Market Commentary — Page 470

Market Commentary

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Considering the current market and inflationary pressure, an allocation in Materials is fine. A benchmark allocation should be around 10%. The sector is looking fine these days. Unlock Premium - Try 5i Free

COMMENT

Since September, the value trade is where the growth will be coming from. As earnings are getting brighter, lots of these names are getting cheaper so you can continue to hold them. Trimmed tech stocks but with spiking yields, FANG names are getting a little cheaper with the bond levitation.

COMMENT

The work-from-home names like Zoom and Pelaton, be careful of them. They may do well in the near-term but they need some consolidation to happen. The market was carried away by the few, and now it is broadening out.

RISKY

Bitcoin. An asset class that drives people nuts. It could go up a lot from here and establish itself, or it could drop down. There is a fear of missing out however. It is looking like it will become an established asset class. You need insurance just in case it keeps going up. Decide upfront how much you want to own, and buy in stages. He would buy it and put it away. Own in a taxable account since it is binary.

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Key market indicators are increasing. Interest rates and earnings are going up and this could be beneficial for sectors like oil. However, investors should have a three year time horizon and should not pre-guess sector shifts. Unlock Premium - Try 5i Free

COMMENT

Is the tech rally over? The best days are behind tech. Don't buy growth in a rising-rate environment. But human nature only buys what it knows. So if you know only Salesforce, you'll buy back into it, like rushing back into a burning house to get burned again and again. The Russell, industrials and chemical names will continue to outperform.

COMMENT

Pent-up demand and value tech names Apple, Microsoft and Google are value plays within tech and will get hit the least among tech names during this rotation into cyclicals. Nobody has any clue what this pent-up demand will be--how big?--because we've never come out of a pandemic. But he expects it will be bigger than many expects, like people taking vacations they never even considered. Hes already sees stores, sidewalks, highways crowded (legally), so he expects there will be huge demand. Also, cycicals and value have underperformed for the last 15 years. He expects the US economy will blow through the roof, which will trip over itself.

COMMENT

Is the tech trade over? Big tech isn't in trouble, because these stocks are fundamentally solid, but there's more downside than upside during this current volatility. Trade this choppiness, not buying the dip and hold forever. It's more a trading than investing long-term environment. Trade tech.

COMMENT

Cybersecurity Cybersecurity is the sector to trade. There's a secular trend here due to increased demand for cybersecurity to defend from attacks. She likes these businesses. Definite hold and buy the dips.

COMMENT

Tech stocks during this rotation Tech names are tradable now but only in the very short term: Facebook, Amazon, Apple, Spotify and Nvidia are at longer-term technical support and that's good. Last week, only 20% of big tech was trading above their 50-day moving average, usually meaning a tradable low signal. Bond sentiment is turning bearish, so rates could trade sideways for a bit, so you can play this oversold condition in tech tech trade. However, cyclicals will rule the day longer term especially in the summer with inflation fears.

COMMENT

Is the tech trade over? The play isn't going all in cyclicals, so tech is still alive. Tech won't outperform during historically low rates as it did in 2020, huge returns won't repeat. Don't throw the baby out with the bathwater. That said, certain tech will perform--Facebook, Apple and Google are trading at high-20s PEs compared to Crowdstrike at 200-300x. Two subsets here. You can't say all tech is untradable. For example, Microsoft still holds value. Look for solid balance sheets and sustainable growth.

COMMENT

Still looking at cyclical, economically sensitive areas? Yes. Last few years, with falling interest rates and very low economic activity, people have focused on things that act like bonds such as utilities, telcos, and REITs. People were willing to pay a premium for companies that had long-term, predictable, secular growth. In November/December, we started a new business cycle, with the market looking ahead 9-12 months. We're entering a new, significant reflationary cycle driven by stimulus. As opposed to owning things that are very predictable, he wants to own things that as revenue goes up, margins expand and profitability goes up.

COMMENT

What about rate-sensitive stocks that could be vulnerable if yields go up? He's had very few of these, such as utilities, for over 6 months. From March to September, they were nowhere in the recovery. They may have been over-owned. SPHD compared to RDVY, dividend growth is knocking the stuffing out of high dividend stocks, because the market is setting up for slowly rising interest rates and a better economic cycle.

COMMENT

Rails and the recovery. Really likes the rails, a cyclical group. CN, CP, CSX trade as a team. Transport is doing quite well, and the rails have a lot of leverage in their business models. In general, the cyclicals are way under-owned and have a long way to go.

COMMENT

Energy stocks and the recovery. Energy stocks have been the last to get some mojo. The XOP is still flirting with the downtrend line. If the rest of the commodities keep going, the energy stocks should participate. XOM is a pretty good, conservative way to be there. CLR and PXD also look good. Or buy the XOP, which reduces business risk.

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A Comment -- General Comments From an Expert (A Commentary)

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. (A Commentary)

A Comment -- General Comments From an Expert(A Commentary)

A Comment -- General Comments From an Expert(A Commentary)

Bitcoin.(A Commentary)

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. (A Commentary)

Is the tech rally over?(A Commentary)

Pent-up demand and value tech names(A Commentary)

Is the tech trade over?(A Commentary)

Cybersecurity (A Commentary)

Tech stocks during this rotation(A Commentary)

Is the tech trade over?(A Commentary)

Still looking at cyclical, economically sensitive areas?(A Commentary)

What about rate-sensitive stocks that could be vulnerable if yields go up?(A Commentary)

Rails and the recovery.(A Commentary)

Energy stocks and the recovery.(A Commentary)

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