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COMMENT
General Market Comment – The current extreme volatility in the market reminds him of the crash of 1987. Not that he expects this to happen again, he sees a lot of uncertainty in the market – usually this results in a down turn. The market has been bounded on the intrinsic value on the cap (around 3000 on the S&P500) and 2.5 times book value on the floor (about 2500 on the S&P500). He is waiting for the floor to buy again, but will trade with a tight stop as this could lead to a massive failure if that floor support does not hold.
COMMENT
TD-T vs US Banks – All the Canadian bank shares have been weak. Technically, he sees support around $68. As with the US banks, they are generally cheaper, but he has not had any good result in purchasing them. He thinks this is a signal the market is just not interested in this sector. He is a firm believer the Canadian banks are of higher quality and earnings are consistent.
banks
COMMENT
Bank of America vs Citigroup – Both of these have earnings forecasts that are growing compared to the rest of the US bank sector that looks weak. He thinks both are excellent value and are good buys currently. He wishes the US banks would stop buying back shares and pay out dividends instead – like the Canadian banks. He thinks this might require regulatory support first.
banks
COMMENT
Bank of America vs Citigroup – Both of these have earnings forecasts that are growing compared to the rest of the US bank sector that looks weak. He thinks both are excellent value and are good buys currently. He wishes the US banks would stop buying back shares and pay out dividends instead – like the Canadian banks. He thinks this might require regulatory support first.
banks
SELL
From a valuation perspective he does not like this stock today. On a price to book of 56 times, it is extremely expensive. He sees the fair market value near $200. He feels they bought back shares trashing the balance sheet in the late innings of the cycle. This sector typically faces the most gruesome moves down when the cycle ends.
Transportation
BUY ON WEAKNESS
He likes to see dividends be paid out of earnings and not funny accounting means. This company is not paying out of earnings and this will damage the balance sheet. He sees the recent move below $34 as a technical signal of further weakness to come and he might become interested when it trades at $24.
oil
gas
