A Comment -- General Comments From an Expert (A Commentary)
COMMENT
The return of retail investors has changed the face of investing. Conventional wisdom has been turned on its head during Covid, driven by young retail investors: forget ETFs and bonds, they pick individual stocks. And they don't care about PE and other metrics, though they will research on the internet themselves. They're picking stocks well and don't care what Wall Street says. The internet has freed these investors from the dominance of Wall Street money pros. Also, the young are strong believers of ESG investing.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. If inflation coincides with a strong economy, industrial and tech stocks have good pricing power. Gold and other metals are also a good option as a hedge against inflation. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
We see a rotation into value oriented stocks. He thinks it might be too much too quickly though. We saw the economy shut down and he does not think it will restart on an even keel. There is still the logistics of rolling out the vaccine. The shutdown induced economic problems will persist for a while.
Michael SprungUnknown
COMMENT
Investors will have a chance to truly invest and look at companies with good management and strong balance sheets. Multiples are extreme for some tech companies and the markets have been led by a narrow set of names. The markets will be better for longer term investors in the times ahead.
Michael SprungUnknown
COMMENT
Energy. If there is any value to be found, it is in the strongly managed energy companies. They will participate in any economic recovery rally. The surviving strong companies have taken advantage of the weaker companies that have gone by the wayside.
Michael SprungUnknown
COMMENT
Banks. A lot of investors have been using banks stocks as a means of gaining some yield in a low interest rate environment. Those dividends are still well covered by earnings. Assuming economic pick-up, the banks will benefit from that. Net interest margins are pretty low but with economic improvement, we could see changes in interest rates.
Michael SprungUnknown
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Higher current valuations in the stock market may lead to a more muted 2021. However, it is not impossible to see a strong year, especially with earnings expected to grow, an effective vaccine and overall recovery in economic activities. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Wall Street rallied today because of stimulus hopes despite bad news (disappointing jobs report, rising Covid cases). Will we really get stimulus? If there isn't progress this weekend, he fears markets will get hammered Monday. We absolutely need a stimulus deal, even a small one. The markets are divorced from the horrible reality of Covid.
COMMENT
Most important factors driving markets right now? We've moved from a disinflationary to an inflationary cycle. Evident in US dollar weakness, yields are starting to back up, commodities prices, short cycle assets that benefit from a strong economy. Markets are looking beyond Covid and trying to position.
COMMENT
How should investors play the falling US dollar? Tailwind for certain assets. US dollar is a safe haven. When people become more comfortable with risk, they take money out and put it in riskier assets like global stocks such as Japan or Taiwan, emerging markets, machinery companies. A different story entirely from building a portfolio that benefits from falling rates and is immune to the business cycle.
COMMENT
How do you decide whether to sell when the entire market's going down? No matter how good companies are, they all go through bear markets. The bear this year was the fastest and sharpest in history. He uses stop losses. When things turn, you don't have to be the first to get back in. See what maintains its strength. Then the markets put on the sorting hat, and sort the good from the bad. Then you have the opportunity to rebuild your portfolio in the image of whatever the market is on the other side.
COMMENT
What should investors keep in mind with the positive vaccine news? Don't discount the fact that global equity markets, including Canada, are in the throes of a cyclical bull market. Vaccine is great news for humanity and investors. Yet a number of investors remain nervous and are waiting to invest. You can outthink yourself sometimes. Don't do that. This is a primary bull market, and it's shaping up to be a good one.
COMMENT
Why are we in a long-term bull market? We just had an epic recession. Primary impulse of an economy is to grow. Coming off such a depressed base, we're back to growth. GDP in Canada of 40% annualized. If that isn't economic expansion, he doesn't know what is. It wasn't your garden-variety recession. It was artificially induced to reduce virus spread. We will get past the new waves. Corporate earnings will grow robustly in 2021 due to massive stimulus, which has also made household incomes resilient, so people are spending money.
COMMENT
View on telcos right now. Low beta, good yield. A defensive, work from home play. Some of the bloom may come off the work from home trade, and money may flow to more cyclical parts of the market. Telcos are respectable on income, but not so much on capital gain in the medium term. None of the telcos are making him jump up and down right now.
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