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It will affect US earnings of certain companies. Those with international operations, which have to bring money back into the US, will be hurt by a strong US dollar. Interestingly, many small-cap companies are domestically based and don't have that exposure. The Russell 2000, for example, has been fairly weak as we started the quarter, and that might be a little bit of a wind at its back.
This issue hasn't been on the front burner of discussions. It probably will be talked about more as the quarter develops, if we continue to see the USD strong, and there's a good chance of that.
You have to look at exposure. He owns some healthcare companies among his US large caps, and they tend not to be as exposed to the USD. For example, MCK completely exited its European exposure in the last couple of years. Something to keep an eye on. It may not be a topic today, but may become shortly in your tenure as an owner of these companies.
No, they're not. And what we've seen is that the expectation for rate cuts from the street, not so much from the Fed and BOC, has gone from 6 down to 2-3. He's always been in the camp that rates would be higher for longer. The Fed and BOC will have great resolve in bringing inflation back to the 2% level.
Finally, normal isn't 0% interest rates. Normal is more about where we are. Reducing rates should only be used as a monetary tool when the economy demands it.
Must distinguish between patience and stubbornness. He's patient, but an investor has to recognize that they won't always be right. Have to be ready to move forward. Remember that professional investors are right only about 55% of the time, and that would be a pretty good return.
Many investors get tired of holding a stock for 2-3 years that's flatlined and they sell. Then, lo and behold, the stock catches a bid and moves up 20-40%.
Good company, but is it a good stock? Moved sharply higher on the back of success. Declared winner of the streaming wars. Watch profitability and margins in the NA markets, as that's where it makes money. Priced aggressively. On valuation, he'd need 20-30% drop before being interested.
Beat earnings and revenue expectations last quarter. Great AI exuberance of a few months ago has turned into impatience. Investors want immediate revenue results. He looks at the long-term potential of fundamentals.
On leading edge of using AI as an application, huge impact of letting companies boost margins through productivity growth via AI. This will filter through to the bottom line numbers, stock price will improve.
Lots of noise in the last year. Remember, pre-eminent Search tool in the world, a franchise it wants to protect. Working hard to use AI to maintain that leadership. Low 20s multiple, growing in high teens to 20%. Buyable well into the future. Exciting prospects. Very strong GARP. Risk: 90% market share possibly in jeopardy due to new technology.
Build it into your portfolio, but don't get carried away.
Health insurance companies have done extremely well and will continue to do so. And this despite continued bombardment to try to tamp down profitability in the sector (its predecessor, Anthem, was trading around $7 a share in 1995). Company expects revenue to grow 10%+ and earnings in low teens. Trades 12-13x earnings. Great setup for long-term hold.
Don't get caught up in the news of the day, think about where it's likely to be in 5-10 years. Use these times of weakness to add to or start a position.
Auto parts, attuned to electrification. Very good operator. Not much going on in past year. Technology needs to catch up on EVs so that consumer fully buys in. Poised to do extremely well on margins and profitability. When the stars align, will see a lot of action here. Not if, but when.
