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Investing Specialists

Weekly Wrap: Herd Immunity by June, May Financial To-Dos, and More

We recap the week on and note the most popular stocks, funds, and exchange-traded funds.

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Editor's note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it.

Technically, it's spring--known as allergy season for many. It's professional baseball season, too. And for thousands of students (and their anxious parents), it's graduation season. For investors, it's earnings season. Long-term investors--such as myself and many of the readers of Morningstar Smart Investor--don't usually get too excited about earnings. After all, one quarter's worth of earnings don't move the needle when it comes to a company's long-term competitive advantages. True, our analysts may tweak the fair value estimates of a few of the companies they follow based on something they learn during an earnings call. But earnings reports aren't generally revelatory.

This earnings season has been different, though--I'd even call it downright exciting. Blowout earnings reports led us to hike our fair value estimates for many high-profile tech-related stocks, including Facebook (FB), (AMZN), Microsoft (MSFT), Alphabet (GOOG), Tesla (TSLA), and Apple (AAPL). Many nontech names, such as JPMorgan Chase (JPM), General Electric (GE), and BlackRock (BLK), enjoyed fair value boosts, too. Earnings have been overwhelmingly positive: FactSet says that the S&P 500 is reporting the largest year-over-year growth in earnings in more than a decade.

That, of course, is good news: Companies are bouncing back with more vigor than many expected from the weak earnings during the pandemic. In fact, Morningstar recently increased its 2021 U.S. real GDP growth forecast to 6.2%, up from our 5.3% projection in February, on the heels of a faster-than-expected U.S. consumer recovery.

If the economic picture looks rosy, does that mean that stocks have more room to run? I wish I knew. But one thing I do know: The stock market and the economy are not the same thing. Stock prices tend to reflect confidence in the future--and some market pundits would argue that these champagne-and-roses results are already reflected in today's market valuations.

Rather than try to guess where the stock market is headed, instead focus on maintaining a low-cost, diversified portfolio with an asset mix befitting your time horizon and goals. After all, a thoughtfully constructed portfolio should withstand any season.

--Susan Dziubinski

Editor's Picks

U.S. Herd Immunity Could Be Coming by End of June
Limited vaccine supply in other countries could make global immunity tougher to achieve, though.

A Financial To-Do List for May
Whatever your income level, it's time to start setting aside funds for an emergency.

8 Key Steps to Provide Better Advice to Latino Clients
Opening your firm to a more diverse client base starts with education.

6 Stocks That Let You Sleep at Night
These wide-moat, low-uncertainty names are reliable.

How to Help Loved Ones Financially
Lending a hand without breaking your bank.

The Pool of Investors Is Growing Wider and Deeper
Morningstar's CEO addresses how barriers to entry are melting away for investors.

Portfolio Planning and Personal Finance With Christine Benz

Capital Gains Tax Proposal a Wake-Up Call to Assess Concentrated Holdings
Letting concentrated positions ride is a classic case of putting the tax cart before the horse.

Mutual Funds and Exchange-Traded Funds

The Strategic-Beta Landscape Today
Learn the latest in this approach to investing.

Morningstar World-Stock Categories Get Some Style
New world-stock categories break out funds by style to provide better comparisons.

More Money Flows Into Stock ETFs So Far This Year Than in All of 2020
Rich stock valuations don't deter exchange-traded fund investors in April.

The Best Growth Funds
These growth-focused funds all earn Morningstar Analyst Ratings of Silver or better.

Are Cryptocurrencies Lurking in Your Funds?
Here's who has dipped into the crypto pool.

Long Live the 60/40 Portfolio
The classic balanced portfolio wasn't slowed down by the worst quarter for U.S. core bonds this century.


4 Utilities Positioned Well for Biden's Infrastructure Overhaul
Here's how regulation can dictate their growth and valuation.

Why Alternatives Don't Always Help Diversify
Investors seek out alternative funds for a variety of reasons, but the diversification benefits might be smaller than you'd expect.

Moderna Dominates COVID-19 Vaccine Manufacturers, at Least for Now
The global COVID-19 vaccine market is currently dominated by mRNA firms, but competitors are gaining strength.

Which Stocks Benefit From Biden's Infrastructure Plan?
The proposed plan could be passed this summer, but related stock valuations remain uncertain.

Profitability Questions Still Plague WeWork
The future of the office is unclear, so why is WeWork going public now?

Stock Analyst Updates

Berkshire Annual Meeting Had Moments Needing Follow-Ups
The second virtual meeting lacked quality questions at the managers about the inner workings of Berkshire's businesses.

FDA Announces Plan to Ban Menthol
We plan to lower our tobacco valuations by mid-single-digit amounts.

Verizon Divests Media to Sharpen Its Focus
The company purchased AOL in 2015 and Yahoo in 2017 to build a media empire.

Revealing Warren Buffett's Successor Is a Net Positive
Berkshire Hathaway announced that Greg Abel would become the next CEO when Buffett departs the scene.

CVS Delivers Strong Q1 and Increases 2021 Outlook
We think shares still look undervalued.

Pfizer Posts Strong Q1 Buoyed by COVID-19 Sales
We expect sales will fall substantially after 2022, limiting the impact on our valuation.

Rekenthaler Report

You Needn't Hold Your Stock Winners
The math doesn't support the argument.

The Largest Funds Are the Safest Bets
The odds favor Goliath.

Advisor Insights

With Biden Tax Proposals, Charitable Strategies Rise in Importance
Charitable giving might become the best way for wealthy investors to lower their taxes.

The Long View Podcast

Kerry Pechter: How Annuities Fit Into the Retirement Income Puzzle
The author and columnist unpacks the benefits and limitations of annuities in an era of ultralow yields.

When Is the 'Right' Time to File for Social Security Benefits?
Author Mike Piper discusses when it makes sense to claim Social Security early and when delaying is advisable.

The Short Answer

Are You Caught in a Scarcity Trap?
Fixing an ingrained scarcity mindset requires more than extra money.

Sustainability Matters

How to Apply a Racial Equity Lens to Your Investments
What can investors do to dismantle systemic racism? Here are some ideas.


Re-Envisioning ESG in 401(k) Retirement Plans
Proxy voting provides a way for investors to have a say on ESG issues.

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