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Market. This one of those good but horrible snapshots when you can't look at your typical indicators. What got us here is liquidity. Look at corporate credit spreads; Financial conditions. The turn back in the US is not going to continue. People demand more and more on corporate bonds than on treasury. People are pricing more and more into the default of that corporate bond. The trend is important. Rising interest rates and reducing liquidity mean you should wait this one out. You should always ask if you would buy something today when deciding whether to dump it. Growth is slowing and credit is becoming more unavailable. Don't catch a falling knife. You have to watch liquidity.
WATCH
They have a lot of cash and a great policy of returning 50% of cash flow to shareholders. It is a really robust balance sheet that can survive the test of time. He is neutral and is not putting money into tech right now. Watch it and when liquidity in the markets improved you would jump. He thinks there might be a kick to Canada on the current Huawei news story.
electrical
electronic
WATCH
The gaming space is great but you have to have a real stomach for it. They used to be known for one hit wonders. The gaming in-buys business kind of flattened out the model because it was a recurring revenue model. It is 22 times earnings. It will probably take some time. They have a good pipeline and a good model but this one will take some torque. Wait for the right time. This is a more stable story now.
computer software
processing
WATCH
They are just so consistent. The health care sector is just so influenced by politics. But these guys reduce costs for governments. This stock has been spectacular. They have scale and a phenomenal management team that returns capital to shareholders. He would not buy more at this time.
medical services
DON'T BUY
Dollar store names came to the forefront in the financial crisis. Americans shifted their budgets to an experience that was better than they expected. Wal-mart suffered from this. On a unit basis you are paying more for what you get from these stores. It is growing but okay and they are fixing parts of it. It is 20 times so a little rich. He is sitting this one out.
merchandising
lodging
DON'T BUY
Memory chips. Margins used to be fantastic. The semis and memory manufacturers are a great long term investment. He is on board. They are doing a good job. He would not buy it today because it does not check the technical box. You are in a negative earnings revision cycle.
computer software
processing
SELL
A great company. Generics are fantastic. There are internal issues. A lot of people are getting lured here by single digit earnings growth. The fundamental picture is not strong here. He would take the loss. He would look at an ETF if you want to stay invested in Pharma. (Analysts’ price target is $23.00)
biotechnology
pharmaceutical
DON'T BUY
He likes it. It has a wild valuation, though. It has been slapped around rather hard. This is high growth, higher reward, higher risk. Fin tech he likes. One of the biggest risks is the copycat risk. It is a disruptor. It has first-mover advantage. He would not buy it now, but likes Visa and MasterCard.
Technology
DON'T BUY
There is some real growth and application but the company has struggled to be identified. You would hope to see a little more from them over 10 years. You realize a bunch of value and then it gets stuck in the soup again. There are simpler stories out there. It is trading rich for a story with volatile earnings.
misc industrial products
