A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The best time to buy the market, is when markets are weak. There might be a correction, although many stocks have already corrected. However, earnings are strong and the global recovery from covid are tailwinds and there isn’t too much worry over a big correction. Unlock Premium - Try 5i Free
COMMENT
Healthcare themes. Massive sector that we don't really see reflected in the TSX. Less than 1% of the TSX is healthcare, and about half of that are marijuana companies. So he really looks outside the Canadian market, mainly in the US but also globally. Pharma, biopharma, medical devices, managed care, and facilities. He's looking for companies with a 10B+ market cap outside of Canada. Companies connected to healthcare account for 13-15% of the global stock market. It's a vast industry.
COMMENT
Covid and healthcare. PZE's anti-viral draws the line in the sand to make Covid endemic and put the pandemic behind us. Everyone feels the rotations happening: growth to value, momentum into cyclical, small cap to large. This rotation isn't new to January, it was going on before. We'll have growth this year, though it's decelerating. In times when the clouds are gathering, you want companies that have good visibility of operations, good valuation, proven track record. Politically and individually, handling of the pandemic has changed sentiment towards some companies. Healthcare is shaping up to look really good for the 2022 environment.
COMMENT
Vaccine players. MRNA does have its flu vaccine coming out, single asset company, revenues are going to come off very sharply. PZE, on the other hand, has executed exceptionally well on both R&D and deployment of vaccines. Impact of Covid on the market is looking further and further away in the rearview mirror.
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- Meta Platforms Inc (FB-Q)
- Amazon.com (AMZN-Q)
- Snap Inc (SNAP-N)
- Pinterest (PINS-N)
- Rivian Automotive (RIVN-Q)
- BlackBerry (BB-T)
- Carvana (CVNA-N)
- Twitter Inc (TWTR-N)
- PayPal Holdings Inc (PYPL-Q)
- Shopify Inc (SHOP-T)
- Microsoft Corporation (MSFT-Q)
- Qualcomm (QCOM-Q)
- Exxon Mobil (XOM-N)
- General Motors Corporation (GM-N)
- Tesla Motors Inc (TSLA-Q)
COMMENT
GOOG 20 for 1 stock split. Stock split will take a while, as it has to be approved at the next shareholders meeting, which is not till July. Great opportunity for a wider distribution of shares. Volumes will go up a lot. Shares will now be more accessible at the lower value and more accessible for options. Lower price will encourage a lower strike price. Last year in general, there were more stock options traded than actual stocks, so it's a big deal.
COMMENT
Tech sector. Digitalization of everything has accelerated multifold. Things are different now. Now we're in a perfect storm of rising interest rates, shrinking liquidity, escalating inflation, supply chain constraints. On top of that, a lot of stocks are rich, especially the ones that are more leveraged and unprofitable. On the other side, earnings are still pretty good, but that's as long as growth hangs in there. The Atlanta Fed predicted that US Q1 GDP growth will only be 0.1%. The whole Omicron situation is really starting to slow growth. It's going to be rough waters, volatile, which plays into the active manager's hands. Three tech trends this year: cybersecurity, metaverse, continued migration into cloud.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Usually, it is preferable to let winners run, whether that be a stock or a sector in general.The key is to sell into strength. Markets could turn and wipeout overweight positions quickly. Would recommend letting stocks run 2-3% above target. Unlock Premium - Try 5i Free
COMMENT
There's a 50/50 chance that January reflects the rest of the year; he thinks 60%. It depends really on the fundamentals, which are not looking great--market valuations are high and susceptible to interst rates and geopolitics could destabilize things. As rates rise, earnings that stretch into the future will be discounted. There'll be a rotation back to value and fundamentals--and there is demand for resources. Dividend paying stocks will be attractive.
COMMENT
Educational Segment. When China slows, credit is contracting in China. When markets in the region goes sideways, then China needs to increase growth by increasing credit. The cycle has been reliable at inducing forward stock prices. Since the US has ramped up the tightening talk, the yield curve is flattening again. Once it inverts, then you have to be careful. Feds are downplaying the yield curve, but this could be a place for policy mistakes. There will be trouble steepening the yield curve. Inflation is persistent. We could see the yield curve invert and a recession. Growth is likely coming from the Asia Pacific markets. US will likely pull off. Look oversees for opportunities.
COMMENT
Surprises out of the Bank of Canada and Feds. BoC did not raise rates like he expected, and the Feds were hawkish. Level of uncertainty is very high. Technical levels are indicating that there was a tradable bottom. If earnings remain good, markets could stabilize. Risk of a policy mistake is really big.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Higher rates are expected by everyone in the world and markets have adapted. In past cycles, the markets rose 7.7%, which is decent. Income investors should keep bond maturities short. Take advantage of higher rates and not get locked in at lower rates. Inflation hedge could come from energy, metals and materials. Insurance could outperform. Unlock Premium - Try 5i Free
COMMENT
Interest rate increases caused by higher inflation are positive for real estate which involves real assets. However you need to have good pricing power involving positive supply/demand fundamentals. Geography is important - consider areas where there is employment growth. The office market is facing a headwind because of more working from home. There could be a net reduction of 15% in the office market.
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