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The time may be right for active stock pickers, according to Morgan Stanley. And his analysis identified actions that could have benefits.
Active stock pickers try to do better than an index, buying and selling stocks depending on whether they think individual prices will go up or down, unlike passive investing which tracks the performance of an index. for example.
“A higher level of equity-specific risk is… favorable to active stock selectors,” Morgan Stanley analyst Alix Guerrini wrote in a recent note. Guerrini said there is a current trend in equity-specific risk, where the price of a stock moves due to its fundamentals or news flow. It occurs after a period of systematic risk, when stocks move together due to macroeconomic or geopolitical factors – such as a pandemic.
In light of this trend, analysts at Moran Stanley have created a list of stocks that are “the most idiosyncratic in nature with the greatest equity-specific risk,” which they believe are best for stockpickers.