Market Commentary — Page 531

Market Commentary

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Market. We have seen tremendous volatility. Real Estate was not left behind. When we came out of March we saw 40% discounts in net asset value, but private markets have not traded back that much. He thinks stocks have priced in too much discount. We have seen unprecedented stimulus by global governments and interest rates should remain low.

COMMENT

Market Outlook This is a difficult time in the market with all this uncertainty. Economies around the world are beginning to reopen and he wonders if that will be successful. People are hopeful the virus may be behind us, but we have to be on watch for wave two. When the lows of March in the market were made the fast plunge likely means we won't make new lows on a pullback. There has been so much done by Central Banks to keep if from happening again. Markets could trend lower, however. When the 2008 financial crisis occurred, it was a crisis of the banking system. Today, the banks are much stronger.

COMMENT

The current rally in the early phase was down to short covering, but also the market looks ahead of the news; eventually, economies will reopen. Investors are slowly piling back in, but they should be cautious. We don't know how long this will last. Some businesses will not recover at the same rate. This is a stock-picker's market, better than buying the index. Keep some powder dry. There could be a second wave later this year. We're in unknown territory. No, we're not in a depression, because of all the efforts of central banks and government stimulus. The recovery will be slow. This is not a normal recession. Recession-proof businesses like movie theatres were shuttered overnight and will take a long time to recover. Also, human behaviour has changed and will last a long time (the lockdown). Some industries will snap back, others may never return to past strength (airlines, hotels, cruiselines).

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Market. The volatility has been extreme, both to the downside and the upside. Investors need to know what they own and how well they are doing. You needed a risk control strategy on the downside in the beginning but now you need it on both the downside AND the upside. You can't tell if we are going to get back to the March lows. Perhaps we won't see a retest, but looking at past history of epidemics then you have to be prepared for the market to react negatively.

COMMENT

Market Outlook He was disappointed with a negative outcome for a vaccine being worked on in China. There are over 1000 companies working on the solution. There appears to be a turnaround for gold and he has started buying into some producers due to all the government buying of debt. COVID-19 impacts are still uncertain, with some analysts calling this a buy of a lifetime. A technical analyst he follows sees this as a 1987 event that has not impacted the underlying fundamentals of the economy. Negative interest yields could continue, which would be great support for gold. He sees the government buying of assets, adding liquidity to avoid a credit crisis like in 2008. Be selective, look for companies with rising cash flows. Some companies are awash in new business. He remains very optimistic.

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Market. This is a tough market to call. He forecast that the S&P low would be 2175 last month. It was two times book value and it was where the market bottomed in 2002 and in fact the market bottomed there this time. Value is running into stimulus. Most market commentaries are in two camps. The fundamentalists are saying we've had it because there is not much left and the technicians are saying the sky's the limit and there are no ceilings. His productivity-of-debt graph shows that if you load more and more debt on top of an economy there is a point at which it becomes so heavy that it starts to push the economy's growth to zero and then if it falls through there it has a difficult time recovering. It is going to be increasingly difficult for the economy to recover strongly because of the pure weight of the debt sitting on it.

WATCH

Uranium Sector. Has the bull started running? His proxy is CCO-T. If there is a bullish case for Uranium, the analysts have not heard it. U-T is up 66% so had had quite a move. He hopes the analysts will get the same message he is about the outlook for uranium.

HOLD

The banks are a good choice. He is not concerned about their dividends. He does not see dividends being cut. As long as the market stays above 2.5 times book value we will be okay. It is about 2650 on the S&P.

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COMMENT

Market Outlook The two things they have been focusing on most is making sure the businesses they invest in will be solvent during the duration of the shutdowns and what companies will succeed and thrive going forward. They need to have certain essentials needed by the market and have a good cash reserve. The month of March showed the correlation among all sectors and assets went to 1. Now, we are starting to see some separation. Certain sectors are starting to shake out giving investors a better idea what businesses will do well going forward. Utilities and pipelines offer good yields (3-6%) and act as core holdings for them on a diversified basis.

COMMENT

REITs have been reporting that 60-80% of renters with small businesses did not require rent assistance last month. That worries him as we are really only one month into the lock downs. Absent any further government relief the real estate asset classes he prefers holding are apartment buildings and US industrial warehousing.

COMMENT

Big 6 Canadian Banks? Their view has been for the past few years that the environment for banks was becoming challenged as interest rates moved towards zero. The upcoming recession will make things worse. He has holdings still with TD and RY. In Japan, where interest rates have been at zero for a long time, bank stocks there have not done well. He sees the same issue for banks in the US, but feels the Canadian banks will do a little better, but like sprinting the wind. Be cautious about being too overly exposed to any one bank.

COMMENT

Investors need to look past this unknown period. Find great businesses on sale that can weather the storm and step into them. There are many unknowns, namely governments' ballooning deficits. He's surprised by the recent rally, but won't predict the future. Markets tend to test lows after such rallies, so have dry powder handy. In mid-March, he stepped into some companies, then waited. There could very well be another tumble. The pandemic is a new crisis, different from the recession of 2008-9.

COMMENT

For older, long-time investors, ride it out or sell? Make sure you have diversified portfolio with bulletproof stocks in finance, tech, etc. This is the worst possible moment to sell. In historic downturns, you should have stuck them out and bought. Don't watch your stocks obsessively, but watch a movie.

COMMENT

Buy high-yield corporate oil bonds? A great time to invest in them now. In the last 40 years, these bonds have had 8 negative ones; each negative year was followed by a strong up one. Bonds have to mature. They work well in a highly diversified portfolio. However, energy is very and he is avoiding that sector.

COMMENT

Is it a bad omen for all stocks with oil this low? No. Low oil means a weak economy, which is not good for stocks.

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We paraphrase the experts by hand, we watch the shows and write down what we understood from the experts’ comments. We are human and can make mistakes, help us fix any errors. If you see something that you know is not right or if there is a problem with the site, feel free to email us at : [email protected].

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

Market. (A Commentary)

Market Outlook(A Commentary)

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

Market. (A Commentary)

Market Outlook(A Commentary)

Market. (A Commentary)

Uranium Sector. (A Commentary)

The banks are a good choice. (A Commentary)

Market Outlook(A Commentary)

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

Big 6 Canadian Banks?(A Commentary)

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

For older, long-time investors, ride it out or sell?(A Commentary)

Buy high-yield corporate oil bonds?(A Commentary)

Is it a bad omen for all stocks with oil this low?(A Commentary)

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