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A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Let winners run? He lets winners run. Warren Buffett says that selling your winners to buy more of your losers is like cutting your flowers to water your weeds. But there's a limit to how far you let your winners run. Can't let them run beyond control. Remember the lesson of Valeant; it was punishing when it pulled back. He has about 25 positions. He trims winners. There are risks associated with a winner becoming too big a position. A financial advisor can help navigate this.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. International stocks remain cheaper at these levels compared to Canadian or US. Holding tech stocks is still a good choice even with rising interest rates. Consumer cyclical and industrials remain good sectors for recovery plays. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Messianic thinking: Some believe it's a sin to sell any stock, because they feel buying stocks is a crusade. He's talking especially about cryptos, GameStop and the Reddit trade. Beware of putting your faith and money in just on sector of the market. And take profits where needed. Really, we're worshipping greed here. He would sell Bitcoin now.
COMMENT
Certain parts of the market are showing signs of a bubble. The causes are ease of access for the investing public and cheaper trading costs, which are both good and bad. He wants democratization of the market, but it's hard to succeed in the market and those entering the market with little or no knowledge could suffer losses. We're in a classic situation where the general public believes we're still in a recession when we exited that many months ago. This happened in 2009, too. Rather, markets are looking ahead with the U.S. going full bore as businesses expand. Earnings will hit new highs later this year. We'll likely grow 30% in earnings in 2021, while coming years look promising.
COMMENT
Big banks are starting to report this week. Earnings will probably be positive. Geopolitical risk seems to be ramping up in Iran, Ukraine and Taiwan. In regards to the Fed's, the growth is being induced by the fiscal support. The question is over the next few years, will it be enough to kick start the economy?
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Gold. Gold has a flight to safety type movement. However, we are seeing money flowing into digital assets. Gold, traditionally chosen for safety, is being replaced by bitcoin and other cryptos.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Educational Segment. There are signs for a melt-up bubble. The BoA has released a report saying that there are more funds flowing into the equity markets than in the last 12 years. It is phenomenal. Looking at two indicators today, the first is bull-bear ratio. The S&P 500 sentiment is becoming extreme. At these times, we see corrections of 5%-10%. We are not seeing the same degree of speculation, however. Looking at the Opportunity vs Caution indicator, it is reaching a high caution level. There is froth. Once earnings get priced in, there will be a sell in May. Need to be more defensive in portfolios in the next months. We are seeing traditional late cycle behaviour but the bubble can get bigger and bigger since the Feds will not be cooling the markets.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. In terms of playing the recovery, consumer cyclicals and industrials should do well as a sector. Financials such as banks, but also alliterative banking plays should also do well. E-commerce should continue its secular growth. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Market outlook. Currently focusing on mid and large caps in North American. Markets tend to remain constructive as long as central banks are. You have a receding pandemic in the US and trillions of dollars of fiscal spending that goes directly into the economy. What works may change due to the stimulus. This would be value stocks rather than techs. As a bull market continues, you get a rotation into quality value with good balance sheets.
Jason MannUnknown
COMMENT
In 2007, there were a few mortgage funds that went broke. They were canaries in the coal mine. The recent hedge fund blowups are similar. Too much leverage in the system and not enough liquidity. Must be mindful that leverage is returning to the markets.
Jason MannUnknown
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Industrial and consumer discretionary could be sectors that will see good growth. Tech also remains attractive. International stocks are cheaper currently as well. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Bond yields. They could go either way in the year ahead. Big question is do we see a test of 2%? A real chance that we could see higher rates, and then the market has to start paying attention. If the 10-year gets to 2%, it gets interesting. A game of chicken. Does the Fed do curve control, which pins down the rates in the yield curve and causes a lot of distortion? But we're not there yet. Probably 9-12 months before the Fed starts to talk about tapering or lifting rates.
COMMENT
Investment grade or high yield bonds? For the last year, he's focused on credit spread. There's been very little value. He's buying mostly short-term, under 3-4 years, and focusing on government yield curve. Risk that rates drop from these heights and a chance we run into a recession. He's neutral in his spot, and negative on credit. Not a great entry point for a great yield experience.
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