Today, Larry Berman CFA, CMT, CTA and James Hodgins commented about whether NLN-T, MSL-T, DRWI-T Dead), CSH.UN-T, CPN-T, CVR-X, AFN-T, PBL-T, MMT-T, AVL-T, RDX-X, WPT-T, TCM-T, SPP-X, MKP-T, DHX.B-T, RBI-T, PHM-X, PLB-T, CSW.A-T, BB-T, AEM-T, NKO-T, SY-X, XHB-N, VXX-T, CJP-T, KEY-T, MFC-T, HOD-T, AGU-T, IPL-T, SU-T are stocks to buy or sell.
Holds VIX futures. You have to understand the premium in the front month futures and the spot VIX. Very difficult tools to use. Typically when the market breaks an important level, it leads to some technical selling and usually you get a spike in the VIX. Don’t play it for more than a couple of days at a time.
Educational Segment. Emotional part of investing. Most major markets did not move in the last week. He wants to swap fixed income into equities in the near future. Gains in a portfolio don’t increase an investor’s happiness. Incremental losses do add up emotionally. The average return in a portfolio has been 7% over the last decade.
Markets. He is more concerned about the shutting down of the tapering than the debt ceiling and shutting down the government. Thinks the market sees though these events. What worries him is the global and US economies. There is a lot of debt in the system and it requires the stimulus in the system for growth. 12-36 months he is negative. Thinks we are due for a cyclical recession.
A disruptive company in the insurance claims software application market. They are taking market share. Thinks they could go from 5% to close to 50% over the next three years so valuation is not at all challenging. Recurring revenue from the software as a service business. The risk is on execution, but so far so good. All his consultants tell him they have a superior solution.
Markets. For the debt ceiling on the 17th of October, the problem is not that the government will get shut down. Investors will probably just wait and see what happens. We’ve seen this movie before. Fundamentals are the major driver in the markets but there is always something in the news that can provide some question. As long as governments are providing markets with liquidity we should be okay. Thinks, however, that the debt problems in the world are much more significant that strategists suggest. For now as long as earnings continue to grow the markets can be pretty stable.