Advertising
N/A
Market. There is a tremendous amount of concern around trade, the economy, news flows and there is incredibly defensive positioning in the market. In 2018 we came in hot and the rate hikes cooled expectations and we discounted some slowdown in trade. The fear at the end of the year was really over done and it was a bull market correction. We are now facing some positive catalysts: A friendlier Fed. There are concerns built into the markets. Defensives are roughly twice as expensive as they have historically been. Cyclicals are cheaper than they have been since 1980. He does not know of a bull market that has ended with everybody defensive and sitting on the sidelines. The market has discounted a slowdown. The pain trade is that which hurts people the most. People are positioned too far in one direction. This market takes out these highs with any measure. The pain trade is what the market can do to people on the wrong side of the market. Defensives are pretty expensive. Railroads or semiconductors are trading high. The market is not telling you that you are heading into recession.
Unknown
BUY
Crypto Currency. They enjoy a dominant position in social media. Instagram is a wild success. Their market share in digital advertizing is very favourable and growing. In an election year when they talk about antitrust and regulation, that can put a drag on the stock. News flow will not be favourable. Their entry into crypto currency will offer an enormous opportunity as Western Union charges up to 10% to transfer money to developing countries. Facebook is a great company and will do well over time, but be ready for difficult news flow over the next year.
0
BUY
This has been a dividend play for years. They did a really great job of growing it over time. The defensive sectors are very expensive. Telecoms have that group risk built into them. But he prefers to focus on stocks that have a higher divined growth rate. The total return over the next few years should be pretty decent.
telephone utilities
WEAK BUY
He is not a resource bull normally, but he likes restructuring themes. The base metals area has been unloved and under owned for a long time. Lows on the sector have been increasing since 2015. This group is set up to do quite well. He prefers RIO-T. The risk reward is very, very good. TECH.B-T should participate in this camp. (Analysts’ price target is $40.00)
Mining
WEAK BUY
It is a high yielder at more than 6%. The dividend is safe but you won't see much growth in it. You have to pick your spot and EMB-T has behaved less well than others in the space. He would focus on where you get the best dividend growth going forward. They are great operators.
oil / gas pipelines
WATCH
Forest Industry, Lumber Producers. His strategy is to look for groups where earnings are starting to accelerate and we are seeing positive change. The forest products group has been difficult and is under-performing the group. Wait to see a turn before stepping in.
Unknown
BUY
The medical device sector has been a leading group for the last three years and he has been a big proponent. They are interesting because it is secular growth. Demographics support what these companies are doing. They are very defensible because they are not tied to the economic cycle. So long as growth performs well, he likes this group. He owns it through the medical devices ETF.
biotechnology / pharmaceutical