Latest Stock Buy or Sell?
Today, Larry Berman CFA, CMT, CTA commented about whether ZMT-T, ZZZD-T are stocks to buy or sell.
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Market. There have been earnings disappointments. He continues to feel bitcoin is worth nothing. AI is going to be a growth space. China is slipping so it is important that China and the US come together with a trade deal soon. Quality of earnings and number of companies beating is in line but the amount by which a company beats is dropping and that is not a good sign. We have come off the bottom on the yield curve, but now it is flatting again. The Fed seems to be on hold with raising rates. We are heading for a recession and the question is only when.
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Where to deploy cash raised in the last few days. He raised a lot of cash last week and the only money he put to work was emerging market debt. It is a currency play that might make 10%. He has just started doing this and will buy more. The ETF is EMM-Q. He has also written a lot of puts in the last few weeks.
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BUY
His target yield / benchmark is as in VT-N plus 100 basis points. It's around 3.8% right now. Dividends from foreign corporations are treated as income but about half of it will be from capital gains.
E.T.F.'s
SELL
Equal weight mining ETF. Global mining will underperform going into a recession. Strong sell.
E.T.F.'s
WATCH
REITs. Usually the last thing to fall going into a recession is REITs. They will fall significantly in a recession. This could be a 2020 or 2021 story. If they went 10% lower they might be interesting for a while.
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DON'T BUY
S&P or NASDAQ in a 3x inverse leveraged ETF? He would never recommend it because of the erosion of net asset value. The most overvalued part of the market is the small caps so you could use a 1 times leveraged inverse as a trade.
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Educational Segment. Guest - Barry Allan. He tries to have ETF products launched before the sector is going to perform very well. FGO-T has done 3.85% with lower risk. He thinks we have seen the peak in equity markets and the peak in bond markets. It does not mean we are going into recession tomorrow, however. The risk of owning long duration government bonds is minimized significantly now. He thinks it is an opportunity to accumulate long term government bonds. He sees pockets of value in short term high yield corporate bonds also. He is cautious on preferred shares and floating rate products.
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