Educational Segment | StockChase
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Compiling comments that experts make about stocks while on public TV.

Educational Segment

Date Expert Opinion Subject
2017-04-24 Larry Berman CFA, CMT, CTA

Educational Segment.  US Government Shutdowns.  Valuations are high and this is a ‘risk-off’.  You want to be defensive if you can.  There have been 22 government shutdowns in history.  The most recent two had a small impact on GDP (0.1%).  The market historically gets nervous before a shut down and then is fine afterwards.  From a markets point of view it is a case of buying dips.

NORTH AMERICAN - LARGE & ETFs
2017-04-17 Larry Berman CFA, CMT, CTA

Educational Segment.  Hedging the Canadian Dollar.  Currency explains about 70% of the difference in returns between markets.  In Canada, the US$ is key.  Currency differences are caused by imports, exports and interest rate differentials.  We are range bound to 70-80 cents for the next few years.  You want to hedge when the Canadian dollar is at the low end of the scale (.73 or below).

NORTH AMERICAN - LARGE & ETFs
2017-04-10 Larry Berman CFA, CMT, CTA

Educational Segment.  Why Long Bonds are the Best Way to Diversify your Portfolio.  You have to look at risk and return.  Long bonds have the same or less risk as equities.  You get a better yield from long bonds than from equities based on risk.  Long bonds are the most negatively correlated to equities.

NORTH AMERICAN - LARGE & ETFs
2017-04-03 Larry Berman CFA, CMT, CTA

Educational Segment.  The French election is coming up at the end of April and is not priced into the markets.  There were two elections last year that did not go the way the pollsters predicted.  This is a market risk.  VT-N dropped as we got into the US election last year.  It went 5% below peak.  The Brexit decline was similar.  If we go to an Anti EU government in France it will be very negative for the markets.  ZWE-T is the way to play this.  He buys into dips, but is underweight.  If it gets back down to $19.40 you should get back into it.

NORTH AMERICAN - LARGE & ETFs
2017-03-27 Larry Berman CFA, CMT, CTA

Educational Segment.  It is the 10th year anniversary of the show.  He often gets the comment that he is always bearish.  But he thinks he is optimistic.  He looks at the risk side before the returns side of investing.  Beta is the sensitivity to the market risk.  When he is considering buying anything he thinks about the risk index.  ZEB-T graph compared to the world index looked at the weekly return and then he finds the trend.  The slope of .65 tells him the sensitivity to the world index.  At this level about 50% is related to sector risk.  He decides how much of the decision relates to the world, or to sector or to the specific stock.  XEG-T is the Canadian energy sector, compared to the world it is more sloped, meaning it is more risky.  He needs to weigh the macro factors more in this case.  SU-T has a lower correlation to the energy sector because there is less risk and that is because of their refining business.  Energy is starting to look interesting now.

NORTH AMERICAN - LARGE & ETFs
2017-03-20 Larry Berman CFA, CMT, CTA

Educational Segment: Long-Term Investing. This is on geopolitical and global macro, because a lot of global hedge funds macro views and look for themes in markets. This week, Canada has their budget. Global investors look at things like this and look for what is diverging and what is different, and is it good or bad compared to others. The US is cutting taxes, both corporate and personal, while Canada is raising taxes. Global money follows the flow of funds. Canada has net outflows on capital account, net outflows on current account, so we run trade deficits. There is less money coming into Canada so the global investors see that Canada is vulnerable and if they Short Canada as well as the currency, will the Bank of Canada raise rates? Investing in Canada has a lot to do with oil, and as oil goes, so goes the TSX.

If the budget is as bad as he thinks it is going to be, in terms of taxing capital and savings, you use inverse ETF’s. HBP 60 Inverse ETF (HIX-T) is an inverse play on the TSX 60. While Canada is somewhat cheap this year, it is only going to grow at 1.5% a year over the next 5 years, and only because they are borrowing money.

STOCKS & ETFs
2017-03-13 Larry Berman CFA, CMT, CTA

Educational Segment: Market Drawdowns. What he calls “market noise” is a 5% correction or less. He looked at the peaks and the lowest lows in a 4-year business cycle since 1920. Looking at the drawdowns over the years, you can see the great depression, where 86% was the drawdown in US large caps. We’ve had several in the 50% range. However, the average surprisingly was 13.4%, and the average was only 10 months long. You tend to get a 5%-13% correction at least once a year, so it is pretty normal to get volatility in the markets. Drawing down a little further, he has a one-year version, which shows that we get more frequent declines. The interesting thing is, if we are down 13.4% from the previous peak, and we look out one year knowing that the bear decline is about 10 months, this is the time to start investing, to get aggressive once the markets are down. Your forward returns go up exponentially from a low point, compared to putting money to work at a high point. We are probably due for a downturn that is going to be about 24% at some point in the next year or 2, so he is playing defence because of that. Once we are down 13.4%, he’ll be thinking about buying.

STOCKS & ETFs
2017-03-06 Larry Berman CFA, CMT, CTA

Educational Segment.  Long Term Investor Psychology.  Per unit of gain in a portfolio, the psychological value diminishes as you get more.  The more money you start to lose, the more you increase your unhappiness per unit of loss.  When we get complacent after a period of gains, this is our biggest point of risk. 

NORTH AMERICAN - LARGE & ETFs
2017-02-27 Larry Berman CFA, CMT, CTA

Educational Segment.  Diverging tax policy in the US and Canada and how to take advantage of it.  Trump is addressing a joint session of congress tomorrow night.  Trump is going to talk about tax, including border tax.  They may not have agreement about tax reform until Q4 this year or even early 2018.  They want the tax reforms to be revenue neutral.  He is far more bullish in his outlook for the US than Canada.  The Canadian dollar could get weaker.  PSU-T is a high interest savings account, but you would also make money on the drop of the CAD$ relative to the US$.  For more aggressive types you could play it with small caps in the US and an inverse position in Canada.  There is volatility ahead with ambitious estimates for earnings growth possibly not happening.

NORTH AMERICAN - LARGE & ETFs
2017-02-13 Larry Berman CFA, CMT, CTA

Educational Segment. Using Stops. The value approach looks for a range of support and how you buy into it.  Anchoring is a behaviour where you want to try to get your money back.  That is the wrong way to think about it.  You should think about where you should put the money in a losing stock.  Get out of a position if it is not working.  You should have a plan on when to get out.

NORTH AMERICAN - LARGE & ETFs
2017-02-06 Larry Berman CFA, CMT, CTA

Educational Segment.  Measuring Risk and Reward.  Within 20 years the vast majority of money in the world will be run by computers.  The traditional portfolio manager will be gone.  E.g. SU-T, 25% of the sector, a big player.  Going back 10 years it has made nobody any money for 10 years.  It is up less than the dividend.  Buy it when it is cheap relative to the benchmark and the markets.  Figure out how much you need in your portfolio.  The price of oil is the most important factor in the stock price.  Looking at the 5 year chart it is incredibly overvalued.

NORTH AMERICAN - LARGE & ETFs
2017-01-30 Larry Berman CFA, CMT, CTA

Educational Segment.  Smart Factor ETFs.  Reducing portfolio risk.  The trend between actively managed mutual funds compared to what capital is going into ETFs show money is moving that way.  You can do asset allocation with ETFs and that is by far the most important consideration.  The bigger companies dominate the NASDAQ.  Three sectors make up half the index.  It is very concentrated and heavily weighted into a few stocks.  All smart factor ETFs beat the index.  They all have different volatilities.  You should use all of the indexing strategies in your portfolio. 

AGRICULTURE, DIVIDEND & FIXED INCOME
2017-01-23 Larry Berman CFA, CMT, CTA

Stop Losses.  Using stops in portfolios is a certain kind of style for people who do not understand diversification and are pure momentum players.  It is fine.  But the vast majority of guests on BNN are portfolio managers and have a long term horizon.  Being stopped out can be silly in that case.  He is going to do a series on them in his educational segment in the future. 

NORTH AMERICAN - LARGE & ETFs
2017-01-23 Larry Berman CFA, CMT, CTA

Educational Segment.  Smart Factor ETFs.  Research affiliates.  He showed a graphic depicting smart factors that look at momentum, volatility, liquidity, profitability, etc.  If you calculate excess returns, on average over history about 40 years you average about 2.4% in excess return.  The average volatility is mostly less than the index.  A second graphic looked at cross correlation of factor returns.  If you put two together in a portfolio you get diversification. 

NORTH AMERICAN - LARGE & ETFs
2017-01-16 Larry Berman CFA, CMT, CTA

Educational Segment.  Smart Beta ETFs.  Sustainable yield.  High dividend stocks can’t usually sustain the high dividends.  Sphere’s strategy aims to offer sustainable dividends.  You have to eliminate stocks from an ETF that can’t sustain high dividends.  They have a screen for these companies.  You lose a little yield, but greatly reduce volatility.  SHC-T is a Canadian sustainable high yield ETF.  They have US, Europe, Asian etc as well.  It is not always about the MERs. 

NORTH AMERICAN - LARGE & ETFs
2017-01-09 Larry Berman CFA, CMT, CTA

Educational Segment.  How to play the market if you are risk adverse in 2017.  Are Trump policies coming in or not?  Over the last 10 years the marginal tax rate for corporations has come down from 50% in 1955 to 35% recently.  Analysts expect 22% earnings growth from the S&P.  The PE of the S&P is 21 times.  It is a 23% world GDP economy.  The banks have been the big leader since the election.  It’s going to take a lot of interest rate hike to get the banks back to where they should be with interest rate spreads.  There is a new president, first term, new party.  The average pattern has half a percent gain.  We have already exceeded that.  The inauguration is pretty much the high point for the year.  Get into options late in the market cycle. 

NORTH AMERICAN - LARGE & ETFs
2016-12-19 Don Vialoux

Educational Segment.  When Stocks are Overbought or Oversold.  Look at the percentage of stocks above and below their 50 day moving average.  Below 20% (30% in Canada) is a buying opportunity and above 80% is a selling opportunity.  These give you signs of the market preparing to sell off or to go up after buying.  He suggests you hold off until inauguration day and then you have a good opportunity to take money off the table.

TECHNICAL ANALYSIS & SEASONAL INVESTING
2016-12-12 Hap (Robert) Sneddon FCSI

Educational Segment.  How to Use Stop Losses.  It is part of risk management.  Look at your position sizing.  Do you have too much in one stock because it has done so well.  Knowing when to sell is a hard thing.  Look at the beta of your portfolio.  To exit, you could use a volatility stop (VSTOP – Google it).  ‘VSTOP’ is a calculated stop loss point that incorporates the volatility in the stock.  Look at moving averages.  You might sell if it breaks the 10 day.

TECHNICAL ANALYSIS
2016-12-05 Don Vialoux

Educational Segment.  Why the TSX outperforms in the early part of the year.  The Canadian market outperforms the US from December to the end of February.  It has to do with commodity prices, which move higher.  Crude oil is at the end of its seasonal weakness after which it moves higher.  Silver moves higher from December into March.  Copper moves higher from now until April.  Gasoline goes up from now until the beginning of March. 

TECHNICAL ANALYSIS & SEASONAL INVESTING
2016-11-21 Larry Berman CFA, CMT, CTA

Educational Segment.  Momentum and value in smart beta ETFs.  Vanguard has a couple of smart strategies.  They think smart indexing is an active strategy.  They debate Larry in disagreeing it is active in that it is a set of rules.  The Momentum strategy is benefiting from a behavioral bias in the market place where investors are slow to react.  The Liquidity strategy focuses on companies that are smaller and don’t trade as much, aren’t in the news as much and so may be undervalued.  Investors overpay for liquidity in the market place.  Less liquid names, also have more risk.  A quarter of Vanguards assets under management are actively managed.

NORTH AMERICAN - LARGE & ETFs
2016-11-14 Larry Berman CFA, CMT, CTA

Educational Segment.  Smart Beta ETFs.  First asset’s approach is to work with morning start.  They have been working on quantitative modeling with dates going back to the 1980s.  They created a screen.  They look for companies that are trading below net asset value and have growth potential.  They screen for companies with price momentum as well as earnings momentum while having value.  These two strategies since inception have extracted some of the better companies.  Over 2 years the two strategies together outperform 90% of the time and 100% of the time over 4 years.  VRX-T was in the momentum portion and was rebalanced on a quarterly basis and got trimmed back.  You could equal weight the strategies.

NORTH AMERICAN - LARGE & ETFs
2016-11-07 Larry Berman CFA, CMT, CTA

Educational Segment.  Smart ETFs - Multi-factor products.  iShares has a forecast on where things are going.  They see $1 Trillion US$ by 2020 and 2.5 by 2025 in these products.   There are two factors suggesting these forecasts:  They has the potential to disrupt active management; and the have the potential to address the challenges investors are facing in today’s market.  What is new about mult- factor investing is the technology. It is based on long term proven drivers of return.  Their approach of combining factors means you don’t have to forecast which is the winning factor of the future.  Value, size, quality and momentum are the four factors they combine into one investment solution.  If you look at F-class (compensation component of cost is removed) mutual funds they have a cost of just below 1%.  iShares multi-factor ETFs are 45 basis points.  It is more affordable.

NORTH AMERICAN - LARGE & ETFs
2016-10-31 Larry Berman CFA, CMT, CTA

Educational Segment.  Fundamental Indexing.  Market Cap indexes are the traditional way to do indexes and fundamental indexing looks at cash flow, profitability, dividend sustainability and so on.  It is a rules based approach that focuses on the strength of the underlying companies.  Market weight is a popularity contest.  E.g. Nortel.  It went from 3% to 30% of the TSX index.  It represents a key flaw of market weight investing.  You would have ridden it all the way back down.  VRX-T did something similar being 9% of the TSX 60 at its height.  Returns are better in fundamental indexing rather than market cap indexing.  It will not win over every part of the cycle but long term it wins.  Larry’s guest runs his screen once per year.  Running it more often incurs trading costs and so on.  Research shows you only run it once a year.  These funds have a few basis points more MER and are worth it.

NORTH AMERICAN - LARGE & ETFs
2016-10-24 Larry Berman CFA, CMT, CTA

Educational Segment.  Smart Beta ETFs.  They are smart indexing products.  Low beta or volatility strategies address investor outcomes using Beta.  They look for low beta.  If you weight beta and ensure diversification across the market place, you get less risk.  Low beta is not expensive but in line with the market place.   There is also a ‘quality’ based set of ETFs.  They look at debt to equity to reduce volatility.  These ETFs are managed by computer and not actively managed by a portfolio manager.  You pay a bit more than a non-smart ETF.  The low volatility and higher quality strategies have historically done better through history.

NORTH AMERICAN - LARGE & ETFs
2016-10-17 Larry Berman CFA, CMT, CTA

Educational Segment.  ‘Smart’ ETFs.  A Beta of 1 means ‘market’. They researched factors back to the 1950s and if you screen for these factors you can do better than market weighted portfolios.  You can pay a bit more, but you get a slightly better return.  Smart ETFs are rule based rather than actively managed.  This is the fastest growing area in ETFs.

NORTH AMERICAN - LARGE & ETFs
2016-10-03 Larry Berman CFA, CMT, CTA

Educational Segment.  Today's educational segment was pre-empted by an announcement by the federal government on housing.

NORTH AMERICAN - LARGE & ETFs
2016-09-26 Larry Berman CFA, CMT, CTA

Educational Segment.  Currency effects on your portfolio.  Over the next decade, average returns are going to be lower.  When you invest globally, currency is the most important consideration.  When the CAD$ is getting weaker, you are making money. However, when it gets weaker, it reduces profits.  With ETFs you can control the currency.  Currency explains about 70% of the difference in returns when investing globally. 

NORTH AMERICAN - LARGE & ETFs
2016-09-19 Larry Berman CFA, CMT, CTA

Educational Segment.  The market thinks the likelihood is 18% for a rate hike.  He thinks they will go for it this week, however.  They have not unexpectedly raised rates since 1994.  ’94 was the worse bond market we had for a generation.  This will not be similar.  It is all about the psychology of how they do it.  We will almost certainly get another recession in the next couple of years and Canada and the US will have to go to negative interest rates.  Economic numbers are getting worse, but the market has not reacted. 

NORTH AMERICAN - LARGE & ETFs
2016-09-12 Larry Berman CFA, CMT, CTA

Educational Segment.  Increased Volatility Coming to the Markets.  There are lots of ways to measure it.  One way is to use the Bollinger bands.  It uses 20 days, or about a month.  The spread got down to below 2% for the longest period in decades recently.  We had ultra low volatility.  In history all the times it has fallen below 2%, we are in for a period of a market correction.  It does not help us to know how long the correction will be.  He believes it will be at least a couple of months.

NORTH AMERICAN - LARGE & ETFs
2016-08-29 Larry Berman CFA, CMT, CTA

Educational Segment.  The US$.  The market changed dramatically after the Fed said the rates were to go up September and December both.  The Euro is 57.6% of the US dollar index, so it matters what Europe does.  The notion that currency doesn’t matter is wrong.  It is the most important factor when investing.  A rate hike will put downward pressure on commodities and upward pressure on the US$.  He thinks we re-test the Brexit lows over the next couple of months.

NORTH AMERICAN - LARGE & ETFs
2016-08-22 Larry Berman CFA, CMT, CTA

Educational Segment.  Why rates can rise and what to do to take advantage.  Bernanke has used this week’s speech in the past to change things.  Last week we had the minutes from the July meeting causing the market to see no raised rates.  Since then a number of Fed speakers have said it could change.  There is still only a 26% chance they raise rates in September.  He thinks the Fed are not considering the election in making interest rate increase decisions.  He thinks there is a much higher chance that rates go up in September.  He recommends sitting in US cash and make 3-4% while you wait.  DLR-T and PSU.U-T and SHV-N play the US dollar as well.  

NORTH AMERICAN - LARGE & ETFs
2016-08-15 Larry Berman CFA, CMT, CTA

Educational Segment – Fewer and fewer stocks are lifting the markets and this should concern investors.  Market breadth is an important concept.  He looks at stocks making new 52 week highs.  100 or more stocks is a lot of stocks to make 52 week highs.  The top 10 holdings in the S&P are 18% of the market and can lift it.  He showed a chart of the number of stocks making new highs over time.  The market is going up and the percentage of stocks making new highs is low compared to 2013-2015.  This is not a broad based rally but late cycle.  There are big risks for downgrades in the fourth quarter.  He compared the consumer cyclical and retailing.  The latter is not doing well but the big names are doing well and lifting the index.  You should look at what the whole market is doing.  It is not a robust trend 8 years into a bull market.  It is not a broad based rally so don’t chase it.

NORTH AMERICAN - LARGE & ETFs
2016-07-25 Larry Berman CFA, CMT, CTA

Educational Segment.  Concerns about the weekend’s G20 meeting.  They are agreeing to continue spending and not worrying about who is going to pay for it.  We need the growth pickup in the world, but the problem is the debt getting bigger.  150% of the world’s GDP has come from debt since the Lehman moment.  You can’t stimulate by weakening your currency, but that is what they are doing.  Infrastructure ETFs are very expensive right now.

NORTH AMERICAN - LARGE & ETFs
2016-07-18 Larry Berman CFA, CMT, CTA

Educational Segment.  Crisis for Savers.  In Europe in asset classes, there will be negative real returns.  They expect 4.3% in emerging markets.  The buy and hold world is going to be challenged for the next number of years.  Fixed income and treasuries are looking negative.  Small caps are looking like zero returns.  Higher volatility investments will have higher returns.  Most returns come from the currency of the country. 

NORTH AMERICAN - LARGE & ETFs
2016-07-11 Larry Berman CFA, CMT, CTA

Educational Segment.  Earnings Season.  Brexit and so on will get pushed to the back burner temporarily.  The focus will be on earnings.  Revenue is important.  The S&P is expected to decline in earnings for the 5th quarter in a row.  It is expected to be down 0.8%.  Next year the expectation is that revenue growth comes back.  Technology and financials are expected to be bad for Q2/16, but to grow a lot in 2017.  Price to sales ratio.  In ’98 to ’00, markets doubled.  The price of the S&P vs. its revenue got to a little over 2.  We don’t have that same economic tailwind now.  The current ratio is 1.9.  When the price to sales ratio is this extreme, companies miss all the time in earnings.  There is a risk of a 10 to 15% correction.

NORTH AMERICAN - LARGE & ETFs
2016-07-04 Larry Berman CFA, CMT, CTA

Educational Segment.  Is Italy Too Big to Fail?  Italian vs. European banks:  all banks across Europe are underperforming.  In Italy, 20% of all outstanding loans are non-performing.  The Spanish banking index has been dropping since 2014.  It is by no means free and clear for Europe.  This is a big challenge and it is not over by a long shot.  Markets are going to stay volatile for a long time yet.

NORTH AMERICAN - LARGE & ETFs
2016-06-27 Larry Berman CFA, CMT, CTA

Educational Segment. Brexit. At the end of every Bear cycle, if you are still bearish you make no money, markets rally. At the end of every Bull cycle, the Bulls have to feel some pain when things go down. Every correction we have seen in the last couple of years has been 1 month or 2, and then a recovery. Thinks BREXIT is enough of a catalyst, that this time it is going to be more painful, taking out the lows that we have seen earlier this year, and in the middle of last year. He showed the STOXX 600 Banking Index (European bank index chart). It showed the 08-09 lows, and lower lows in 2012. Today we are at about 6% from those lows of 2012. Those lows need to be tested and probably to be taken out at a minimum before we see people confident about coming back in to European banks. He then showed the STOXX 600, which is like the S&P 500 of Europe, a benchmark of all the European countries including the UK. Chart shows a long upward trend line from 2008, and we are sitting on the trend line now. If it breaks where do we go. Retracement levels are where you look for where the market might come back to. The trend line is almost certainly going to break, and that adds to the broader European markets of another 10%-15% downside. On fundamentals, looking at the last 5 years of the earnings, earnings have been going down. Negative interest rates don’t work, they are toxic. He doesn’t know how they stabilize things, and there is more downside to come. Fundamentally we have to go down lower, there has to be some pain. The US and Canadian markets are going to come down in sympathy. They probably retest February lows, and let hope it holds.

NORTH AMERICAN & ETFs
2016-06-20 Larry Berman CFA, CMT, CTA

Educational Segment. Brexit? Feels Brexit is probably not going to happen. Generally speaking, the undecided voter speaks for the status quo. What is happening globally is the anti-establishment vote. More and more people are upset. He doesn’t think Europe works in the common currency and in some of the things they are trying to do. Loves the idea of the EU and Europe working together, but the reality is that these countries did not meet their criteria and debt is a problem. A chart on the British pound shows that it broke down in January at about 1.48-1.49 when this really started to get in the mainstream. The long-term multi-decade support of 1.39-1.40 is the range. If the British pound gets above 1.49 or below 1.39 that is going to tell you how things are going to play out.

NORTH AMERICAN & ETFs
2016-06-13 Larry Berman CFA, CMT, CTA

Educational Segment. Downside of negative interest rates. Negative interest rates are really stealing money away from pensioners and savers. Did a little heat map of the term structure of interest rates going 2 to 30 years in the various countries. Canada, US and UK still have relatively normal yield curves, although yields are pretty much as low as they have ever been. However, in Europe and Japan you’ve got negative interest rates. There are over $10 trillion of government yields with negative interest rates. Last week the ECB started buying corporate bonds, and there is a good chance that some corporates are going to be able to issue bonds with negative interest rates. He showed a 2006-2016 chart of the total returns of the entire US market comparing the history of stock and bond returns. When stocks go down, bonds are generally the offset. The problem in the pension world going forward is that interest rates are so low that in order to get that balance return of 6%-7%-8%, you have to use stocks, but only if you can handle the ride. The volatility is very, very different. If global bonds are going to yield 1%, in order to get your 7% in a balanced portfolio, you have to get 14%-15% in stocks. Where valuation is today, that is not doable. A passive “buy and hold” portfolio is going to be very challenging.

NORTH AMERICAN & ETFs
2016-06-06 Larry Berman CFA, CMT, CTA

Educational Segment.  Growth.  The ECRI have some great free stuff on their web site.  Dips in the GDI below 0 mean we are in a recession.  Less than 2% is a period of stagnation and is where it has been for the last couple of years.   We can expect this to continue and it depends somewhat on who wins the election and what they do with minimum wage laws.  Another great indicator is a 20 country coincident growth diffusion indicator.  Below .50 is contractionary and that is where it has been over the last couple of years. 

NORTH AMERICAN - LARGE & ETFs
2016-05-30 Larry Berman CFA, CMT, CTA

Educational segment.  Sell in May and Go Away?  On May 19 we broke the neck like of the head and shoulders pattern.  The bulls are now back in control.  Seasonally there is talk of selling in May.  Historically this has worked.  From 1928 to today in the the S&P, he showed a chart of weekly price returns and it is flat May to October each year.  The fourth year of a presidential year is different.  The seasonal patterns for the next couple of months in 4th years are quite positive.  There is weakness in September and October, however.

NORTH AMERICAN - LARGE & ETFs
2016-05-16 Larry Berman CFA, CMT, CTA

Educational Segment.  Head and Shoulders Pattern.  This is THE best pattern and the most reliable pattern.  You get higher highs and high lows over a period of time and then you make a lower high and a lower low.  The neck line is the trend from shoulder to shoulder.  We had the S&P in an uptrend since Feb lows and then in April it had a head and in May it is having a second shoulder.  You have a lot of support in the 1970 area and if you are going to buy in the next while, it will be a good time.  However, he is worried about the market in September/October. 

NORTH AMERICAN - LARGE & ETFs
2016-05-09 Larry Berman CFA, CMT, CTA

Educational Segment. Companies buying back shares.  There are a couple of ETFs that focus on these companies.  When you look at what share buy backs have done over the last 7 years to earnings, it has grossed up earnings per share by 25% for the S&P.  Companies generally buy back 10 to 15% of shares when they do so.  The earnings per share go up, but the EPS goes down.  The market likes share buy backs, but it indicates the company does not see many growth prospects for themselves.  There is a buyback index.  Buying back shares was good until 2000.  It is not good when interest rates are likely to rise.  PKW-T does not always outperform and has not been doing so for the last year.  Watch out when companies are increasing the rate of buying back shares.

NORTH AMERICAN - LARGE & ETFs
2016-05-02 Larry Berman CFA, CMT, CTA

Educational Segment.  Artificial Intelligence and ETFs.  The Buzz Index.  His guest looks at social media and identifies the top 25 stocks with the most bullish prospects.  He uses the power of the computer to scan social media for comments he is looking for.  Software uses natural language processing.  He also tries to gauge how many people are listening to the person posting. 

NORTH AMERICAN - LARGE & ETFs
2016-04-25 Larry Berman CFA, CMT, CTA

Educational segment. The zero interest rate policy.  The central banks are ripping about a trillion dollars away from the savers.  This is actually effectively the biggest increase in taxes for savers in history.  Japan cannot do anything to stimulate growth except to lower the value of the currency.  There is $75 Billion in in ETFs that Japan has purchased in the last few years to try to stimulate the economy.  The largest economy in the world (USA) is not growing if it was not for borrowing.  Borrowing in the system is going up and GDP growth is going down.  They just can’t keep going on like this.

NORTH AMERICAN - LARGE & ETFs
2016-04-18 Larry Berman CFA, CMT, CTA

Educational Segment.  An agreement among stop producers did not happen.  They were talking of freezing production.  But if he was running Iran and had been under sanctions for 5 years, he would pump as much as he could to get his share of the revenue.  Probably the highs we have seen recently are all we are going to see for now.  5 years ago OECD did not have a clue what fracking would do.  Right now they are expecting no material increase in production in North America for over a decade.  The XEG-T trend line is up, but we have to watch for it to break down.  We have 10-15% correction risk.  ZJO-T is energy and juniors would have 15-20% correction risk.

NORTH AMERICAN - LARGE & ETFs
2016-04-11 Larry Berman CFA, CMT, CTA

Educational Segment.  A Safe Withdrawal Rate from Retirement Savings (e.g. RRSP/RRIF).  With a 5% interest rate return, it would have taken $178k for an income of $48k through retirement.  Now you have to put $563k to get the same payout.  This environment crushes the savers.  Less than 10% of Canadians have a financial plan.  You HAVE to have one.  There is a pending crisis regarding retirement because of low interest rates.  If you withdraw at too high a rate, you run out of money.

NORTH AMERICAN - LARGE & ETFs
2016-04-04 Larry Berman CFA, CMT, CTA

Educational Segment.  April Showers and No May flowers.  He sees a lot of risk. Looking bottom up, analysts started out looking up, but as earnings are coming out, they have taken estimates down just before that. The risk this year is that earnings don’t deliver.  Looking top down, the analysts are worse.  In 2015 they had big expectations, but then they were wrong.  As markets sell off, they start lowering their forecasts.  There is downside risk as we get into earnings season again.  You should take some money off the table right now and buy back later.

NORTH AMERICAN - LARGE & ETFs
2016-03-28 Larry Berman CFA, CMT, CTA

Educational Segment. Fixed income.  Spreads in credit are far more a leading indicator than the stock market.  The bond guys understand a lot better what is happening in the economy than the stock guys.  Corporate bond spreads vs. treasury ETFs:  They have been widening.  They have come back to the same levels as in ’08/’09.  They are telling us the economy is not healthy.  European banks: EUFN-N and the FTSE Europe ETF. The banks have dragged everything down.  There are big risks in credit spreads.  Portuguese bond spreads have widened dramatically and a lot of refinancing has to happen over the next 5 years so that is the next big risk to the European economy.  You don’t go all to cash.  You have to understand asset allocation.

NORTH AMERICAN - LARGE & ETFs
2016-03-28 Larry Berman CFA, CMT, CTA

He cares most about business risk to the banking sector overall.  See his educational segment today.  The banks had a great run from January, but he does not like owning banks generally.  He does not like TD-T here and is underweight financials as a source of dividends in his dividend fund.  He did hold it earlier in the year for a while.

NORTH AMERICAN - LARGE & ETFs
2016-03-21 Larry Berman CFA, CMT, CTA

Educational Segment.  Why Raising Retirement Age is a Good Idea.  A Lawyer and an Actuary penned an article about why it was a bad idea to roll back OAS from 67 to 65.  We are all living longer.  OAS started in the 1950s and life expectancy was 80.  Now if you live to 65 you are likely to live to 85.  We will be at 16% young people going forward, but the number of old people will be going up dramatically (16-24%).  Governments are inept at dealing with people living longer.  The kids are going to pay.  Each one owes $38k right now.  The US will be out of OAS by 2039 if they don’t change policy. 

NORTH AMERICAN - LARGE & ETFs
2016-03-14 Larry Berman CFA, CMT, CTA

Educational Segment.  After the recent market rally what comes next?  The markets popped in the last week and now we are into a period of resistance.  We are in a global bear market and have we bottomed?  Market breadth: The US market has had good breadth, but not around the world – mixed reading, slightly negative.  Valuations higher than ever, earnings likely to be flat for the rest of the year, so we are on the high end.  A lot of earnings growth is from share buy backs over the last 4 years.  Is the market respecting support and resistance levels – no.  He believes we are in a bear market.  He believes we will retrace to around the 1600 level (25% from the peak).

NORTH AMERICAN - LARGE & ETFs
2016-03-07 Larry Berman CFA, CMT, CTA

Educational Segment.  Negative Interest Rates.  The yield to maturity in the world in bonds is 1%.  The central bank in the US controls short interest rates as well as to supply and drain liquidity from the marketplace.  Quantitative easing is a more permanent operation.  He believes interest rates will stay low for some time.  US debt to GDP shot up during the Ragan years.  Then in the Lehman moment, they borrowed 9 trillion dollars. 

NORTH AMERICAN - LARGE & ETFs
2016-02-29 Larry Berman CFA, CMT, CTA

Educational Segment.  Super Tuesday.  The political establishment is mortified at what Donald Trump has been able to do.  You have this rip in the party.  Texas is key here.  Trump has been able to win because the Republican party is split.  Texas is tomorrow night (Super Tuesday).  After that Trump may be able to be challenged.  He has not said one thing that is economically decent.  The markets are not likely to go down on Wednesday because you have the March 10th ECB announcement.  Then you want to wait for March 15th, after that volatility will increase.  You want to take down the risk after the 15th.

NORTH AMERICAN - LARGE & ETFs
2016-02-22 Larry Berman CFA, CMT, CTA

Educational Segment.  Bear Markets.  Once you are armed with the facts, you get a lot of valuable information about the markets.  From 1928, the S&P (a third of the capitalization in the entire world), measuring all the bear markets, the average correction is 13% and this is where people start to panic.  This is not when you should sell, but when you should buy.  The problem is the 22 papa bear markets that are 19% or more and they average a 34% decline.  And the question is "are we in one of those?"  They happen because of extreme valuations (not now), or the financial systemic risk (not now), and the great depression.  In the absence of those three, the average is 20% and no more.  We just had a bit over 15% of a correction recently.  He thinks there is another leg down in this bear so every time the market goes another leg up he takes his equity exposure down.

NORTH AMERICAN - LARGE & ETFs
2016-02-08 Larry Berman CFA, CMT, CTA

Educational Segment.  How to make Smart Monthly Withdrawals.  0.8% is the monthly average return of the S&P over history.   Look at the percentage difference between the current S&P price and the 21-day moving average.  If the current monthly return is twice as much as the average monthly return, it is time to take money out of the market.

NORTH AMERICAN - LARGE & ETFs
2016-02-01 Larry Berman CFA, CMT, CTA

Educational Segment.  Dollar cost averaging.  For the average person, if you are smart, you can make informed decisions beyond dollar cost averaging.  But don’t just invest on the month end.  He looked at the VIX index.  He took a rating of -1.57, and said put that same money in the market when it declines that much.  This is Smart Dollar Cost Averaging.  -1.57 is based on volatility and this is the moment you need to invest.  You don’t know whether to do it at the close or the next morning but he prefers the afternoon of the day of that volatility.

NORTH AMERICAN - LARGE & ETFs
2016-01-25 Larry Berman CFA, CMT, CTA

Educational Segment.  Standard Deviation.  In December, securities regulators put out a paper for comment about more disclosure for mutual funds.  People don’t understand the true cost of investing.  However, the biggest cost to investors is really the emotional costs – the volatility.  People sell when they should be buying.  Standard deviation defines risk.  Looking back over 10 years, higher than 20% on your return means +60 to -40%.  The real cost of investing is being able to stay in the market to get that return.  ETFs are good for keeping in the stocks for the long term.

NORTH AMERICAN - LARGE & ETFs
2016-01-18 Larry Berman CFA, CMT, CTA

Educational Segment.  Are global markets oversold?  Everything he looks at tells him we are ripe for a new trading rally.  We won’t make higher highs, however.  Canada will outperform.  He looks at the percent of stocks above the 200 day moving average.  Only 16.5% (it is very low compared to other periods earlier in the year) of global stocks are above it now.  It was over 50% back in August.  Sell into rallies.  

NORTH AMERICAN - LARGE & ETFs
2016-01-11 Larry Berman CFA, CMT, CTA

Educational Segment.  The Relative Strength Index (RSI).  It looks at the average gain and the average loss over the last 14 days.  The average RSI of SPY-N (S&P 500) going back 22 years is about 54.  The standard deviation (volatility) is 11.  It hit below 2 standard deviations (32) last Friday.  Historically following this point the return has been 3.11% vs. 0.82%.

NORTH AMERICAN - LARGE & ETFs
2015-12-21 Don Vialoux

Educational Segment.  The Electoral Seasonality.  During a presidential election year, the US market slightly underperforms the average.  There is not much change earlier in the year.  But super Tuesday is March 1st when 14 primaries happen.  Around the end of May they have their candidates and from there until the beginning of September, the US market outperforms what it usually does.  The market then goes down until just before the election.  This year they changed the election laws regarding campaign spending (Super Packs).  After the election on November 8th, the markets go higher until the end of the year.

NORTH AMERICAN - LARGE & ETFs
2015-12-14 Larry Berman CFA, CMT, CTA

Educational Segment.  A Recap of his 2015 Predictions and a look at 2016.  China slowed as he predicted.  He expected the anti-EU party to get in in Greece.  He thought they would leave the EU and still thinks it will eventually do so and also that the EU will eventually break up.  In 2016 the biggest risk is credit risk.  The last time credit spreads were this high, the S&P was 20% lower.  He sees a 15-20% correction in 2016.  There are geopolitical risks, ISIS being one of them.  He expects the Fed rate to be 0.75 to 1% by the end of next year.  He predicted crude oil would go down and he thinks it will at best get back to $60 by end of 2016.

NORTH AMERICAN - LARGE & ETFs
2015-12-07 Don Vialoux

Educational Segment. How the markets have reacted to previous rate increases + the El Nino effect on stocks.  The market always goes down prior to the first rate increase.  After the rate increase, the market over the next 3 months goes up over 10%.  The US dollar goes lower.  The same has happened in Canada 6 of 7 times.  Environment Canada has said it will be warmer than average in Canada because of El Nino.  Industrial production increases because more can get done in a warmer winter.  Stock markets do better because of these production increases, although retailers sell less winter coats, energy does less well also.  Don’t be afraid to be in markets over the next three months.

NORTH AMERICAN - LARGE & ETFs
2015-11-30 Larry Berman CFA, CMT, CTA

Educational Segment.  Tax Loss Selling.  This is tax loss selling season.  Energy is the worst sector this year.  FHE-T gives a selection of US energy companies, traded in Canadian dollars, no hedging.  You sell the stocks for tax loss and then buy back this ETF to keep your exposure.  They decided not to hedge to the US $ last year.  Canadian dollar ETFs with US holdings are not subject to US estate taxes on high net worth investors upon death.

NORTH AMERICAN - LARGE & ETFs
2015-11-23 Larry Berman CFA, CMT, CTA

Educational Segment.  Roll-ups in Horizons ETFs.  It is a round of consolidations of ETFs through unit consolidations.  It has to do with moving from one futures contract to another, where you lose some premium.  HNU-T is one of their most popular ETFs.  The loss of some premium of futures contracts is a headwind for this ETF.  The average hold time is a day or two.  Your average hold time has to be less than a week.

NORTH AMERICAN - LARGE & ETFs
2015-11-16 Larry Berman CFA, CMT, CTA

Educational Segment.  Japanese Debt.  There was a $57 billion increase in global debt since Leman.  The biggest accumulation of debt is on the government and corporate sides, not households.  Look at credit default swap spreads.  Emerging markets have higher spreads.  The bond market is starting to get on alert.  The trend has turned and this is where we watch for global systemic risk.

NORTH AMERICAN - LARGE & ETFs
2015-11-09 Larry Berman CFA, CMT, CTA

Educational Segment.  Asset Allocation vs. Stock Selection.  The market could care less where you bought the stock.  Most people don’t know how to get out of a stock.  Over the last 60 years, equities were the best choice, vs. bonds, but the problem is tolerance for volatility.  By combining different asset classes, you can lower volatility.  It is more important than stock selection. 

NORTH AMERICAN - LARGE & ETFs
2015-11-02 Larry Berman CFA, CMT, CTA

Educational Segment.  Retirement and an encore career – you leave the corporation, but keep doing lots of work, possibly part-time.  One of the challenges for this is the uncertainty of returns from investments going forward.  An encore career makes your money last longer in retirement.  People are living longer, perhaps 10 years longer than you expected.  Millennials are looking at living to 110 years old. 

AGRICULTURE, DIVIDEND & FIXED INCOME
2015-10-26 Larry Berman CFA, CMT, CTA

Educational Segment.  Real Estate (like it was a stock).  The guest is cautious on the outlook for real estate.  House maintenance is like an MER is to mutual funds or ETFs.  Real-estate is VERY expensive to maintain.  It is almost becoming a luxury product.  You should not fall in love with the value of your house as they rise and fall.  Don’t sell your own house because it is overvalued.  The current rental house in Toronto has a ‘P/E’ ratio that has risen from 5.1 to 8.5 since 2000.  Vancouver is at 11 times and New York is at 6.  Retirees want to extract maximum value from their house.  Maybe they should think about selling in this kind of market.  Condos are expensive also.

NORTH AMERICAN - LARGE & ETFs
2015-10-19 Larry Berman CFA, CMT, CTA

Educational Segment.  Elections.  Statistically, when the Democrats are in power, the markets do better than when the republicans are in office.  But if you throw out 1929-1932 you find it is the reverse.  This tells you the dataset is useless.  In Canada, going back to 1922, when Liberals were in power, markets did better, unless you take out the great depression and in that case they are about equal. 

NORTH AMERICAN - LARGE & ETFs
2015-10-05 Larry Berman CFA, CMT, CTA

Educational Segment.  Turning the Volatility Index into the Opportunity Index.  The VIX index has been nicknamed the ‘fear’ index.  That is wrong.  Turn it upside down and call it the ‘Opportunity Index’.  It is VIX divided by the square root of 12 get the monthly number and by the square root of 252 to get the daily number.  When the opportunity index is below the decline of the S&P from 52 week highs, that is a period of opportunity.

NORTH AMERICAN - LARGE & ETFs
2015-09-28 Larry Berman CFA, CMT, CTA

Educational Segment.  Financial Literacy.  Financial Fraud:  Guest’s book talks about avoiding identity fraud and financial fraud.  People should go to their accountant with an offering memorandum before investing.  The accountant should be independent of the offerer. 

NORTH AMERICAN - LARGE & ETFs
2015-09-21 Larry Berman CFA, CMT, CTA

Educational Segment.  Opportunity and Event Risk.  This week there is an election in Spain.  The US debt ceiling in October will be a market moving event.  How do you navigate around them?  His current road show addresses this.  He addresses events by moving in and out of equities.  When an event occurs he goes back to see similar events and sees what happens to look for opportunities. 

NORTH AMERICAN - LARGE & ETFs
2015-09-14 Larry Berman CFA, CMT, CTA

Educational Segment.  It is FED Week.  What happens with interest rates for the next couple of years is really important for investors.  The probability of them moving up a full 25 basis points next week is about 20%.  He is expecting half that.  There is about a 60% chance that the Fed does a half a move.  In the 50’s when interest rates went up at first when hikes started, the markets also went up because it was due to the economy being stronger.  He does not think we will get over tightened any time soon.  He thinks that even if the FED tightens 4 times, the markets will still be strong.  There is no historical period to use as reference as to what to expect.  He thinks lower rates are here to stay for quite a while. 

NORTH AMERICAN - LARGE & ETFs
2015-08-31 Larry Berman CFA, CMT, CTA

Educational Segment.  Fees Related to ETFs and their Impact on Returns.  Regulations regarding performance require you publish the gross of fee returns to the public.  This is because there are various fee classes.  You have to back out fees to see what you are actually paying.  iShares is about 54%, BMO 27%, and Vanguard is 7% of the ETF market.  He mentions the ones that are 80% of the market more often.  He has a bias towards BMO, however because he prefers the way they do covered calls, for example.  He prefers equal weights to market weights.  MERs are not the whole story.  There are cost of trade, acquisition cost (spread), and tracking error as well, which all impact your actual returns.

NORTH AMERICAN - LARGE & ETFs
2015-08-17 Larry Berman CFA, CMT, CTA

Educational Segment.  How to position yourself for a low growth environment.  He has an equal weight portfolio:

ETF

Yield

Beta

ZHY

6.4%

39.7%

ZPR

5.1%

15.5%

ZDV

4.6%

75.3%

ZUE

1.8%

91.6%

ZDM

3.1%

103%

ZEM

1.7%

81.1%

ZWU

6.4%

64%

ZRE

5.4%

45.2%

Average

4.3%

64.4%

He gets about 45% exposure to Canada and an average yield of just over 4%.  YTD he got 2.16%, ahead 3.6%.  Annualized since inception is 9.55%. 

NORTH AMERICAN - LARGE & ETFs
2015-08-10 Larry Berman CFA, CMT, CTA

Educational Segment.  Health of US Economy.  It is not nearly as healthy as the bulls would have it.  A Chart of Debt to GDP was displayed.  Since ’09 it has increased dramatically to 105%.  The US public debt was $9.2 Trillion in ’08 and is $18.2 today.  It is starting to become a big problem.  He thinks interest rates will stay low for 25 years because of the US public debt.  He does not think the US economy is actually in good shape.

NORTH AMERICAN - LARGE & ETFs
2015-07-27 Larry Berman CFA, CMT, CTA

Educational Segment.  Market Breadth.  There are a handfull of stocks that are leading the markets higher, but the average stock is not participating.  VT-N is the entire world of global equities.  Over the last year we have moved to a flat pattern compared to 2012-2014.  How many stocks are above the 200 day moving average?  Only 51.8%, quite a drop off.  This is classic of the late stage of a bull market.  In New York it is below 40% now.  Starting Q1 last year, small caps started to outperform dramatically.  In ’97-’99, small cap stocks started underperforming.  When markets ultimately made their highs in 2000, small caps kicked up.  He is looking for a 10-15% correction, not a bear market.

NORTH AMERICAN - LARGE & ETFs
2015-07-06 Don Vialoux

Educational Segment.  Volatility vs. Markets.  When the volatility spikes, the market goes down.  This happens every year.  Reduce equities in May and watch for volatility.  Then the summer rally happens.  Last year it happened in the middle of October.  But a lot of times it happens in the summer.  As of today, your finger should be on the trigger to maybe buy over the next two to three weeks.  You have to watch for the trend of volatility to end.  Wait for the VIX to come down again, completing the spike.  Gold seasonality:  July 9th, gold usually starts to go higher until the end of October.  Support going back to last November is still in place.

NORTH AMERICAN - LARGE & ETFs
2015-06-29 Larry Berman CFA, CMT, CTA

Educational Segment.  How you may want to invest during the Greek Meltdown.  GREK-N is an ETF that trades in the US.  There are no Canadian banks that deal in Athens trading.  Forget about the Greek debt.  The individual cannot play that.  In 2012 we came off the bottoms and got a massive rally.  The potential to double your money is great, but it is not risk free.  The two year Greek bond is trading at about 33%, suggesting the probability of default is 50%.  The Market is telling you they are leaving the Euro.  You have to view the investment after currency conversion.  The risk is 50% on taking a haircut based on the currency risk. 

NORTH AMERICAN - LARGE & ETFs
2015-06-22 Larry Berman CFA, CMT, CTA

Educational Segment.  Avoiding get caught up in the weeds.  We have been hyper focused on Greece.  The reality is that whatever happens, it will not matter to the long term results in your portfolio.  It promotes anxiety.  Tips:  Investors need to focus on the big picture.  Find your happy place where your portfolio should be positioned so that noise does not prevent you meeting your long term goals.  Everyone should have a part of their portfolio looking for opportunities from mispricing.  It is a small portion.  If you want the highest return possible, have a concentrated stock portfolio with managers you like, or do it on your own.  You have to be able to handle the risk of volatility of it so you don’t get out at the wrong time.

NORTH AMERICAN - LARGE & ETFs
2015-06-15 Larry Berman CFA, CMT, CTA

Educational Segment.  A coming 10-20% correction.  We get a 5 to 10% correction every year.  The last big one was a 16% correction in 2010.  It was a Greece-related correction.  We are due for one of these bigger ones in the back half of this year.  You have to have balance in your portfolio.  Volatility is there.

NORTH AMERICAN - LARGE & ETFs
2015-06-08 Larry Berman CFA, CMT, CTA

Educational Segment.  The 6 Tenants of Dow Theory: 

(1) The market has 3 movements.  We are in the speculative phase around the world now. 

(2) Market trends have three phases. 

(3) The market discounts all news. 

(4) Stock market averages must confirm each other. 

(5) Trends are confirmed by volume, which is not what it used to be. 

(6) Trends continue until there are definite signals they have ended.  If industrials are doing well, then the rails should be doing well.  In ’05 and ’06 the correlation started to break down in preparation for ‘07/08. 

In ‘11/’12 it started to break down but we did not get a bear market, so he challenges Dow Theory.  Don’t pay a lot of attention to it, but it is an important point about divergences.

NORTH AMERICAN - LARGE & ETFs
2015-06-01 Larry Berman CFA, CMT, CTA

Educational Segment.  A tool to gauge GDP growth.  See the Berman’s call Blog today.  GDP Now.  The US economy has not grown in 2 months.  There is no chance the FED is going raise interest rates this year.  There is no employment number that goes into GDP.  Personal income was up 0.4%.  People are not spending.  More people are working, but not spending.  There are more reports coming out through the month.  Earnings revisions are a big, big risk to the marketplace. 

NORTH AMERICAN - LARGE & ETFs
2015-05-25 Larry Berman CFA, CMT, CTA

Educational Segment.  The US$.  The trend line on a chart of US vs. Canadian $ from 1967 suggests it is not over.  The catalysts for this will likely last a long time.  The US dollar was almost this low compared to the Canadian $ in 2008, but what is the catalyst to make the situation worse?  He doesn’t see one.

NORTH AMERICAN - LARGE & ETFs
2015-05-11 Larry Berman CFA, CMT, CTA

Educational Segment.  Fixed Income.  There are 4 ETFs he wants to focus on.  In the following table ‘Duration’ is the sensitivity to interest rates.

Ticker

MER

YTM

Duration

VBU

0.20%

2.0%

5.6

VGB

0.35%

0.9%

7.4

ZEF

0.50%

5.9%

7.7

XBB

0.30%

2.0%

7.3

The 10 year German bond is at 0.57% and Greek 2 year is 20.16%.  Canadian 30 year is 2.29%.  Now look at a 1% move up in interest rates:

  • The German bond moves 10.5bps
  • The Greek bond moves 50.6bps.
  • The Canadian bond moves only 5bps.

The longer your duration, the less sensitive they are to interest rate increases.  Dividend stocks have tremendous volatility to interest rates (twice the standard deviation).  Increasing bonds reduced volatility to a portfolio dramatically.

NORTH AMERICAN - LARGE & ETFs
2015-05-04 Larry Berman CFA, CMT, CTA

Educational Segment.  Stops.  He loves ETFs for diversification.  With a single stock you tend to fall in love with it and average down.  You never want to have more than 5% in any one security, otherwise you are gambling.  Take SU-T.  A recent low was $29.  A recent high was $40.  At $39, you have 4 or 5% upside.  Back in 2012, it was in the mid $20s.  You have 8% downside and 4% upside.  At $35, you have a much better risk reward ratio.  Move in slowly and if it ever goes below your stop, get out.  Don’t average down.

NORTH AMERICAN - LARGE & ETFs
2015-04-27 Larry Berman CFA, CMT, CTA

Educational Segment.  Couch Potato Investor.  There is risk in buying and holding.  RAFI smart indexes have a great track record of forecasting forward based on what the inflation rate is, on bond yields and what a 60/40 balanced portfolio might look like as we move forward.  They are forecasting a 4% return in a balanced portfolio over the next 10 years.  They have a web site so people can follow this.  You have to look at risk and return together.  Higher returns are going to come in the future from emerging markets. 

NORTH AMERICAN - LARGE & ETFs
2015-04-06 Larry Berman CFA, CMT, CTA

Educational Segment.  Assessing Risk and Return.  How much should you put into any given trade?  If you are trying to beat the TSX in the energy sector, for example, the XEG-T (energy sector) represents about 22% of the TSX so if you want to outperform and energy is leading, you need more than 22%.  Looking out over the next year it is unlikely the sector reaches more than 16 when it is at 14 now.  If we look at 5 years, he thinks oil will recover to the mid $80s.  You now have 50% upside.  He thinks you want a 25% position in the TSX energy sector right now.  As it pulls back you want to add to it.

NORTH AMERICAN - LARGE & ETFs
2015-03-30 Larry Berman CFA, CMT, CTA

Educational Segment.  Canadian vs. the world market since Mar 9/09.  Canadians need to be global investors.  The only incentive is tax considerations.  In non-taxable accounts you must be global.  Consumer discretionary has lead since ’09.  Less than 10% of the top three sectors make up the Canadian index.  Canada has a lot in its index that underperforms the world. 

NORTH AMERICAN - LARGE & ETFs
2015-03-23 Larry Berman CFA, CMT, CTA

Educational Segment.  Qualitative and Quantitative assessment of current markets.  Since 2012 we have had higher highs and higher lows.  In October of last year we had the first lower low but then followed by a higher high.  Will we see a higher high this time around?  We can look at advance decline lines.  Since 2012 the NASDAQ didn’t go lower than the NYSE until last fall.  The NASDAQ is dropping and the NYSE is leveling.  Small caps are now leading the rally and that is a good sign.  They are not as dollar sensitive in earnings reports.  Seasonals:  It is year 3 of the presidential cycle, which is the most powerful.  From March to June is the most powerful seasonal time for this year of the cycle.

NORTH AMERICAN - LARGE & ETFs
2015-03-16 Larry Berman CFA, CMT, CTA

Educational Segment.  The debt ceiling is back again.  The treasury could kick the can down the road to October if they wanted to.  We are at 18 Trillion and the forecast is for 7-8 hundred billion per year and won’t change any time soon.  They kicked Greece into the second half of the year.  50 percent of all job growth in the US is related in some way to fracking, so this should reduce.  Job creation in North Dakota is exactly like production increases through fracking.  The quality of labour is certainly a bit of a challenge.  20 percent of families in the US are on food stamps.  There is no reason to overweight Canada in your portfolio unless you think oil will outperform.

NORTH AMERICAN - LARGE & ETFs
2015-03-09 Larry Berman CFA, CMT, CTA

Educational Segment.  It is the 25th anniversary of the first ETF in Canada.  We were the first as a US ETF before that did not get off the ground.  It is the 8th anniversary of Berman’s call.  Warren Buffet is one of the best investors of the world.  His annual compound growth rate from 1958 to 2009 was 21%.  The S&P was 9.4%.  He does not always make money.  He said that when he retires he is just going to buy the S&P.  From 1998 to 2002 the average stock went down.  The first half of that period money came out of value companies and then went back into it.  The best investor in the world underperformed the market for a while by 100%.  The buy and hold investor for the next decade can expect less than 1% vs. bonds at 2%.

NORTH AMERICAN - LARGE & ETFs
2015-03-02 Larry Berman CFA, CMT, CTA

Educational Segment.  Rig Count.  Baker Hughs is the biggest driller in the world.  The Rig Count got cut last year, but it wasn’t until the last two months that they really cut out rigs.  Most of those cut were not very productive so they did not cut out much production.  The seasonal period for oil starts out at the beginning of the year for the first half.  Inventories of oil are the biggest they have ever been in history.  They are expected to build for the next couple of months.  He thinks oil prices will re-test the lows of the last year over the next couple of months.

NORTH AMERICAN - LARGE & ETFs
2015-02-23 Larry Berman CFA, CMT, CTA

Educational Segment.  63 year old’s potential portfolio.  VCE-T (30%) is an ETF that invests in Canada.   XWD-T (40%) is the world index.  XBB-T (30%) is the entire Canadian bond market (no emerging market exposure).  It had a  2.8% annual return over the last 13 years with 13% standard deviation. That is probably not what you are hoping for.  But from ‘09 to present the returns are quite good at 15%.  Would he have sold in `08?

NORTH AMERICAN - LARGE
2015-02-02 Larry Berman CFA, CMT, CTA

Educational Segment.  If you don’t understand the markets are going to go up and down then you are not ready for the markets.  The average investor’s return in the last year was 10% and the volatility was 10%.  The ideal portfolio gives you the highest return possible with the lowest volatility. 

NORTH AMERICAN & ETFs
2015-01-26 Don Vialoux

Educational Segment.  He is at the largest ETF conference in the world.  Every ETF provider in the world is there describing their new products.  Greece is a hot topic.  He showed a chart of 10 year Greek bond yields. Yields have really come down.  The question of Greece leaving the Euro could lead to a rocky road in the markets.  What is happening in Greece is having an impact on your portfolio and you have to know how to handle it.  They are projecting the global ETF market will double to over 5 trillion dollars next year.  If Greece defaults on its debt it will have an effect even on North American markets.

NORTH AMERICAN & ETFs
2015-01-19 Larry Berman CFA, CMT, CTA

Educational Segment.  Volatility: Taking the Whole World into Account.  Europe`s economic performance is horrible.  Chinese growth is in question.  US markets are really fluctuating.  The Swiss Franc`s volatility wiped out some hedge funds.  Out to twelve years, the interest rate in Switzerland is negative.  People only buy the bond for the currency, not the negative interest rate.  70% of your return in global investments is based on the currency.  The Euro is heading for parity with the US$. 

NORTH AMERICAN - LARGE & ETFs
2015-01-12 Larry Berman CFA, CMT, CTA

Educational Segment.  Geopolitical Influences.  In Jan. and Feb. we tend to get volatility in the markets. It seems geopolitical influences will be high this year.  Greece will be next to impact the markets.  Yields are rising there again.  They may elect an anti EU party.  He feels the only way to fix it is to get rid of half their debt.

NORTH AMERICAN - LARGE & ETFs
2015-01-05 Larry Berman CFA, CMT, CTA

Educational Segment.  Will it be a year for the Bears or the Bulls?  Lots of volatility in 2015.  Since 1900, US large caps have always been up in a year that ends with a ‘5’.  The fundamentals are nonsense.  ‘So goes January, so goes the year’.  That is nonsense also.  About 40% of the time it is true. 

Seasonality:  The first couple of months of the year are flat on average and then you sell in May and go away. 

Presidential years:  The seasonals are almost twice as strong in the 3’rd year as any other and it is because of fundamentals.  We should get a good seasonal rally starting in March. 

Buy on dips starting in January.  He would not be surprised to see the lows of the last few months to be tested once again on the TSX.  You might want to raise some cash.

TECHNICAL ANALYSIS & SEASONAL INVESTING
2014-12-29 Don Vialoux

Educational Segment.  Metals.  Gold has two periods of seasonal strength: Mid-July until the beginning of October, and then January to the end of February.  He does not like gold.  He prefers Silver, platinum or palladium where seasonal strength is stronger.  The supply of silver is diminishing because the price is so low.  People are buying silver for solar panels, Chinese weddings and smart phones which consume silver.  Lots of silver ends up in landfill, but gold does not.  The Gold-Silver ratio is at a historical high.  It means silver is likely to outperform gold for at least the next 18 months.  Platinum/palladium demands from the auto industry are expected to increase.  WITE-N is a way to play silver metals.

SEASONAL INVESTING
2014-12-15 Larry Berman CFA, CMT, CTA

Educational Segment.  Forecasting Next Year.  What he thinks today could change a month from now.  Forecasting two years out is nice to have but…  In 2015 here is what might happen:  Greece:  We could be positioned for another exit.  We are starting to take a turn.  It is breaking down.  An election process over the next three weeks may not re-elect, and it could be an anti Euro party that gets in.  That is the only way to turn things around there.  It would be the first country to leave the Euro.  Russia and part of South America:  South America is stressed like Russia because of oil being the major export for their economy.  Thinks Venezuela could re-value their currency and shock the world.  Credit market spreads:  are widening and we need to be on the lookout for that.  China: next year they could miss their 7% growth projection.  China is a big risk for next year that we need to think about.  What if the FED decides to tighten next year:  Look at Euro futures.  By September and December next year, the probably of 1/2-3/4ths of a percent rate hike are already priced in.  If oil prices stabilize, the Canadian market might start to turn around.  Look at French and German bond yields:  The best performing asset this year was a US long bond.  We need to watch Euro bond yields and especially French.  When we see an extended decline in oil like this, the recovery tends to be about 15 to 25%.  We are likely to see a bottom in the next few months,.  Earning expectations need to come down.  Maybe markets will be just okay next year.  Will talk more about these things in January.

TECHNICAL ANALYSIS & ETF's
2014-12-08 Larry Berman CFA, CMT, CTA

Educational Segment.  The Science of Making Decisions.  When there is Euphoria, you want to be careful.  When there is depression, you want to consider buying.  Sell into strength and buy into weakness.  Partial buys and sells are known as ‘rebalancing’.  Evaluate the volatility of what you are investing.  Avoid influences that promote emotions.

NORTH AMERICAN - LARGE & ETFs
2014-12-01 Larry Berman CFA, CMT, CTA

Educational Segment.  Markets and Emotion.  They go through cycles.  We are in the depression area.  People are thinking they have to get out because they cannot take it anymore.  But in the Euphoric phase you should take money off the table.  XEG-T went another 12% below the decline he predicted in the summer.  Risks now are very, very low.  Since 2001, XEG-T when it is down 10%, it is a good buy.  The last two times we were at these levels they were great buying opportunities.  The long term price in oil should be up from here.  We should be bullish.  We normally go up 20% with an 85% probability over history after these lows.

TECHNICAL ANALYSIS & ETF's
2014-11-24 Larry Berman CFA, CMT, CTA

Educational Segment.  Interest Rates.  He and his guest felt interest rates will not be raised next year.  The world economy is slowing even though the US is growing slowly.  Only 37% of Americans are employed, down from 42 in 2007.  There isn’t enough demand to create inflation.  They won’t want to raise interest rates at a time when they will affect the 2016 election. 

TECHNICAL ANALYSIS & ETF's
2014-11-17 Larry Berman CFA, CMT, CTA

Educational Segment.  How to Sleep at Night.  Risk and return go hand in hand.  The average market correction of more than 10% is 19%.  People sell mutual funds at this point, which is wrong.  Financial planning relieves much of the stress of investing.  Those that have a financial plan in place have much lower levels of stress and can sleep at night.  Talking about money with the spouse is very stressful. 

TECHNICAL ANALYSIS & ETF's
2014-11-10 Larry Berman CFA, CMT, CTA

Educational Segment. The US long bond is giving the best performance. You can’t base your portfolio based on someone’s forecast. ZFL has the returns, but is the long bond ETF. The longer your maturity the more volatility you will have. You have to understand currency risks when you invest in foreign bonds. High yield bonds are ‘junk’. JNK-N is your high yield exposure. They have come down recently. Everyone needs fixed income in their portfolio.  

TECHNICAL INVESTING
2014-11-03 Larry Berman CFA, CMT, CTA

Educational Segment.  The US Election Mid Term Year.  Thinks the democrats are not going to take the senate.  You get an average of a down side of 1.5%.  For the next week or two expect the markets to pull back a little.  It is a buying opportunity.  If you are a trader you take a little cash off the table.  We are going higher into the year end.

NORTH AMERICAN - LARGE & ETFs
2014-10-27 Larry Berman CFA, CMT, CTA

Educational Segment.  How to Play the Energy Sector.  ZEO-T, HXE-T, CLO-T, and XEG-T are the 4 ways to play the energy sector.  OXF-T and HXE-T do a covered call overlay, offering two more ways.  Equally weighted ETFs usually outperform market weighted indexes.  Covered call ETFs usually give you about 2 percentage points more than the others.

NORTH AMERICAN - LARGE & ETFs
2014-10-20 Larry Berman CFA, CMT, CTA

Educational Segment.  Volatility and the Bond Market.  In his sleep at night portfolio he looked for this correction.  Bond markets have done very well.  With 3 ETFs you can buy the entire world of fixed income.  He saw a 10 point spike in their charts.  Hedged fund portfolios are forced to come and buy fixed income securities.  He looked at the spread between VIX futures.  Wednesday of last week we saw the spike in the VIX spot and the bottoming of the S&P.  What he did was to get out of a lot of fixed income and rolled it into equities while they were so low and bonds were so high.

TECHNICAL ANALYSIS & ETF's
2014-10-06 Larry Berman CFA, CMT, CTA

Educational Segment.  Gauging Market Health.  Spread Between Small and Large Cap Stocks.  The US market is generally up about 7.5%  The Russell 2000 is down 4% on the year.  The divergence started about March.  The global growth downgrade started to come out about that time.  So right now small caps are screaming as much cheaper than large.  We are seeing a decay in the Russell 300 index.  We should get a short term bounce, but he thinks there is one more leg down by November.  Small caps will be where you want to go for a good bounce.

TECHNICAL ANALYSIS & ETF's
2014-09-29 Larry Berman CFA, CMT, CTA

Educational Segment.  Sleep at Night Factor.  You need to take the risk down at times, but if you go to cash and markets go up then you miss out.  He wants to take money out of the banking sector and get it into the energy sector and get the same dividend yield.

NORTH AMERICAN - LARGE & ETFs
2014-09-22 Larry Berman CFA, CMT, CTA

Educational Segment.  Women in Investing.  Woman are making more and more decisions in finance.  Graphic showing age of population and how many dependants they have, increasing.  Women will control most of the wealth going forward.  Women are increasingly taking over the reins of investing.

TECHNICAL ANALYSIS & ETF's
2014-09-15 Larry Berman CFA, CMT, CTA

Educational Segment.  Liquidity trap.  October is the last time they are doing QE.  They are pricing in the first move by next June.  You have to understand what the fixed income markets are going to do.  We won’t have the liquidity from the FED, although Europe will fill in some of the lost liquidity.

AGRICULTURE, DIVIDEND & FIXED INCOME
2014-09-08 Larry Berman CFA, CMT, CTA

Educational Segment. Financial Literacy.  Seniors: Increasing bankruptcies.  Larry’s guest is trying to develop a national financial literacy strategy.  Seniors are entering their senior years with more debt and don’t have good financial literacy.  In terms of low interest rates, it is a great time to pay down debt before interest rates start to go up again.  The guest wants seniors to know what questions to ask about the products the advisor is suggesting they get into.

TECHNICAL ANALYSIS & ETF's
2014-08-25 Larry Berman CFA, CMT, CTA

Educational Segment.  Financial Literacy.  Are you a smart consumer of financial media?  The government wants to strengthen the skills of Canadians in financial matters.  You can get ideas from TV, but you must do your own research.  You need to have a plan as to when to get out.  65+ year olds’ bankruptcies have increased 600% over the last 20 years.

TECHNICAL ANALYSIS & ETF's
2014-08-18 Larry Berman CFA, CMT, CTA

Educational Segment.  You want components of fixed income and equity when you create a diversified, balanced portfolio.  The strategy is difficult because of the low yields of bonds.  The reality is that equities have twice the volatility of fixed income.  When the market is strong like it is now, you want to rebalance. 

TECHNICAL ANALYSIS & ETF's
2014-08-11 Larry Berman CFA, CMT, CTA

Educational Segment.  Tomorrow is the anniversary of his sleep at night portfolio and the BMO Tactical Dividend ETF fund.  The portfolio, composed of ETFs, is diversified and starts with a low beta core and high yield.  You need to get incremental returns for every increase in beta you assume.  The Sleep at night portfolio:

Ticker

Yield (%)

Beta

ZHY-T

6.33

0.32

ZPR-T

4.39

0.11

ZDV-T

4.22

0.55

ZUE-T

1.61

0.87

ZDM-T

2.26

1.02

ZEM-T

1.98

0.62

ZWU-T

5.62

0.43

ZRE-T

4.93

0.34

NORTH AMERICAN - LARGE & ETFs
2014-07-21 Larry Berman CFA, CMT, CTA

Educational Segment.  Selling out to Cash Because of Possible Correction:  We should see a 5-10% correction including seasonality and geopolitical events at present to occur soon.  Selling out to cash is risky because if markets go up, then you lose out.  It is harder to buy it all back much higher (psychology of investing).  If we get a correction, it is normal and mild.  We should not be overly concerned about it.  Typically in this situation, the Canadian dollar goes south.  He would play it by holding US currency or buying US investments that are hedged to the US dollar.  Holding US$ during a 10% correction would only lose you 8%.  ZWH-T adds a covered call component to reduce that loss to 6% yet when the market goes up you typically gets a 6% yield so if you are wrong and there is no correction you still make money.

TECHNICAL ANALYSIS
2014-07-07 Larry Berman CFA, CMT, CTA

Educational Segment.  Does Rally Have More Room to Run?  Divergence readings continue to build and sentiment indicators are not extremely bearish or bullish. Market breadth lets you see what’s going on under the market.  Advance/decline lines show how many stocks go up vs. down.  NYSE A/D line has made higher highs whereas the NASDAQ has not.  Russell 2000 stocks corrected 10% this year and other small caps corrected up to 20%.  The large cap market did not correct during this time.  Last week the R2000 came very close to a high.  The NASDAQ has not made a new high. History tells us that the Large Caps should follow suit, but he is only looking for a 5-10% correction.  There is no reason for a bigger correction at this point.

NORTH AMERICAN - LARGE & ETFs
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