While we stand just 5% off the all-time highs, it sure doesn’t feel like it. After two lousy weeks and Monday’s big sell-off, when we finally hit the elusive 5% decline that took almost a year to happen, Monday’s late reversal showed that once again, the “buy the dip” crowd will wade into even the largest of sell-offs to buy stocks. Even though Tuesday was mixed, the stock armageddon may have been put on hold, for a while at least. Despite the lofty indexes prints this year, according to BTIG Research 15% of S&P 500 stocks are down more than 20% from their highs, with a much larger percentage of the midcap and small-cap universe are down 20% and more. As has been the case for years, a handful of stocks are responsible for much of the index moves.
In another interesting sidebar, BTIG also noted that hedge fund net exposure is down to the 38th percentile, which as they remarked, suggests that portfolio managers have taken a very defensive stance coming out of summer. If hedge fund managers are getting more defensive, it is probably high-time individual investors do as well.
We screened our 24/7 Wall St. research database looking for stocks that pay reliable dividends, are not overextended and are rated Buy at major Wall Street firms. We found five that look like great picks for the rest of 2021 and into next year.
This article originally appeared at 24/7 Wall St.