A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Recovery stocks. He has exposure to value and cyclical elements of the market. But he's not way out on a limb with hotels or airlines. Those are not the kind of stocks that match his investment philosophy. Most hotels are US-traded. Airlines are slim pickings. Air Canada doesn't check the boxes he looks for, which would be a sustainable, defensible, growing, profitable franchise, resilient to downtrends, not beholden to the government. He wants to own things where something has to go really wrong to lose money, not where things have to go really right to make money.
COMMENT
Hold or take profits in Canadian banks? OSFI has a press conference tomorrow, so we may get a hint on increasing dividends and reinstating share buybacks. Banks are chomping at the bit on this. Banks have been a cornerstone of his portfolios for years, and he expects them to be for years to come. He does trim if they get to an outsized weighting, as part of ongoing risk management. He wouldn't be taking profits. At 33%, outpacing the TSX. Banks are secular dominant, profitable, growing franchises that deliver a good income stream and are very well governed. He's comfortable holding them here. Expects further gains in months and years ahead, mainly in income rather than share price appreciation.
COMMENT
Evaluating serial acquirers. Need to have a critical eye on serial acquirers. He owns a lot of acquisitive companies, since there's a dearth of high organic growth companies in Canada. You want acquisitions that are strategically in scope, reasonably priced, synergistic, accretive, no undue financial risks, expand products or geography.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Higher prices can be passed off to customers in the commodities, raw materials, consumer staples and telecom sectors. Financials can also do well. Companies with higher margins can also absorb higher input costs so they tend to be better off. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Outlook. It depends on how interest rates rise that will impact current record highs in stocks.Central banks around the world want to stop liquidity and raise rates, so you must wonder what the U.S. Fed will do tomorrow--likely quantitative easing. This could lead to volatility. He hasn't bought or sold any shares any lately and is happy with his portfolio. His holdings will do well in any economic environment. As for Canadian banks, we have very good regulation over them, in contrast to the U.S. He likes the banks; they reserved well during Covid and now have lots of capital. The banks should be allowed to buyback shares and raise dividends.
Paul Harris, CFAUnknown
COMMENT
Educational Segment. Climate change brings in the idea of ESG and what investors can do to change. There are clear risks to uranium. If China and India do not get on to stop using coal, then there won't be a substantial change. We will start to see ESG become a more important part of investing. Just starting to see material change. ESG World Leader Index is starting to outperform the broad markets. Additional cost is a factor however.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Energy. Thinks that uranium is a play for future energy plays. Look at top energy sector ETFs, as well as top ESG players. Buying energy without taking on too much risk is a challenge. Chevron and Suncor are some options that are high on ESG and converting to more sustainable practices.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Central banks around the world have started to signal pulling back on stimulus as inflation has proven to be more sticky than first thought. The expectation is to pull back accommodations by 15B a month and up it to 20B a month. Some interest rate pressures could occur. Supply chain issues is certainly an issue on a company basis but not on a broad market. Earnings have been pretty good. There have been upgrades and underlying support is good.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Market. We are starting to see the inflationary pressures across commodities and across the labour front. It is going to be a concern for the federal reserve. The inflation we have seen could definitely persist into 2022. The problem the market will have with this will be patience. He is starting to become more defensive. He thinks we are looking at an overdue pullback in the markets. It will not be significant, though.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Peak tax loss selling tends to be in the third week of November. This is also the best time for buyers that are looking for a contrarian play. Inflation is also a fear so investors should look at companies with pricing power. Consumer discretionary, utilities and health care should be areas of interest. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Supply chain issues. There were questions about whether inflation was transitory or not. This is an extraordinary period with lots of supply chain issues. We won't know the impact of inflation for some time. The central bank is hawkish. If the Feds become more hawkish, it will affect investor sentiment further.
Greg NewmanUnknown
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