- Page 1/4
- Next Page
1973 saw Nixon's Watergate and the oil embargo. This isn't today's world. Instead, the markets now are overvalued and there is geopolitical uncertainty. Doesn't see a 40% bear market like 1973, but we are seeing the forth come off. Today's market can sustain a 20x multiple or -300 or -400 S&P points (5,200-5,300), which he doesn't like, isn't cheap. But he might buy at those lower levels.
Technicals tell us we'll soon get a bounce, but he doesn't know when and he doesn't see a catalyst to trigger a bull market. First, the Fed's survey, The Beige Book, recently saw a major spike in the number of times "uncertainty" appeared (a survey of business sentiment). Businesses are very, very cautious. Similarly, the AAII survey of individual investors shows bearish sentiment, so we're close to a bottom. Thirdly, the graph of current volatility vs. expected volatility in 3 months is also at an extreme. So, day traders can ride this out, but not mom and pop investors in or nearing retirement.
He's been cautious for months. The market is overvalued. The hedge fund community is very levered. Time to take some money off the table as some of the froth is coming off. There's nothing fundamentally wrong with the economy. Take Tesla: at 200x earnings is insane; they sell cars, so they should be trading at a premium to GM like 25-30x earnings. So, Tesla has another 50% to fall before it's even reasonably priced. The best support for the S&P is 5,200--last August's bottom. By before that or wait? Doesn't know. Don't expect a 50% drop, but 10-15% which is healthy.
Maybe after the Canadian election or a new trade deal, 1-3 quarters. Will be lots of volatility and the CAD could weaken. The CAD is grossly undervalued and should be trading at $1.20. Hedge in the next 2-5 years.
They had a terrific quarter, but fell 6% anyway. Is -13% from all-time high of a few weeks ago. But it usually sells off on good quarters, but bounces back, so you must buy it into weakness. Almost always. They reported a revenue beat, but earnings miss. Same-store sales were +6.8%, beating the street. Operating margin barely missed as did EPS. Costco shoppers are still spending, but getting picky about value. Non-food same-store sales growth was around 15%, good. Only one-sixth of their goods come from China, Canada and Mexico, so they are fairly insulated from tariffs; and they can replaced those tariffed items with non-tariffed ones. Shares are hit because it's a high-PE stock and the market is down. Shares now are a buying opportunity.
Is -19% this year, but peaked in January. It's a richly valued momentum stock, struggling in this market. Last week, they reported an excellent quarter: a big top and bottom line beat, accelerating revenue growth and strength outside North America. Gross margins beat, a huge EPS beat and issued solid full-year guidance. Net wholesale sales were up 29.1% and direct to consumer up 43.4%. Saw huge brand awareness growth last year.
As a value investor, not growth, he didn't like SLF when markets were ripping higher late last year. However, if this falls down to its trend line of $70, he would buy.