A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Proxy for a bond ETF in an RRSP? Once you get liquidity issues, ie. no buyers, the price of bonds can drop really fast. So he sold his long bond ETFs. Instead, he bought ZEB as a bond substitute, which holds all 6 Canadian banks. Its MER used to be too high for him, but they recently chopped it to 25 bps, so he bought. But see his Top Picks for a bond ETF.
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Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. With a long term holding period, a focus on buying high-growth tech stocks on a potential downturn is a good strategy. If you have a short-term defensive investment focus, then financial stocks or consumer cyclical could be preferable. Unlock Premium - Try 5i Free
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The big picture is the sway that options trading has over this market. The 2 days, day before and day of options expiration sees jarring market moves. It happens every week during this earning season. Company fundamentals aren't important in comparison. That's why we're not out of this bear market yet. A stock can fall 30% or 50% from its peak, but nothing fundamental has changed with the company or stock.
COMMENT
If Russia invades Ukraine, what's the impact on markets? Stocks fell 3% after Pearl Harbour but recovered all that in one month. Historically, stocks rally within a week or so in conflicts that the US had direct involvement. In 2014, there was a volatility spike in the Russia-Crimea conflict. If Russia invades Ukraine, it won't be a fun day, but the market will digest it. History shows that the market reacts in a mixed way and it's not necessarily negative.
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What could happen this long weekend to impact Tuesday's trade? She's most concerned with two periods. The next six weeks see ongoing inflation and Fed concerns, the reset of high valuation stocks and Russian military conflict against Ukraine. 12 months out: nobody cares about that now, just the present. Bonds didn't protect stocks in January and cash doesn't help against inflation. She has a balance between cyclicals and high-growth tech, as well as an interest in international stocks. The second half of 2022 will be much different (better) from 2022 to-date.
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COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. A downtick in inflation numbers would set off a powerful rally in growth stocks. When investors see inflation as having peaked. A solution in Ukraine would also help. If there is a recession, this will also help growth stocks since it would be more valuable in a slow-growth world. Unlock Premium - Try 5i Free
COMMENT
CRYPTO UPDATE The cryptocurrency market, for some time has still not found a direction.
Using Bitcoin as a benchmark, we can clearly see that the asset has been in a triangle of indecision since the middle of January.
On the fundamental level, apart from another reversal of position by Russia and India on the status of crypto-currencies, we can note the decision of the Ukrainian government to strengthen the right of protection to the owners of cryptos by legalizing more digital assets.
COMMENT
Tech sector. There have been some powerful changes in the market, especially in the NASDAQ 100. It reached the same valuation peak from October to early January that it did in the year 2000, and has now stepped back. This is the first leg down of that index. Some stocks like PTON have been massacred, as they don't have much earnings support. These stocks are still not cheap, and have miles to go before they're finished. SHOP and some of the FANGs are also on their way lower. Modestly decent fundamentals have held up so far. If all this reminds you of the height of the dot-com boom, it should.
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Portfolio positioning. As in 2000, value stocks and gold have held their ground. Economy didn't implode then, and it doesn't appear to be imploding now. He has no overall sell signal for the general market, and he's in no panic to become defensive unless you still hold the NASDAQ stocks. If you do, switch to any areas of value. End of pandemic should open the NA economies to a great degree and encourage the overall market to stay the course, at least for now. TSX is far, far better value than the S&P or NASDAQ, and he'd focus his portfolio there.
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Differences from year 2000? If you can find differences, good on you. Only the names have been changed to protect the guilty. Same excessive valuations have begun to correct. Switch from those high valuation, no sales, no earnings stocks and into value. Value held quite nicely for all of the 2000s. We can see a crash again on the NASDAQ stocks. The lion's share of those are still excessively valued. For the NASDAQ to just get back to FMV (not even cheap), it would have to fall almost 40%.
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