A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. In terms of market outlook for this year, 5i does not see a real cause for concern for 2021. The world is recovering from a recession and low-interest rates support equities. Earnings growth helps with the higher valuation. Make sure to diversify with bonds and cash to levels you can sleep well at night. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Market outlook. It's not as easy to deploy new capital as it has been in the past with markets reaching all time highs. The backdrop is still positive. There are 3 areas to watch: covid vaccines roll-out, monetary policy that is expected to remain easy, and earnings are positive.
Shane ObataUnknown
COMMENT
Recovery play. The Canadian real estate sector has lagged for a little while and the discounting is over done. A good recovery play. There are also stocks that are like Uber, Disney and Booking that are related to the reopening of the economy. There are still opportunities but it is harder to find good value in the broader market.
Shane ObataUnknown
N/A
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. On the shift from growth to value, the distinction between value and growth stocks is debatable and changing. Value stocks are usually more stable companies with strong fundamentals but trade at lower multiples. There are also companies that are more growthy but trade at lower multiples, which offer good value. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Global, aging population is one of the few long-term, indefinite themes. Definitely. In the medium- to long-term, you spend on medical devices and drugs as you age. That structural backdrop remains in place. Short-term, there are a number of catalysts such as the US election is over and vaccine development. Public and political perception is bestowing a halo effect on companies. These companies are growing earnings and have great clarity. This sector is trading at a 20-year discount to the market, and he doesn't think that's reasonable given the tailwinds.
COMMENT
What about investing in some of the experimental areas in biotech? There's a lot of rotation from growth in the markets, even though we're hitting new highs. It's not really going from growth to value; it's going from growth to momentum. He sees it in the small cap biotech space. Russell small cap healthcare is up about 75% compared to large cap healthcare up 9%. He prefers to look at good quality businesses with above-market earnings growth at a 20-year discount on valuation. Be aware of this when you start looking at new areas.
COMMENT
Speculative froth in this market? He saw a statistic that 1/3 of all investors in South Korea are teenagers or under age 13. One had a 43% return last year, all in one stock. Similar to 1999. People aren't discounting cashflows to find the true value of a company. When the music stops, you don't want to be the last one looking for a chair. If you're investing based on noise, when you double your money, at least take half your cash off the table. When things turn bad, they can go badly very quickly.
COMMENT
Will there eventually be a reckoning with governments running up huge deficits? Once we reach herd immunity of 70-80% and people bust out of their houses and start spending again, given 30% of personal spending has been cheques from the government, inflation will start to move higher. This isn't good for the US dollar, so emerging markets will start to overwhelm the US market. Increased demand, reduced supply. To control inflation, the Fed will increase interest rates, which usually means the stock market gets clocked. We may get the taper tantrum from 2013 in the next year to 18 months.
BUY
Green energy space ideas in Europe. Brookfield Renewables, but own it in your RRSP, not in your cash accounts. In US, he owns NEE, involved in solar and wind. Prices are coming down for customers. NEE is looking at better storage, and has increased dividend at 12% clip over the last decade. It yields 1.5-2% right now.
COMMENT
Markets are heading to the "danger zone," disconnected to the underlying fundamentals. The froth doesn't last and people are getting greedy. Signs of froth: the SPAC surge and the cannabis craze (ridiculously valued overnight). Take some money off the table. He's seen this before: red-hot market that lasts longer than veterans like him expect, but it always ends. However, don't sell now and not everything.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Inflation has remained low recently but with stimulus and a recovering economy could pick it up. Investors are probably not expecting it. So long as there is economic growth, the market can absorb inflation. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Oil prices now hitting new highs The short term is tough to call. Oil markets are looking through short-term noise of lockdowns and slow vaccinations here, and to a post-Covid world. The backdrop is very strong--the glut from the demand shock from Covid has already fallen by 57%, and this is from early vaccine roll-outs in the US and Europe. So, he optimistic demand will recover to pre-Covid levels by the end of 2021, meaning $60/barrel WTI. The real impact on oil by Covid has been supply. Shale's meaningful growth is over, done. Meanwhile, big oil companies are investing more in offshore wind and solar energy, not fossil fuels. OPEC, he thinks, will come back online when demand normalizes. He expects the price of oil will rise in coming years, with $60 stretching into the second half of 2021. 2022 will be even better. You'll have to kill off demand with higher oil prices. Oil companies are profoundly undervalued. Oil stocks are well off their lows, and there's a lot of room for oil stocks, as much 100% upside. He seeks stocks that offer only 100% or more upside.
COMMENT
Market outlook. We are in the worst economic shock in history with millions of people permanently removed from the labour force but the stock markets are at all times high. There is no telling when this will end however. The Feds are continuing to support the market. We must be cautious in the markets. There is no telling how big this bubble will get. If support from government steps back, the bubble will pop.
Larry Berman CFA, CMT, CTAUnknown
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