Once-in-a-generation market

In today’s big story, we’re looking at why the market might be on the cusp of a once-in-a-generation investing moment (but not with the names you’re familiar with).

• Markets: Charlie Munger discusses everything from bitcoin to Berkshire Hathaway’s M&A plans.
• Tech: Kendrick Lamar’s “dumb” phone is already a hit.
• Business: The real reason behind most companies’ layoffs, according to an expert.

Instead of worrying about the status of the much-ballyhooed Magnificent Seven stocks, investors should be focusing on under-the-radar stocks, according to investment chief Richard Bernstein.

The former chief investment strategist at Merrill Lynch views the chance to get in on less-glamorous stocks as a “once-in-a-generation” opportunity.

Bernstein’s thesis for looking outside the Magnificent Seven is fairly straightforward: the number of stocks notching big gains is about to broaden, giving unloved stocks a resurgence.

“Are these seven really the best growth stories in the entire global equity market?” he told Insider’s Jennifer Sor.

The data backs Bernstein. Over 100 US companies saw at least 25% earnings growth in the past 12 months, but only one (Amazon) was a Magnificent Seven.

A note from Bank of America pointed to its Sell Side Indicator, which flashes bullish signals when Wall Street becomes overly bearish.

The contrarian sentiment gauge is currently neutral, but it’s three times closer to a “buy” signal than a “sell” one. At its current level, it’s suggesting about a 15.5% gain in the S&P 500 over the next year.

Such strong stances come at a unique time for the market, as many investors are waffling over where things are headed.

Any positives for the market — strong earnings, GDP growth, pause on rate hikes — have been coupled with negatives — troubling year-end forecasts, rising bond yields, increasing geopolitical risks — over the past few months.

Having conviction and staying away from popular stocks might be investors’ best bet.

Of course, it won’t happen overnight. Bernstein told Jennifer not to expect a similar market rally in the wake of the pandemic. A more accurate comparison, he said, would be when S&P 500 leaders lost value in the 2000s while underdogs performed.

• An Israeli minister was swiftly punished after suggesting dropping a nuke on Gaza
• The US sanctioned the Russian manufacturer of Lancet, a ‘kamikaze’ drone
• Thousands of pro-Palestinian protesters chanted ‘Guilty!’ in front of the White House
• Russell Brand was accused of sexual assault on the set of 2011’s ‘Arthur’ in new lawsuit
• Now-Speaker Mike Johnson tried to blunt fallout over unopened Christian law school

🔔 Before the opening bell: US stock futures rise early Monday, after jumping Friday as a Goldilocks jobs report took pressure off of interest rates.

2. Charlie Munger sounds off. Warren Buffett’s right-hand man talked about everything from bitcoin to the woes of stock picking during a recent interview. Munger, who’s worth nearly $3 billion, said there’s a 50/50 chance Berkshire Hathaway will make another big acquisition. Check out eight of his best quotes.

3. The end of the AI market boon. Veteran investor Bill Smead says the AI craze is overblown and sees a painful comedown for stocks. “AI looks like tech stock and S&P 500 index life support to us,” Smead said.

2. All the best bits from Elon Musk’s chat with the British prime minister. The billionaire was interviewed by Rishi Sunak following his appearance at the AI Safety Summit. Musk touched on the future of jobs and government regulation. These are the best quotes.

3. Linda Yaccarino puts her foot down. The CEO of X reportedly stepped in to remove a viral pro-Hitler post on the platform. The move comes despite X owner Elon Musk being an unapologetic proponent of free speech.

2. The Ozempic impact on the economy. The knock-on effects of weight-loss drugs are almost innumerable. One of the big winners, according to an expert, is “better-for-you products” as people focus more on lifestyle and fitness.

3. How companies decide who’s on the chopping block. An expert in helping companies communicate layoffs offers an inside look at the process. One thing to remember: it’s more often related to tightening margins versus actual performance.

• Stay or go: Why Americans are drawn to — or sick of — living in Florida
• Gen Z is forcing a workplace reckoning that should have happened years ago
• Job growth slowed in October as the economy settled into a new normal
• A law clerk who lived with Clarence Thomas despite texting ‘I hate Black people’ has dodged an investigation
• Gen Z’s financial icons revealed: Taylor Swift beats Warren Buffett, and Bill Gates tops the list
• OpenAI just taught little-guy developers an ugly lesson
• Big Oil wants to become Big EV
• ‘I survived a freak hockey accident — a cut to the jugular from a skate — during a game. I’ve dealt with PTSD for decades.’

• Trump takes the stand. Former President Donald Trump is expected to testify in the civil fraud trial against the Trump Organization.
• OpenAI opens its doors. The buzzy AI startup hosts its inaugural developer conference, OpenAI DevDay.
• Happy Saxophone Day! The holiday corresponds with the birthday of the instrument’s inventor, Adolphe Sax.

Dan DeFrancesco, senior editor and anchor, in New York City. Diamond Naga Siu, senior reporter, in San Diego. Hallam Bullock, editor, in London. Lisa Ryan, executive editor, in New York.

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