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COMMENT
COMMENT
May 8, 2019
Market Outlook There has been excessive exuberance in the market. Since Halloween there has been massive market volatility, but the VIX has not moved. You had growth in the economy and the Central Banks were expecting a cut in interest rates. The market has gotten ahead of itself and now the market is only expecting a cut with modest belief. He would caution investors about the trade talks in China, but once that is resolved the market will re-focus on market expectations, which are much more realistic compared to a few weeks ago. Be cautious, don't strap on new exposure just yet.
Market Outlook There has been excessive exuberance in the market. Since Halloween there has been massive market volatility, but the VIX has not moved. You had growth in the economy and the Central Banks were expecting a cut in interest rates. The market has gotten ahead of itself and now the market is only expecting a cut with modest belief. He would caution investors about the trade talks in China, but once that is resolved the market will re-focus on market expectations, which are much more realistic compared to a few weeks ago. Be cautious, don't strap on new exposure just yet.
Cameron Hurst
Chief Investment Officer, Equium Capital Management
COMMENT
COMMENT
May 8, 2019
The market has been on a tear this year, so Monday-Tuesday were a cool-off. Not to worry. It's healthy and it happens. 78% of TSX stocks have been up year-to-date and so it's a little overheated. Retail sales have been negative for 5 of the last 6 months in Canada, so some took this as an ominous sign, given consumers are overleveraged. But last month we saw a year-over-year sales uptick. Also, housing starts perked back up, led by Toronto and Vancouver. The union saved some GM 300 jobs today (3000 were originally laid off), and he tips his hat to the union.
The market has been on a tear this year, so Monday-Tuesday were a cool-off. Not to worry. It's healthy and it happens. 78% of TSX stocks have been up year-to-date and so it's a little overheated. Retail sales have been negative for 5 of the last 6 months in Canada, so some took this as an ominous sign, given consumers are overleveraged. But last month we saw a year-over-year sales uptick. Also, housing starts perked back up, led by Toronto and Vancouver. The union saved some GM 300 jobs today (3000 were originally laid off), and he tips his hat to the union.
Brian Madden
Senior VP & Portfolio Manager, Goodreid Investment Council
COMMENT
COMMENT
May 8, 2019
How to calculate the PEG ratio? Price earnings to growth ratio. You gauge whether the mulitple on current or expected earnings is reasonable vs. the growth prospects of a company. Companies growing faster warrant a higher PEG because the PE in a few years will be much higher. So, it's price divided by the earnings. Some may use the earnings estimate for 2019 or the blended forward 12-month estimate. Find the PEG in analysts research reports (a concensus among some) and look for a 5-year growth rate, because a recession could artificially deflate earnings for one year.
How to calculate the PEG ratio? Price earnings to growth ratio. You gauge whether the mulitple on current or expected earnings is reasonable vs. the growth prospects of a company. Companies growing faster warrant a higher PEG because the PE in a few years will be much higher. So, it's price divided by the earnings. Some may use the earnings estimate for 2019 or the blended forward 12-month estimate. Find the PEG in analysts research reports (a concensus among some) and look for a 5-year growth rate, because a recession could artificially deflate earnings for one year.
Brian Madden
Senior VP & Portfolio Manager, Goodreid Investment Council