A Comment -- General Comments From an Expert (A Commentary)
COMMENT
ETF management expenses. The ETF industry has changed. They used to track just the S&P 500, the TSX 60, etc., and the MER was very low. Now, there are more actively managed ETFs, and the MERs will be more expensive. Best place to find the actual MER is in the prospectus of the investment, found on the website or wherever you're buying it from.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The stock market has seen a surprising rally, welcoming stronger than expected Q2 earnings. However, a correction of around 10% is possible. Investors should still be comfortable investing now for a medium term timeframe of 3-5 years. Low interest rates and good earnings growth expectations for 2021 has investors willing to pay more for stocks. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Big tech stocks are overbought, but other sectors have started to rise, sectors that have been dormant, so this is a good sign. This buying is driven by FOMO, though the economic realities don't line up stock prices. Stimulus has also encouraged buying, but economic data looks encouraging. He's looking for companies that can grow earnings in a period like this. Home improvement and recreation (i.e. skidoos) have been higher than in years.
COMMENT
He doesn't believe much change in society, but accelerated existing trends like poor demand at shopping malls and more buying online, as well as video--conferencing impacted travel and the office market. There's already diversification of production away from China, like in Vietnam and Mexico, the latter seeing a shift of production to the western hemisphere. China is also less competitive in terms of quality, not just costs.
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Hello, my name is Billy Kawasaki -- Stockchase Insights editor. Today we’re launching a new partnership where we will be publishing insights and top picks from the 5i Research Community forums. 5i Research is a subscription based service founded by stock experts Ryan Modesto and Peter Hodson where you can get answers to your own investing questions. Use our special offer coupon code “Stockchase” to redeem your free 1 month trial. We will publish Stockchase Insights every Monday, Wednesday and Friday on Canadian stock ideas from the 5i Research Community forums. Today’s ideas focus on the trends in defensive stocks, e-commerce and industry. Stockchase Insights is available for free for a limited time and might become Premium-Only in the next few weeks.
Stockchase InsightsUnknown
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Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. We are seeing developments in prevention and treatment for the coronavirus that adds positivity to outlook. Lower interest rates have pushed demand higher for housing and lumber. Although there is risk for a recession, government stimulus is working and people are saving more which increases willingness to spend. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
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The economy has dug itself in a hole and we then filled it with too much money. Now there is nowhere for the money to go. Interest rates are so low, do you use the bond market? The scale of the money looking for somewhere to go is driving the market.
Bill Harris, CFAUnknown
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Apple. They sold Apple last week. Over the last 6 months, nothing has changed internally. However, the multiple has expanded sharply. It's close to 40 times current earnings now.
Bill Harris, CFAUnknown
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Going back to 2012, the Fed has always been concerned with their inflation target. In the 60s, there was runaway inflation that they have worked to stabilize. Now that it is stable, they want inflation higher to inflate away the debt issue. The US government will owe 30 trillion next year. Because of low interest rates, it is manageable. However, if inflation goes up, they will need to buy more bonds.
Larry Berman CFA, CMT, CTAUnknown
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US Elections The RNC did a good job to present Trump as a worthy candidate. We will probably see the polls close in in the next couple of weeks. The swing states are the only ones to watch closely. The markets will be paying more and more attention to this in the coming weeks.
Larry Berman CFA, CMT, CTAUnknown
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Educational segment. There are a couple big index changes and stock splits coming up on Monday. On July 30th, Apple announced a 4-to-1 split. Since announcing the split, the stock has taken off and is now more expensive than before the launch of the first iPhone based on PE. With the split, their influence on the index will be 75% less. In response, the Dow has replaced some industry stocks with tech. Tesla might also be included in the S&P500 soon. There are many changes coming from the indices to watch for.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
A handful of US stocks accounts for half the entire market. It's a fairly narrow market. He's not a market timer. Take the ups and downs of the market without losing much sleep. A barbell approach is working quite well. On one end, large, mega cap momentum names like Apple and Facebook. On the other side, banks and industrials that are a value play as a hedge.
COMMENT
Could it become a self-reinforcing selloff if the momentum names turn over? J Powell this morning gave a green light for the Fed to support risk assets. We'll see a fairly long re-rating of companies to higher levels. We will have periods of corrections, but a March-type event is off the table. The markets are on fairly good footing and feeling the love and support from the Fed.
COMMENT
Depression in the cards? Never say never. Take a reasonable base case and don't look at the tail risks as likely events. You can worry yourself about things that don't have a high likelihood of occurring. He uses a balanced technique, so there's some hedging going on at all times to try to smooth the ride.
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