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Stock Opinions by Barry Schwartz

COMMENT
Market view for value investors. All intelligent investing is value investing. Buy something for less than what it's worth, and hope that it goes up in value over time. The key words are "over time". The last 6 months have been tough, and investors are making bets for the next 2-3 years based on that. July has started nicely, not for the TSX, but for good reason. He wants oil and gas prices to go down. Bottom line is that US markets having fallen 20%, and with the NASDAQ down close to 30%, you should be buying. After 20% drops, S&P 500 returns are generally very strong 1-3 years out. If you're selling now, you're being emotional and selling stocks after they've fallen and already priced in a lot of the bad news. Now is the time to put money to work.
Unknown
COMMENT
Do investors need to decide about a recession before they jump in? The markets have already told us we're in a recession. We're in a bear market. Stocks have fallen 20+%, and many have fallen more. The market anticipates a recession well before it happens. The good news is that when the recession is announced, the stock market will look forward for the next 6 months. At that time, central banks and governments look ahead to see how they can facilitate improving the economy. Don't be afraid of a recession. Data shows that markets start to rebound once the recession announcement has been made. If we're in a recession, it's the weirdest one he's ever seen. Consumer spending is strong, full employment.
Unknown
COMMENT
Will raising rates to tame rampant inflation slam the brakes on the economy to the point of negative growth? Absolutely possible, and that's what will probably happen in the next few quarters. That said, stocks have already fallen a fair bit. Time will tell what's priced in and what's not. He's finding many stocks to buy at these levels.
Unknown
COMMENT
Copper miners. No, he wouldn't buy these right now. A year ago, everyone was talking about the copper shortage and demand from EVs. Now, copper's at multi-year lows and demand has dried up. One would have thought that inflation and the war in Europe would drive commodity prices to ultra-high levels. They did, and then they crashed. He's not interested in trading vehicles.
Unknown
HOLD
Great company. Tremendous enterprise in Canada. Perplexed by purchase of LWRK at a large premium, needed to issue equity. They're trying to become a different telco. Happy to own for income.
telephone utilities
BUY
Earlier in the year, people bought real estate, thinking that would work in an inflationary environment. But recessions aren't good for real estate. Shows the folly of trying to second-guess, rather than having a long-term view. Well run. E-commerce is still strong.
property mngmnt / investment
DON'T BUY
Last week, most banks and lifecos touched a 52-week low. Recession is not good for them. Insurance companies are hard to figure out. Not only insurance, but mutual funds as well, so it's complicated. He owns POW for the dividend and BRK.B.
insurance
BUY
Recently got into insurance. Pulled back tremendously, and labour costs have gone up. Serial acquirer. Structural tailwinds for very good growth over the long term. Early innings of building its business in numerous areas.
other services
HOLD
Split today. Will live and die with the US economy. Fewer companies will advertise, so it will pull back, but then it will be quick to recover. He's comfortable holding. The days of 20-25% revenue growth quarter after quarter are over, but it's still growing in double digits. Tremendous balance sheet and optionality.
Business Services
COMMENT
Strong USD affecting US services sold abroad? Yes, this does apply to large multi-nationals like GOOG. Temporary issue. Won't affect the underlying business, but could hurt earnings for the rest of the year.
Unknown
PAST TOP PICK
(A Top Pick Oct 22/21, Down 31%) Anything to do with tech or Covid winners pulled back a lot more than the market. Higher interest rates don't help companies with higher valuations. The tailwinds are still here. People aren't moving away from online shopping, but the big gains are over. Success of Prime Day shows business model is intact. Stock will be dramatically higher over the next few years.
specialty stores
PAST TOP PICK
(A Top Pick Oct 22/21, Down 69%) The lesson is don't get caught up in the hype of overpaying for stocks. Tailwinds are still there. Profitable, beautiful balance sheet. Market has overreacted to the down side.
0
PAST TOP PICK
(A Top Pick Oct 22/21, Down 34%) Covid beneficiary. Very inexpensive valuation. A business you can't live without, so he sees tremendous growth over the long term. Bad news is priced in.
Consumer Products
BUY
His largest holding. When it drops, he buys more; when it blossoms, he trims. Warned on supply chain, Ukraine, and USD issues. Some of this should reverse as we head into 2023. Reasonable valuation at just over 20x earnings. Excited by new products. One of the world's best businesses. He's buying.
electrical / electronic
COMMENT
Portfolio construction: percentage cap on sectors? Tries to limit each stock to 7-8%, within reason given the size of a client's portfolio and what stage of life they're at. Sectors change all the time. For example, is NFLX media or tech? Is AAPL tech or consumer products? It can get challenging. Oil was the big winner this year, but who knew what weighting you should have had? Invest according to your conviction, being diversified across all asset classes and geographies. He doesn't quantify one sector as more conservative than another, for example, telcos vs. utilities. But he sleeps at night by owning companies with beautiful balance sheets, recurring revenues, and high quality products and services. Those factors will protect your portfolio over the long run.
Unknown
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