A Comment -- General Comments From an Expert (A Commentary)
COMMENT
The S&P and Nasdaq have been real leaders in the last decade. There is a bit of catchup being made in Europe. It has been underperforming since the financial crisis. Things are starting to turn around. Export is the driver behind Europe. Valuation in NA has gotten so far from Europe so there is a natural catchup happening.
Brett Girard, CPA, CA, CFAUnknown
COMMENT
Although the EU moves directionally together, there is some divergence, especially looking at Nordic vs Mediterranean markets. Investors must understand the macro country level market, but also the EU market as a whole. Developed EU is one block and the UK is a close trading partner. Holds most European stocks in Nordic countries.
Brett Girard, CPA, CA, CFAUnknown
COMMENT
Has always stayed away from direct Chinese listings. Can't get comfortable with the rule of law in place in China. Asian investments have been made in Singapore and India. Chinese exposure is based in companies with activities in China, such as Unilever, that operates in China. Risk for owning direct Chinese listings is too high.
Brett Girard, CPA, CA, CFAUnknown
COMMENT
The rising tide is buoying the European market broadly. The industrials are doing particularly well. Financials are recovering but European interest rates are still negative. North American trends are translating into Europe. Confidence is broadly coming back.
Brett Girard, CPA, CA, CFAUnknown
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Tapering will lead to interest rates rising, most likely. Higher rates have put pressure on commodity prices in the past. This will lead to commodity linked stocks seeing pressure. Inflation and industrial demands are other factors that could support commodities and partially offset the effect. Unlock Premium - Try 5i Free
COMMENT
The S&P has been on a juggernaut rally, hitting 48 record highs this year so far and has doubled from the pandemic low of March 23, 2020. Are nervous this could end? Nervous about this market? A trader always is. But with any pandemic pullbacks we saw, the market then moves higher. A big reason is that Jay Powell is in the market's corner by keeping interest rates very low. The market may pull back 5-10% in the future, but it will quickly bounce back because those rates are low. This makes risk-on trading nowadays either value, growth or both.
COMMENT
The S&P has been on a juggernaut rally, hitting 48 record highs this year so far and has doubled from the pandemic low of March 23, 2020. Worried about complacency? No, because the cost of protecting his portfolio is cheap (using overlays across his portfolio). Yes, shares have doubled from the pandemic low, so now take some profits. No, he would not sell stocks to buy protection like options.
COMMENT
The U.S. 10-year yield Has been discussed ad naseum and oversimplified. He'd rather look at credit spreads, boiling down to the Fed striking a balance between their tapering asset purchases and setting their target interst rates. When the high-yield credit market is spreading, it trickles down and correlates well with small businesses that haven't enjoyed the same access to credit like the big players.
COMMENT
The S&P has been on a juggernaut rally, hitting 48 record highs this year so far and has doubled from the pandemic low of March 23, 2020. How to invest in this market now?
Market strength comes from low interest rates and that people still have cash in their pockets to spend. There's lots of dry powder to support risky asset prices. True, there are many record days now, but below the surface not every stock is rallying. There's volatility for individual stocks that far more than an overall index. You have to be choose certain sectors and geographies to trade. The tide is not lifting all boats.
COMMENT
The S&P has been on a juggernaut rally, hitting 48 record highs this year so far and has doubled from the pandemic low of March 23, 2020. Any worries ahead? The tide isn't lifting all boats. The S&P is up, but the Russell index and transportation and financials have not made highs for the last 4-5 months, so you need to pick certain sectors. It comes down to picking. Only some stocks are lifting the S&P to new highs.
COMMENT
Market push and pull. Still constructive on markets, driven by corporate profits much stronger than expected. Case rates are going up, but hospitalizations aren't. Doesn't see severe lockdowns of a year ago, because the remedy of a vaccine is out there. Valuation multiples are the same as in January based on 2021 earnings. This tells her that what's driven the markets up is not multiple expansion, but corporate profits, and this is encouraging.
COMMENT
Use for corporate profits. Companies will spend. Capex is going up and quite strongly, especially in the areas that serve commodity, energy, and mining sectors. Spending on automation and the cloud. Government is also spending on infrastructure and renewables. Utilities, too, might need to expand their reach. A lot of catalysts for corporate spending. As companies get more confident, they'll loosen the purse strings. Important, as one company's spending is another company's revenue. It's all interrelated.
COMMENT
Where are we as the sectors rotate to grind the markets higher? Last month or two, back to growth stocks. Back in February, when interest rates shot up, the reopening trade was positively impacted. Now that interest rates have backed off, resurgence back to growth names, as in secular growth and not cyclical growth. You must assess the valuations you're paying. Pick your points. On a pullback, that's an opportunity for an investor to start building a position in a company they've been looking at.
COMMENT
Takeovers. Ultimately, you have to trust that management has done its due diligence and is paying an appropriate price for the target company. Look at the fundamentals and take a long-term perspective. If you agree with the strategic reasons for the takeover, just hold the company. If there's a pullback on the news, you may take the opportunity to increase your position.
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