Opinions
Stan Wong
Ishares S&P Global Financials Sector Index Fund
IXG-N
PAST TOP PICK
Oct 26, 2022
(A Top Pick Oct 21/21, Down 17%) On one hand, higher interest rates. But on the other, the economy is hurting credit and loan loss provisions. Price to book is cheap. Blue chip names. Still outperforming broader indices. Should pick up in early cycle stage and do very well. Yield about 4%.
$66.509
Stock price when the opinion was issued
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DON'T BUY
The challenge for the banks is the inverted yield curve, low rates and this low rate environment will continue for a while. The curve will not go much steeper. Central banks will continue to buy bonds and suppress yields. There has been steepening and global financials have done well. There will be not much growth. Europe is a challenge. Would stick to Canada for banks.
E.T.F.'s
PAST TOP PICK
(A Top Pick Jun 24/21, Down 13%) Down 26% since February due to recession fears. It holds large-cap financials like Berkshire Hathaway, Royal Bank and Morgan Stanley; half of this is American. 52% are banks and 29% insurance. Trades at 1.13x price-to-book. Financials are great long-term. Pays a 2.5% dividend that will increase. Still buys it.
E.T.F.'s
PAST TOP PICK
(A Top Pick Aug 05/21, Down 11%) Financials are being hurt by recession worries and potential for rising credit provisions. He's holding and collecting the 4.6% dividend yield. If the slowdown is short or shallow or doesn't happen, financials will do well, as they tend to be early cycle winners.
E.T.F.'s
BUY
Likes the financial space in general, in the US and internationally. Half this ETF is in US, half is international including Canada. Financials tend to be early cycle winners. Most investors won't think we're in the early cycle, but remember that the stock market tends to bottom well before the economic data bottoms. You want to prepare for that, before the pickup in the economy. Financials have broken above 200-day MA, a positive signal. Yield is 2-3%.
E.T.F.'s
TOP PICK
Take an overweight in financials going forward. Basket of global financials. Economic picture is improving, waning inflation, dovish central banks, China reopening. All catalysts for global financial companies. Performing well this year. Europe's already up 8% this year, and there are valuation discounts compared to US. An outperformer. 1.25x price to book, quite cheap historically. 49% US, remainder international including Canada. Yield is about 3%.
E.T.F.'s
PAST TOP PICK
(A Top Pick Jan 12/23, Up 11%)
Good name to hold with the broadening market participation. Outperforming the MSCI World Index since fall 2020. Pretty cheap with an average 1.4x price to book. MER is 42 bps. Looks sound technically, with price above 200-day MA, higher highs and higher lows. Yield is 2.3%.
E.T.F.'s