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Financial Advice

Ever-Evolving ESG, Warren Buffett, and Which Stocks Are Beating the Market

We review the top stocks, funds, and exchange-traded funds this week as well as share updates you can make to your portfolio.

What You Missed

This week, we dove into ever-evolving environmental, social, and governance issues; Warren Buffett stocks that are a buy; when to contribute to your IRA; stocks that we believe are beating the market; and how to avoid arguing over money just in time for the holidays.

Chart of the Week

Markets Brief: Has the Stock Market Hit Bottom? 3 Signs to Watch

In a down week for the market, Taylor Swift hit Live Nation LYV stock, FTX ripples swamped Coinbase COIN.

A line chart showing the U.S. market's performance in terms of the Morningstar US Market Index between Jan. 1, 2022 and Nov. 18, 2022.

Glossary Term of the Week

Roth IRA

A Roth IRA is a type of individual retirement account. Unlike with a traditional IRA, you don’t receive a tax break for your contributions; you contribute aftertax dollars. In a Roth IRA, your contributions grow tax-free, and you can withdraw money from your account tax-free after the age of 59½.

See Morningstar’s Investing Definitions and Financial Terms for the full definition.

What to Watch

3 Great Global Funds

What kind of fund is a mainstay in the rest of the world, but not the United States? Global funds.

An illustrative image of Russ Kinnel, director of manager research at Morningstar.

Articles We Love

Why These Biotech Stocks Are Outperforming the Market

Recession-resistant stocks include undervalued names like Moderna MRNA and CRISPR Therapeutics CRSP.

Line chart showing 2022 performance of the Morningstar US Biotech index.

The move higher in biotech stocks comes after a rough start in the first half of the year, when the biotech index lost 17.7%, more than it lost in the first six months of any year since 2016. Even with the recent bounce, those losses have led to a number of undervalued names in the space, according to Morningstar stock analysts.

7 Most-Undervalued Biotech Stocks

1. CRISPR Therapeutics CRSP

2. Moderna MRNA

3. BioMarin Pharmaceutical BMRN

4. Incyte INCY

5. Jazz Pharmaceuticals JAZZ

6. Ionis Pharmaceuticals IONS

7. Intellia Therapeutics NTLA

ESG Evolves

Sustainable investing is the mainstream now.

Sustainable investing and the consideration of environmental, social, and governance factors have become part of the investment mainstream over the past few years. The rapid growth has been spurred by the need for investors to consider nonfinancial risks posed by problems ranging from climate change to natural-resources depletion, treatment of workers throughout the supply chain, corporate ethics, and wealth inequality. We live in an age of transparency, and stakeholders are demanding better corporate accountability around these types of issues. More end investors want their investments to make a difference.

These are complex problems, and the field is still evolving. I spoke with three researchers whose work is shedding light on the issues and setting standards for the future. Cary Krosinsky is an author, consultant, and university lecturer on sustainable investing; Tensie Whelan leads the NYU Stern Center for Sustainable Business; and Hortense Bioy is Morningstar’s global director for sustainability research on the manager research team:

Jon Hale: To clarify terms, ESG refers broadly to data about nonfinancial issues and is widely used in the investment world. Sustainable investing encompasses the idea of delivering a competitive return alongside positive outcomes for people and planet. What should investors know about these concepts?

Cary Krosinsky: In my classes, we talk about the “seven tribes of sustainable investing,” which are seven distinct categories of investment strategy. These include negative screening, avoiding companies you don’t want to own for an ethical reason, which is where the field started. The reverse is positive/best-in-class approaches, used by firms like Generation Investment Management, which has beaten benchmarks after fees over time, and Parnassus Investments and others that aim to invest in financially viable companies trying to solve problems.

You Can Make IRA Contributions at Any Age. But Should You?

Traditional IRA contributions after RMD age may make sense in a handful of situations, but not many.

Illustrative visualization showing the accumulation of dollar bills and a piggy bank.

In the wake of the Secure Act, a wide-ranging piece of retirement legislation passed in 2019′s waning days, the death of the stretch IRA and delayed required minimum distribution received the lion’s share of the chatter in retirement- and tax-planning circles.

But a related provision that received less attention allows account owners to continue making contributions to traditional IRAs after age 72, provided they have earned income. Prior to the Secure Act’s passage, people couldn’t contribute to a traditional IRA if they were of RMD age or older: 70½. (Roth IRA contributions at any age have long been allowed, so long as the contributor—or his or her spouse—meets the earned income requirement.)

How to Avoid Arguing Over Money

Use these strategies to help defuse financial tensions.

"coins volatility money"

The holiday season is a time of giving, entertaining, and celebrating life with those we love. Holidays also tend to throw us together with people whom we care about but disagree with on thorny issues like economics, politics, and personal finances.

These conversations can often get heated. Thankfully, resolving them is mostly a matter of perspective and patience.

In previous articles, I’ve written about how we should reframe the idea of “needs vs. wants” to one of “needs vs. strategies to acquire those needs.” Understanding this difference can improve your financial life by making budgeting an empowering exercise rather than a financial diet, and it can help us overcome problematic behaviors like overspending.

Stocks, Funds, and Exchange-Traded Funds

Top articles

4 Bond Funds With Tax Issues

3 Warren Buffett Stocks to Buy

Is There a Right Way to Weight Stocks?

Missed Us?

Check out our investing specialists on Twitter:

#Stocks surged off Sept lows during 2H Oct. According to composite of our coverage, equities remain undervalued—yet investors should brace themselves. #Volatility will persist until economic growth reaccelerates & inflation subsides. Here is our outlook: http://spr.ly/6018MtVNg”—David Sekera, @MstarMarkets

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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