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

Educational Segment

Date Expert Opinion Subject
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.

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.

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. 

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. 

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.

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.

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.  

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.

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.

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. 

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.

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.

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.

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.

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.

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