A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Explain the biggest shift in momentum that we've ever seen. He does fundamental plus technical analysis. S&P 500 and TSX are very bullish charts. Looks like a teacup and handle, and these can be very bullish. His sneaking suspicion is that this is a very bullish setup and he wouldn't be shocked to see stocks rally quite hard from here. In the past, January and February have been strong for equities. If you forced him to make a prediction for 6-8 weeks from now, stocks will be materially higher.
COMMENT
Gold. If central banks continue to print money, bodes well for hard assets. Gold is trending higher again, a hedge against inflation. Jury is still out, as we don't have runaway inflation. He isn't saying there will be, but there is a risk. Fed is willing to let inflation run hot. Don't have all your money in gold, but a percentage in gold or the precious metals (miners) does make sense. Doesn't know Barrick well. It's the biggest. Lowest risk way to express this trade in the market. He owns Kirkland Lake and Pan American Silver. These two are the top miners based on his metrics. He also owns PHYS. Make sure any ETF you own is backed by hard gold, not paper gold.
DON'T BUY
Canadian banks. Banks are good companies, but they're not great. He wants above 20% return on invested capital. Oligopolies. Source of their moat is regulatory, and he'd rather they stand on their own two feet. Banks haven't invested enough in tech. He expects tech to come in and give them a good run for their money. Good core holding for income-type investors, but not for him.
COMMENT
Cheap stocks can stay cheap for quite a while? This isn't the first call toward value. We've had some false starts. Market bifurcated for almost 10 years, back to the crisis of 2008. Many of the companies that have led the S&P 500 are the mega-caps. The underlying companies will do well. A stock-pickers market, and the passive investors will be frustrated. The past few months have seen a rotation and this will continue. You don't want to buy just because it's cheap. Sometimes it's cheap for a reason. But on the other side, there are companies that are market driven. Make sure the price has some correlation to the fundamentals. There's a lot of air under negative news.
COMMENT
Should I stay or should I go? He hears a lot "I'm almost at break even". This can be a damaging view of what we hold. The market doesn't know or care what our break even is. Nor is there any rule that we must end the race on the same horse we started on. If you think there's a better opportunity than where you are, take it. Doesn't matter if there's a gain or a loss, as the tax issues will sort themselves out. But the investment thesis should always be that you employ your capital the best way possible.
COMMENT
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Stockchase InsightsUnknown
COMMENT
Wall Street was negative until 2pm when Washington announced a forthcoming stimulus bill. Again, the bears were wrong. True, now is an ugly moment, but we're about to cross the Jordan to the land of milk and honey. Think of this morning's negativity as fuel for a rally. Rising unemployment and lowering retail sales were drivers for the bears. We're in a best of times/worst of times moment. Best for the wealthy, and worst for the unemployed and small businesses. Investors are actually in a perfect spot to take advantage of this situation as $900 billion in stimulus is coming.
COMMENT
Gold outlook He's bullish. He's never been more exposed to gold than now, under 10% weight. He won't flock to Bitcoin, like some have. Will money managers use gold historically in gold stocks or bullion? Gold is a hard industry to do well in. The hot ESG trend will dwarf gold investing in the short term.
COMMENT
The markets are excited for a stimulus bill but there is wide disagreement between the Democrats and the Republicans on what it should look like. It will come down to the Georgia senate race. It could be February when we see a big stimulus bill.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
US Index Rebalancing. Tesla is the biggest stock to be added to an index in terms of its influence. It means that you have to sell proportionally the other big names to allocate to Tesla. The stock is very overvalued. The indexers will get hooped here, and there will be significant selling following its index inclusion.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Federal Reserve. It is unlikely they will say they will do more. They need fiscal spending to monetize the debt. They are expected to reiterate their commitment to do more with fiscal spending. Longer-end rates are rising and they want to contain these rates.
Larry Berman CFA, CMT, CTAUnknown
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