A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Inflation affecting corporate profits? In some sectors it is, but not in others. Input costs can be added to the price for customers, especially for goods that get used up and replaced such as groceries, semiconductors, or metal producers. Those industries seem pretty well insulated at this point. Some of it is companies wanting to fatten their margins. In energy and materials, margins are expanding dramatically. Expects many S&P earnings to be better than forecast. This "dance of rotation" will continue for quite some time.
COMMENT
Investing strategy. We're in a bull market. Go there instead of bottom feeding. 80% of a return is getting the sector and the market right; 20% is picking the right equity to take advantage of this. He's low in his tech weighting. You've had a multi-year timeframe to own tech. Now a lot of people are trapped at higher prices, who were late to the game. Be cautious about buying something with so many built-in sellers. Go to the sectors that are underowned and outperforming, where everyone who's there is happy because they're making money. Estimates will keep going higher, will become a bigger part of the market, better earnings growth in the near term. Go where the bull market is, not where it was.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The Nasdaq trades at 26x earnings right now, if we count only the profitable companies. It is not cheap but the index has been higher at other times. The correction has most likely already happened. Not overly concerned about a crash, but the expected gains are less than what they were in 2021. Unlock Premium - Try 5i Free
COMMENT
No, the years-long bull market isn't in trouble. This is a typical, healthy and needed correction. We had years of great returns, but we don't want to disconnect between fundamentals and prices. 24% of the Russell 2000 index is down significantly from their peaks. The momentum and meme stocks got carried away. Rising rates could limit growth, but it could also indicate an existing strong economy. We're not slamming on the brakes, but just taking off a little pressure off the gas pedal. We're in good shape, especially later this year, but don't expect 25%+ returns again like last year.
COMMENT
Do you use stop losses? He doesn't use them. Look at a stock price with fresh eyes each day to determine whether it's a buy or sell. Stop losses can get you into trouble. Say a company doing well falls 10% in a correction while the market falls 15%. The company is doing well, but it pulled down by wider forces.
COMMENT
Educational Segment. Global macro demographic trends ultimately drives consumerism and demand. As society ages and birth rates fall, we are at a time where even growth countries like India, birth rates have fallen to replacement rates. By the end of this century, 40% of the population could be over 50. There is a graying dynamic which will impact labour. Outstanding debt and demographics means that the world can't handle higher interest rates. Inflation will probably be well contained. For the next year or so, it will remain sticky. It could be the peak of inflation shortly and then it will start to come down.
COMMENT
Canadian job numbers. The job numbers were disappointing and may have been a reason why there were no rate hikes by the Bank of Canada. Can't get a good sense of where the economy is for a year or so. We need to get clear of the colossal spending and central bank debt monetization. These policies distorts the economical data so it is hard to read.
COMMENT
Markets are going through a period of indigestion with massive volatility. After 10 years of high growth stocks moving to high valuations, they are starting to unwind. Sellers are being overwhelmed in the short term. Interest rates and earnings drive the market and these are going through change. Now the focus is on inflation which is the highest in three decades. Earnings have been great for two years but now costs are rising and margins are getting squeezed, However some stocks have been beaten up enough that it may be time to start buying a little for the long term. Example, he bought Lightspeed last week.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. If there is an invasion in Ukraine by Russia, the sell off would be quick. Energy and gold will be good places to hide. Uncertainty is negative for markets and the way the west responds will be key. Markets settled eventually in the past, as in 2014. Unlock Premium - Try 5i Free
COMMENT
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