeli emphasizes the need to evaluate stocks on an individual basis, stating that even stocks in the same sectors and with the same drivers "are performing very differently" due to variations in company management and financials. She highlighted that this divergence is occurring among the Magnificent Seven stocks.
Fedeli advises investors against attempting to "time the market." She explains that valuations are currently based on "expectations"— saying "If you like something, buy it; if you don't like it, stay away because the fact that there is short-term price momentum is not a guarantee that it's gonna last for the rest of the earnings season."
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