The Best Investment Strategy for the Federal Reserve Rate Cut on September 18
As the Federal Reserve gears up for a rate cut on September 18, Evercore ISI analysts have identified key stock groups that could potentially outperform during this easing cycle. Their research shows that focusing on companies with a strong "High Buyback factor" has been a winning strategy in all Fed cut cycles since 1990, regardless of the economic conditions prompting the cuts.
In addition to high buyback stocks, momentum stocks are also expected to shine, especially given the seasonal volatility of fall 2024. Momentum has historically been a strong performer in September and is expected to continue to do well in the current environment of rate cuts and political uncertainty leading up to the U.S. election.
The analysts have highlighted software companies like ACIW, APP, BOX, and YOU as potential outperformers in the Russell 3000 index, well-positioned to benefit from the upcoming rate cuts. They believe that these stocks, along with a broader "Soft Landing Strategy," could provide investors with an opportunity to capitalize on the Fed's rate cuts and market dynamics.
In conclusion, Evercore ISI recommends focusing on high buyback and momentum stocks to take advantage of the upcoming rate cuts and market conditions. By following this strategy, investors can potentially maximize their returns during this easing cycle.
Analysis:
- Focus on companies with significant share buybacks and momentum stocks for potential outperformance during the Fed rate cut cycle.
- Software companies like ACIW, APP, BOX, and YOU are highlighted as well-positioned to benefit from the upcoming rate cuts.
- Consider a broader "Soft Landing Strategy" as the economy shows resilience, similar to the 1995 soft landing.
- Historical data shows that momentum stocks have outperformed in 76% of Septembers since 1990, indicating a potential opportunity for investors.