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COMMENT
Markets for the rest of the year. Three things to think of. First, what is the economy doing? Second, what's the policy response both fiscally and by central banks? Third, what's being priced in? Very strong year so far, except for China. Cyclical parts of the market have done well. Now the economy is starting to slow down. Going forward, with less fiscal support and with tapering starting, there's a bit of risk into the fall. All-time highs the last month, so not much of the slowdown is being priced in. He's cut his cyclical and economically sensitive exposure. Recycling proceeds into more defensive names and sectors. 5-6% cash. Not super negative, but tilted more defensively. Weak seasonally, combined with the other factors, makes him more cautious than earlier this year.
Unknown
COMMENT
Sugar high of massive stimulus? Sugar high and caffeine high at the same time. Three signs of a bubble: people are borrowing to invest, lots of new securities are being issued, massive participation by retail investors. All 3 boxes are checked. But can you go all cash and sit on the sidelines? The market could continue going up for years. He's trying to stay invested, but be as defensive or as aggressive as needed. Focus on risks, not just on the returns. If you do that, the returns will take care of themselves.
Unknown
DON'T BUY
Not time to be aggressive. Lot of risks for a name like this and Canadian banks, and investors need to pay attention. Mortgage portfolios are expanding, housing prices are up 30-40%, and this is a lot of risk in an economy that's slowing.
banks
COMMENT
Canadian banks. Terrible idea to take a large amount of margin right now. People feel that they can take more risk and borrow against their portfolios. Not time to be that aggressive. Lot of risks for Canadian banks. Mortgage portfolios are expanding, housing prices are up 30-40%, and this is a lot of risk in an economy that's slowing. He's maximum underweight banks. Once or twice in a career, you get to a point where the banking sector is facing risks not priced in, and we're as close to that as we've been in a long time. Canadian love their banks and dividends, but the banking sector is facing a lot of risks and investors need to be paying attention.
Unknown
BUY
Good job rolling up smaller distributors and rebranding retail component. Excellent execution. Great business. Pace of acquisitions has slowed, so share price has just chugged along. He recently added. Time to build a position.
merchandising / lodging
SELL
Low interest rate is challenging. Stock's had a good run. Take profits. Economy slowing. Not right time of the cycle to be aggressive with your bank positions. Their bread and butter is lending, and the Fed has capped their loan book as a penalty. Look elsewhere.
banks
WEAK BUY
Part of the reopening trade, which is still uncertain. Media arm is valuable. Interesting business. Trades at a high multiple. Good stock to buy when the market's getting crushed. Don't be aggressive with it.
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