Macroeconomic drivers are creating an unnatural market environment in which low-quality stocks are outperforming companies with stronger fundamentals, according to an analysis by Hennessee Group, a hedge-fund investment consultant.

Companies rated C by the S&P returned a whopping 65.7% over the past seven quarters, while A-rated stocks returned just half that, 33.6%. And it’s not because those C stocks are diamonds in the rough. “Lower-quality stocks should drop dramatically, but right now all ships are rising because of quantitative easing by the Fed and the weakened dollar,” Gradante explained.

Register or login for access to this item and much more

All On Wall Street content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access