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His outlook hasn't changed since he was last on the show recently. Volatility will continue for the next little while. There will be violent shifts. The technical quality of the recent rebound was suspect. We've seen our peak in economic and profit growth. Profit margins are peaking as material costs and wages rise. We've had a great 9 years, but it can't continue forever. Headwinds, like rising interest rates, are emerging. 2018 reminds him of 1987. He's staying defensive. There will be buying opportunities, but investors will be wary. He's staying on the sidelines with a lot of cash. If he buys stuff, he'll move in and out of it quickly, even tech. For example, he sold some Facebook recently based on valuation, not the headlines.
There's hope for it. Trading at 22 forward earnings which is pretty good in this market. Sure, there are some risks, but they have 2 billion active users. There aren't many alternative apps to FB. They will lose some users on the margins and costs were rising, so he sold a bit recently. But this is not a disaster waiting to happen. Not at all. There is growth ahead. Nobody monetizes their app better than FB, turning viewers into ad dollars.
Sees little or no impact on life insurance, including MFC's Asian operations, from a US trade war. Interest rate rise will help them. They have a good international growth profile, because of Asia. Generally, the Canadian lifecos look good. MFC is one of the few Canadian financials he owns.
BAC vs. Wells Fargo? He's long the U.S. banks more than Canadian ones, given better economic growth down there. BAC is at the top of the U.S. banks for earnings growth. Prefers BAC over Wells. Once Wells overcomes the recent customer service controversy, it'll take time for the bank to recover.
BAC vs. Wells Fargo? He's long the U.S. banks more than Canadian ones, given better economic growth down there. BAC is at the top of the U.S. banks for earnings growth. Prefers BAC over Wells. Once Wells overcomes the recent customer service controversy, it'll take time for the bank to recover.
It's been caught up in this movement in quasi-industrial stocks with military-government projects, all due to better global growth. The stock has risen since Trump came in, pronouncing "America First." That said, he's concerned with global growth going forward and HON's margin costs. He wouldn't buy it now.
He's overweight gold. Barrick's costs have been high and they carry outrageous debt, which they have cleaned up in past years. This stock has done nothing for a decade, and is far down from its peaks. There's no production growth. Look at a mid-size company instead. Barrick will underperform the sector. Effect of cryotocurrency investment taking away from gold investment? He doesn't know, but he doesn't belive in and wouldn't buy any cryptos.
Are we 6 months from a world collapse? It's possible, but unlikely. Financial crises always arise from a debt crisis. There's high consumer debt in Canada and corporate debt in China, for example. He doesn't think a collapse will happen. However, he feels we're closer to a recession than anyone thinks. Stocks peak 6-9 months before a recession. He's read some worrying financial reports from the U.S. and abroad. He sees warning signs, particuarly debt, and he's staying cautious.
Floating rates preferred shares as a fixed income strategy during rising interest rates? He's overweight, at 15%, preferreds in his portfolios. The problem with them is they're not equity or debt, so in a down market they get the worst of both worlds. There's a sustainability issue, so they will act worse than bonds. They're attractive now--and he's been managing them recently--because the gross yield is so high.
