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Market. He continues to be positive on the market. The pullback is really heathy and reminds people there are risks. Over 78% of companies beat earnings estimates in the last quarter. January was the largest upward revisions month since 2002. The P/E ratio is at very reasonable levels. He is most optimistic on US markets, and modestly on European markets, and less so on the Canadian market.
S&P 500 Comment. There has never been a bull market that has ended on the first shot, he says. You can expect higher volatility but nothing significant into later in the year. Tech, financials, industrials and consumer discretionary have been leading the market since early-2016. As there has been a recent recovery, these same sectors have again been leading. This bull-run is not over he believes.
Blockchain Comment. He sees blockchain as a technology that allows owners’ assets to be tracked. It takes out a middleman in tracking ownership. It is at the early stages and it is difficult to identify the opportunities. There is a lot of risk at this point. They only have a relatively small investment in this area. Unless you invest in a basket of securities, it is too difficult to pick individual companies right now. Evolve Blochchain ETF (LINK-T) is an ETF in this sector.
Technical Stop Comment. He runs indicators that track market breadth. In late January these indicators turned defensive. He runs stops using point-and-figure charts. When the charts swing to lower highs and lower lows that is when he gets out. The sharp correction in February began, he put index hedge positions in place for about 50% of their holdings. He took off the hedges on February 9. He is quite bullish now.
Structural Bull Market Comment. He sees the period of 2000-2013 as showing no persistent growth. Now that we are in a structural bull market, you should hold onto your winning positions. The first stock that doubles will likely double again. There may be market pullbacks. Don’t go looking for change where it doesn’t exist. REITs, telcos, utilities and other interest rate sensitive stocks remain vulnerable – don’t get caught buying on a bounce. If you own these types of stock, use the bounce to get out of them.
You are banking on growth in the oil sands, he thinks. There is a risk of contraction and so the ability to see growth in multiplies is decline. Pipelines are seen as a bond proxy, since bond prices are viewed as low, so too is this segment being impacted by bearish sentiment. He would not own this.
This is China’s largest online marketplace. It is very similar to Amazon and is very dominate – growing at 60-70% year over year. He likes the backdrop of Chinese equities, but there is risk when dealing in China. He sees the vast market size of this market as attractive. It plays a part in a portfolio strategy.
He is not a fan of this sector as the value of commercial real estate and infrastructure assets is looking more like a bond. The sector could be hurt with higher interest rates. This company recently took it on the chin (he could not recall exactly why). This company is technically broken and the sector is at risk. He would move on.
With the steel and aluminum tariff possible is this at risk? He thinks the auto sector has already been facing headwinds lately. This company is cheap relative to the peer group and it is growing faster. If you own it, it is on the long term moving average. If it can hold at these levels, you should continue to hold it. He thinks it needs to hold $51 US.
