Generation X Investors: Deja Vu?

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.

This week, Tracey is going solo to talk about the summer stock market rally.

As a Generation Xer herself, this rally is beginning to have a sense of déjà vu with the late 1990s.

In 2000, the NASDAQ was coming off its best year of the decade, up 85.6%. Everyone was diving into technology, as they chased the returns of the past 5 years.

It was a new era of the Internet and dot coms. Everyone thought the innovation would go on forever. If you didn’t own tech in 2000, you were a loser.

Flash forward to 2020. Just before the pandemic, the Nasdaq was hot and hitting new highs in February. But then the coronavirus hit.

Off the March coronavirus lows, however, the Nasdaq rallied over 75% to another set of new all-time highs, until the recent 9% pullback.

Millions of new traders and investors have opened up accounts on trading apps like Robinhood.

In 1999, eTrade, which allowed you to trade cheaply online, was also adding millions of new accounts and traders.  

What’s an Investor to Do Now?

Good investors have a diverse portfolio. They’re not just in technology.

Some industries have value and aren’t getting sold off as sharply right now as tech or the popular growth names.

Where should you look?

Big cap pharmaceuticals have underperformed this year and for the last 5 years. The industry is up just 52% over the last 5 years compared to a gain of 91.7% for the S&P 500.

Energy, value, and small caps are also in the dog house.

Be a Contrarian

1.       Merck (MRK - Free Reportis the only Zacks Rank #2 (Buy) stock in the large cap pharmaceutical group. There are NO Zacks Rank #1 (Strong Buys) right now. It’s expected to see earnings growth of 9.8% this year and another 4.2% next year. It’s trading with a forward P/E of just 15.

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Disclosure: The author owns shares of VBR mentioned in the podcast.

Disclaimer: Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the  more

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