SPDR Cons Discretionary ETF (XLY)

Like financials, earnings are understated among consumer discretionary. There are some great names to pick here and earnings are way understated.

(A Top Pick Feb 07/20, Down 9%) This was the peak of the market. AMZN-Q is about a quarter of this ETF. It is important to know what is in an ETF before buying it. He exited this sector.

This is a new sector for them. It holds everything from Home Depot to Netflix and is well diversified. The recent pull back offers good value, especially if you are looking to add beta to your portfolio. He likes it as a group.

XLY-US or XLF-US? January saw massive gains in the U.S., which was too much, too soon. So, he pulled back and held a lot of cash. Then, in early-Feb he bought both ETFs. He recommends buying both right now.

Consumer Discretionary has been a pretty hot sector already. Price to Book is very high at around 5. If you’ve got a growing US economy and people are now getting the benefits, that means more discretionary money will be spent on big screen TVs, etc.

One of the issues with the Consumer Discretionary space is what is called the “Amazon affect”, which has had such a major impact on so many retailers. He thinks you are almost better off picking a retailer that has been able to restructure itself and immunize itself as best as possible against Amazon. Coach (COH-N) would be an example. If you can afford it, he would buy Amazon as your starting point and look for a couple of retail companies that you think have an opportunity to continue.

Consumer discretionary ETF? He would go with a broad play and this is one in the US, pretty much a default, and then you can go into more specific plays. There are some restaurant ETF’s. It depends on what industry you want to go into.

XLY-N vs. QRD-T. QRD-T is more gambling and entertainment. XLY-N is larger cap.

The US consumer discretionary sector has done incredibly well for 2 reasons. Amazon (AMZN-Q) falls in there as well as Netflix (NFLX-Q). This is a season where consumer discretionary should do well. A marginal increase in interest rates is not going to affect consumer spending as much as people think.

An excellent product which mimics the consumer discretionary Index in the US. Thinks the consumer is coming back and this is a strong area to be in.

(A Top Pick March 23/15. Down 1.21%.) Sold his holdings on April 23 when it was reaching the end of its seasonal period. It tends to do really well from Oct 28 until mid April, and it did exactly that this year. May still may be okay for this, but in June it starts to fall off. (See Top Picks.)