A Comment -- General Comments From an Expert (A Commentary)
COMMENT
People feel confident, especially in the US where vaccinations are accelerating. Recent data is very positive. Q1 exceeded expectations. Whether we see a full recovery in services later this year is questionable, especially in places like Ontario. But rates remain relatively low and stimulus helps. Healthcare is a good place to be now, though pharma tends to get beaten down historically. Health technology is especially good. Elective surgeries, down during lockdowns, will grow going forward. Covid vaccines proved how quickly companies can bring them to market, how we can solve medical problems a lot faster.
N/A
Market. Market. We are seeing signs of the real economy roaring back. He thinks this cycle has room to run. Think about the re-opening trade, the back-to-work trade and away from the work-at-home trade. Don't throw out babies with the bath water. It will not likely be like the 2008 to 2019 cycle.
Brian MaddenUnknown
BUY
Copper. It is a pro-cyclical commodity. He likes it and has exposure in his US portfolio. It went on quite a spike about 2011 because of rapid industrialization in China and then fell back. In 2016 it rallied again. He does not think electric vehicles will get us a $20 price but it suggests being in the upper part of the range $2-$5. There will be a higher demand as we move to electric vehicles.
Brian MaddenOwned
COMMENT
Jobs are coming back. Unemployment numbers in Canada are coming this week. There are a lot of positives that the market is celebrating. However, who is going to pay for all this stimulus? Right now, markets are okay and it should continue for the next 4-6 weeks. Valuations are problematic but some times the market doesn't care. Vaccine efficacy is positive.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Tax hikes and corporate tax hikes are coming. Funding gap is more than $2 trillion. This will suck a lot of money out of the capital markets. Liquidity is also a factor.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Crypto. Wouldn't recommend for the average investor. However, if you are going to invest, invest in the TFSA so you don't have to pay taxes on it. Good for speculative plays.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Bond ETF. Bond funds have interest rate sensitivity risk, duration risk. It is different from doing a laddered strategy yourself. The world is so sensitive to interest rates so bonds will be a bad investment for a while. A traditional 60-40 balanced portfolios will see stress. It will be a problem for the next couple decades. Central banks will probably continue to monetize the debt.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Educational Segment. Earnings season is starting next week. Markets will be focusing on the earnings. S&P is now up to $174/share. With the S&P over $4000, the multiple we pay for the earnings is getting pretty high. The multiple of the market should be 16.5x, which is fair value. If we use a multiple of 20x, you get a $200/share number. Before covid, for 2021, we were expecting $200. Now 2022 expectations are at $200. The earnings are discounted into the future. The markets are expensive here. May will be interesting and we could see selling into strength.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Buy everything except the stay at home stocks, which is what happened today. We just saw blow-out jobs numbers. If everyone is vaccinated, we may return to record-low, pre-Covid employment levels, unless inflation spikes. These record highs have come at the expense of the stay at homes, which may see a comeback. But he thinks a slowdown won't happen. Meanwhile, he sees an uptick in index funds, which help lift FAANGs which are part of them. It's strange to see low-wage inflation now.
COMMENT
The new investors who fuelled the Reddit short squeeze seem to be bowing out. One reason is that some of their stocks got crashed. Meanwhile, professional money managers have moved onto reopening plays and increasingly more back into big tech stocks. Those young, new investors still holding those Reddit stocks are waiting for them to bounce back to former lofty levels, but he doubts they will. The lesson: an investors needs to diversify into financials, retails or the rails. Boring stocks, but you need them.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The government is providing liquidity to the system through QE. More access to capital should mean banks are more willing to lend. However, savings rates have increased dramatically while spending and investments have not occurred at the pace that was expected. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Too much euphoria in the market? Not sure it's euphoria. Aren't markets supposed to go up? 2019 and 2020 were spectacular years. And people are thinking the good news we expected in 2021, actually took place in 2020. Markets don't go up every single year. Even in times of good economies and fundamentals, the stock market will do whatever it likes.
COMMENT
Interested in energy? No. He doesn't want oil to go negative or stay low. But we have to start preparing for a post-carbon world, and we have to get there sooner rather than later. You don't want oil to drive economies for the next 30 years. He'd rather own companies that can set prices for customers, rather than betting whether the price of oil will go up or down.
COMMENT
Outlook for rails as coal is phased out. CP rail still moves a fair bit of thermal coal, which is decreasing. CNR gets more of its revenue from metallurgical coal, which is increasing. Both provide only a small portion of revenues. They also move chemicals, lumber, autos. If you're betting on worldwide economic recovery for many years, as he is, you have to own the railroads. He's a bit nervous about the acquisition of KCS, but if that goes through, could be terrific. Incredible performers over the long term, and no reason this will stop. He owns CNR, but would have no problem holding CP. Keep holding.
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