are almost over. The 10-year US Treasury Note's yield, which moves inversely to its price, is down 8.5% in the first three months of 2023 after more than doubling last year. Fixed income has also taken off, since it's considered to be a safe haven during times of economic volatility.Goldman Sachs
A team of Goldman Sachs strategists led by Ryan Hammond pointed out in a March 29 note that fast-growing companies with high profit margins have lapped their low-margin peers this year. They expect the trend to continue as investors seek quality in this shaky economy."We recommend investors own high-margin growth stocks and avoid low-margin growth stocks, given the current resilient economic growth pricing within equity markets but pessimistic pricing in rates markets," Hammond wrote.
But even if the US does avoid a recession, Goldman Sachs still would favor high-margin growth stocks out of a belief that interest rates would remain elevated. Lofty rates weigh on growth broadly but would disproportionately hurt the valuations of low-margin stocks, Hammond noted.
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