A Comment -- General Comments From an Expert (A Commentary)
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Shorter term he sees indicators that cause him to be more cautious. European debt yields are starting to move up fairly aggressively. Commodity price inflation in the developed world. Sentiment is extremely strong. He wants to be tactical and selective. He will be accumulating positions on a correction over the next 2 to 3 months.
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Fundamentals are sound in Real Estate. Job levels have rebounded in the real estate markets. Single digit vacancy rates, limited new supply. The US recognizes that Canada is the next best thing to the 53’rd state. Real estate companies are not over leveraged, good balance sheets, in good shape. This year you will see improvements in cash flow.
COMMENT
Insuring a portfolio? A simple but expensive way is to Buy a Put. You could do a straddle where you Buy a Put and Sell a Put further out of the money so the cost of Buying the Put is less. 2nd way is selling and taking some profits. You’ll pay some taxes but it doesn’t cost you any money. 3rd way, which he prefers, is going long S&P 500 VIX Short-Term (VXX-N). If the market corrects it will go up. He goes long this and Shorts a Call Option against it to take an option premium.
COMMENT
Gold. Continues to be a massive Bull on gold because the bottom line is developed nations globally are effectively bankrupt. We are going to have a new monetary system in the world and gold is going to play a part in it.
Derek Webb, CFAOwned
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If ECB wasn’t there or Germany wasn’t there there wouldn’t be much demand for Spanish bonds, Market is telling you there you won’t get back 100 cents on the dollar. There is definitely going to be a hair cut. Most of investors in these countries are the banks. He would stay out of Europe until it settles down.
PAST TOP PICK
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The market got a little toppy. You have profit taking. The fundamentals in the US are getting a little better. We will be in the same choppy market after this correction. Interest rates are stagnating low and should continue. He is going to stick with commodities as well as find some non-commodity stocks.
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Any credit event or risk of a credit event will trigger a market pull back. It is most applicable when you are evaluating companies with a lot of debt. He gravitates to companies with very strong balance sheets, often debt free. Reasonably bullish on equities. There are risks, but equities are not particularly expensive and interest rates are low.
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