A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Portfolio construction with bonds and equities. If safety of capital is your concern, then you need to have some lower yielding bonds as well as the high yield ones. This will protect your capital if the market takes a tumble. For the dividend portion, you want to own Canada's and the world's best businesses that have a track record of earnings growth and dividend growth. This is better than going just for the highest yield, as the company may not be able to grow that dividend or it's borrowing money to pay it.
COMMENT
Forest products oversold, so a buy? Lumber is a wildly volatile commodity. Rising interest rates should cool down the housing market. If it does, prices will probably seriously decline. It wouldn't take much. The 30-year US mortgage has already risen substantially. He's the last person to ask about technical charts. Commodity prices, in general, are not going to maintain current price levels.
COMMENT
Monetary policy is seeing a seismic shift and the impact of the Russian war is weakening the global outlook. Both amount to sustained volatility. In recent weeks we've seen a decent rebound especially in Canadian stocks. Pull back in Q2 on equities as we wait to see what happens in Ukraine. He isn't a massive fan of energy stocks. The second half of the year will see oil pull back to $80; the best is behind us.
COMMENT
Oil or gold? Two different sectors, though gold is seen as a storer of wealth during geopolitical turmoil. He prefers gold. Oil will likely fade later this year though there could be upside near term. Oil is a short-term trade, or you pick for the long term companies with strong dividends and balance sheets.
COMMENT
Educational Segment. Today, inflation outlook is different than in the past. We see a 25 year trend of the 10-year US interest rates is now below the inflation rate. There will be less globalization, more inflation so there will be less profits. Investors need to get boring. For the next few years, maybe tech isn't the place to be. Look for value stocks.
COMMENT
We had two buy signals in the U.S. markets on March 14. TSX looks good with a positive fair market value, 33 1/2% higher than current price. It is also a commodity index and with shortages in commodities that is the place to be. Markets swing back and forth between the U.S. and Canada. Canada has been an under performer for 12 years relative to the U.S. The Nasdaq is 38% overvalued and the S&P about neutral without the FANG stocks. Think of the U.S. as a trading market with opportunities to play rebounds and Canada as an investment market. He likes the commodities sector with broad based metals, food, etc.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The Canadian dollar is up on the year, influenced by oil and other commodities. Interest rates are also a force affecting the CAD. Canada raised rates before the US. Fiscal situation in Canada is not as good as the US. In the next six months, Canada could see some relative strength as international commodities see supply issues. Unlock Premium - Try 5i Free
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- Wayfair (W-N)
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COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Higher rates slow down the economy generally, and often trigger a recession. With inflation limiting consumer spending, it increases the possibility further. Timing is difficult. Markets usually drop before a recession and then rise in the middle. They are also short-lived usually. Unlock Premium - Try 5i Free
COMMENT
options vs. stocks Options give you great opportunities like big-cap tech like Apple and Microsoft, but be nimble. He's sitting on a high level of cash. He'll jump on options when he spots an opportunity. In fact, he expects them to do well as rising rates often means that tech rises, too (believe it or not). That said, he prefers options in these names, given volatility. All these names have great free cash flow, though their PEs are slightly high (mid-30s for Apple, mid-20s Meta). Definitely buy these on pullbacks, BUT he doesn't see pullbacks coming. Doesn't see them going straight up either. Instead, they will trade in a tight range.
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