Welcome to a new era of stock-picking, BlackRock strategist says
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- The pandemic has ushered in a new era for investing, according to BlackRock.
- Traders will focus above all else on beating the market, Helen Jewell told Insider.
- Earnings and other stock specifics will likely reign supreme, she added.
Welcome to a new era of investing, where "picking winners" matters above anything else.
That's the view being put forward by BlackRock's Helen Jewell, who told Insider Wednesday that the pandemic had brought an end to the post-financial crisis "easy money" period.
"It's a real opportunity for stock-picking and within that, alpha," she said, referring to the amount by which a trader is able to beat a benchmark index like the S&P 500.
"What you saw for a long period of time was styles driving returns… but now what we're starting to see come back in are stock specifics, and particularly earnings," Jewell, who's the CIO of BlackRock's Fundamental Equities group for Europe, the Middle East, and Africa, added.
Stocks racked up year after year of solid gains between 2008 and 2021, powered higher by historically low interest rates across the western world.
But 18 months ago, central banks started to rapidly lift borrowing costs in a bid to clamp down on inflation – and that's sparked a massive surge in volatility in both US and European markets.
For example, in 2023, a group of mega-cap Big Tech companies known as the "Magnificent Seven" have seen their share prices soar thanks to the rise of AI – but stocks from other sectors, like financials and pharmaceuticals, have plunged.
Jewell sees the uncertainty of the past two years as a transition period into a new era – one that she believes will be defined by high but stable interest rates and the return of alpha as a golden metric for active investors.
"It's what we're calling the post-pandemic era – I think the pivot would have happened anyway, but the pandemic made that shift much, much sharper," she told Insider, alluding to the massive surge in inflation caused by COVID-19 disrupting global supply chains.
"The [Magnificent] Seven has been a really good way of thinking about it," Jewell added.
"It's all about picking winners versus losers – and what's happening in the market this year has shown how important that is."
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