Hi Reader, here's what you need to know for April 6th in 2:59 minutes.

🎉 We’ll be back bright-eyed and bushy-tailed with your next Finimize update on Wednesday, but in the meantime, here’s the second of our special editions – this time focused on the economic recovery and emerging markets…

Today's big stories

With the global economy in recovery, investors have been rotating away from growth stocks and toward cyclical and value stocks…
… So you’ll want to start being more selective about which stocks you choose… – Read Now
And those in emerging markets, it turns out, might be most attractive of all

Economic Sorecast

What’s Going On Here?

The global economy has been left bruised and battered by the last year, but it looks like it’s finally starting to recover in earnest.

What Does This Mean?

Now that the world’s in recovery from the pandemic, the economy’s expected to hit 5.6% growth this year. That’s good news for companies, even if it won’t benefit them all equally: fast-growing firms like those in tech should continue to steadily grow their earnings, but “cyclical” companies should get a much bigger boost from the uptick in economic growth.

Investors trying to capitalize on that trend have been buying cyclical “value” stocks, whose share prices should rise in line with companies’ earnings growth. And to make room for them in their portfolios, investors have been selling off growth stocks – so much so that the tech-heavy Nasdaq collapsed into a correction last month.

Why Should I Care?

Zooming in: Investors are ultimately looking for growth.
Analysts at UBS reckon stock market investors are always chasing the same thing: companies with high earnings growth. And while that might work in cyclical and value stocks’ favor in the near term, investors will eventually return to stocks that can promise growth year in, year out. That’s what seems to have happened in the past, after all: growth stocks have outperformed value for most of the last 50 years.

For markets: Here’s how the rotation is playing out...
Recent data showing the movement of investors’ money into and out of certain funds shows how much of a rotation there’s been in the last month. Stock market investors have opted for emerging markets over developed ones, and industrial and financial stocks over healthcare, utilities, and real estate. Bond investors, meanwhile, have opted for inflation-protected bonds, while selling out of previously popular but risky “junk” bonds.

You might also like: Value stocks are the opportunity of a lifetime right now. Here’s why.

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2. Analyst Take

The “Best Of Both Worlds” Investment Strategy

What’s Going On Here?

With all this talk of rotations and bubbles – and with some of last year’s biggest stock market winners already losing their gains – you might want to be more selective with your stock picks.

And there’s one technique that could help you do just that: the core-satellite approach.

It refers to a core of low-cost ETFs that’ll give you diversified exposure to stock and bond markets, and a satellite of shorter-term trading ideas that should outperform the broader market.

Embracing the best of both passive and active investing, after all, could protect you from dangerous levels of risk, while putting you in line for some big gains.

So that’s today’s Insight: how to build a balanced, no-fuss portfolio that’ll see you through thick and thin.

Read or listen to the Insight here

Now You’re Cookin’

What’s Going On Here?

Emerging market (EM) stocks have been looking pretty tasty this year, and it’s all down to three very special ingredients…

What Does This Mean?

Firstly, EM stocks are highly cyclical, ebbing and flowing in line with global economic growth – and since that growth is on the up, EM stocks are too. Secondly, the weakened US dollar – until recently – should make it cheaper for EMs to borrow money in the currency, as well as boost demand for some of their dollar-denominated exports. And thirdly, plenty of EM economies rely on selling raw materials, which should benefit from climbing commodity prices. Throw in the high valuations of US stocks at the moment, and it’s no wonder investors have turned to EMs in their droves. In fact, the amount of investment managers’ portfolios invested in EM stocks is at its highest ever level.

Why Should I Care?

For markets: India could be the best of the bunch.
Still, Morgan Stanley has warned that EM stocks might’ve already hit their peak for the year. So it reckons you need to be a bit more picky about precisely which EM investments you make. Enter India: the bank reckons the country’s strong economic growth outlook should boost Indian companies’ earnings and, in turn, their stocks.

The bigger picture: EMs aren’t immune to higher rates.
Investors’ main worry this year is that central banks will hike interest rates sooner than expected and damage the value of stocks. EMs would feel the effects too, but not necessarily all of them: Goldman Sachs reckons Asian stocks are still a good bet. History, after all, suggests they haven’t moved much lower even when investors have got antsier about rates. The bank’s particularly keen on Asia’s energy and insurance stocks, but recommends avoiding those in the internet and media industries.

You might also like: How to invest in India.

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💬 Quote of the day

“One day the people that don’t even believe in you will tell everyone how they met you.”

– Johnny Depp (an American actor, producer, and musician)

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📚 What we're reading

Being disgusted isn’t so disgusting after all (National Geographic)
Who takes the most flights? (Possible)
The (pillow) case for couples sleeping apart (Capsule)

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Finimize - ⚠️ Found: value opportunities

Today's big stories

Economic Sorecast

What’s Going On Here?

What Does This Mean?

Why Should I Care?

The “Best Of Both Worlds” Investment Strategy

Now You’re Cookin’

What’s Going On Here?

What Does This Mean?

Why Should I Care?

The heavyweights of the drone industry

Older messages

🇺🇸 The Fed is (not?) in control

📉 A new accounting scandal

🦘 Deliveroo's stock market crash

📉 The chips are down

🛢 We talk oil with Morgan Stanley

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