A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Growth of e-commerce. Packages from the likes of Amazon never stop arriving, and this won't abate anytime soon. People will go back to stores, but online shopping is so very convenient. With the AMZN membership, you're subsidizing your shipping costs. We don't want to see ourselves paying for shipping, so the free shipping incentivizes us to keep buying and buying. As people learn how efficient it is to order things online, the more they will. AMZN has no competition on logistics.
COMMENT
Investing thoughts. Common misconception that you have to have a contrarian view to make a lot of money. This is just plain false in a lot of cases. FANG stocks are a good example. He likes them, as they're extremely profitable, great businesses, and have great ecosystems. People may look at them and say it's too easy, too many people like them. At the end of the day, it's about growth, earnings and delivering. Sometimes, investing can be this simple.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The multiples on stocks are on the higher side but are supported by higher expected earnings growth. It is also a result of the extraordinary circumstances of the pandemic. The assumption is that it was an external factor that caused the economic slowdown and we will pick up where we left off. Low interest rates also justify the higher multiples. Unlock Premium - Try 5i Free
COMMENT
He prefers asset-light companies. We're seeing inflationary pressures, perhaps long-term or short. Real estate and commodity companies don't perform as well as asset-light during inflationary times. Both kinds of companies can raise prices, but the asset-lights have much lower input costs, so that's the advantage. Example: Google is lighter than Amazon, because the latter has a cloud operation in addition to their retail.
COMMENT
Uranium as an investment He used to own uranium until Fukushima happened, and the industry has tanked since then. He's of two minds about uranium: it's clean and readily available, but there is a lot of risk (i.e. Fukushima, Chernobyl disasters). He prefers quality, STABLE companies. Uranium companies are all over the map, unpredictable. So, he doesn't invest in uranium.
COMMENT
The best three Canadian banks The banks are stable and predictable. They pay moderate returns, albeit a little below what he prefers. His top 3: RY, TD and BNS though National Bank is close. The banks are at the mercy of interest rates, and he expects rates to go down, and this will pressure bank stocks. For the banks, have a 5-10-year horizon.
COMMENT
Inflation. There needs to be a will to spend, but also an ability to do so. In the bottom half of the population, they are still struggling. Incomes have not risen in a material way. Prices of technology continues to fall and this is a deflationary force. There are supply shortages that are pushing prices up. This is not real demand but a supply shortage. We will see policies to fix inequalities. Inflation will come back to the system.
COMMENT
Educational Segment. In 2011, the first part of the baby boom hit 65 and now the middle part of that generation is retiring. This poses challenges for natural rate of growth. China over the weekend is now allowing people to have up to 3 children outside of cities because of their demographic challenges. Sub-saharan Africa is the only place with a strong natural rate of growth. If we are not getting demographic growth, productivity must grow. Tech is the only sector that has increased productivity in a large way. Buy the dips.
COMMENT
Educational Segment. In 2011, the first part of the baby boom hit 65 and now the middle part of that generation is retiring. This poses challenges for natural rate of growth. China over the weekend is now allowing people to have up to 3 children outside of cities because of their demographic challenges. Sub-saharan Africa is the only place with a strong natural rate of growth. If we are not getting demographic growth, productivity must grow. Tech is the only sector that has increased productivity in a large way. Buy the dips.
N/A
Market. Inflation will play out differently for different real estate sectors. Real estate is a great hedge for inflation. Rents go up as inflation goes up. You have to be careful, asset class by asset class. When you have record office space vacancy, you cannot capture inflation to the same extent as with industrial, which has record low vacancies. Single family rental homes in the US are a good choice, as are malls. REITs don't pay tax at the corporate level, so they are agnostic to a change in corporate tax rates. REITs should be better off than corporate right now.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. 5i considers that the crash occurred last year. Growth stocks have already corrected twice this year. Although the current rally is hated by most investors, earnings and interest rates are the things that count. Both remain favourable for equities. Unlock Premium - Try 5i Free
COMMENT
Market outlook. Retail interest is strong in energy. Generalists have not come to energy yet. There is still noise that is holding them back. We saw the Dutch court order against Shell. Exxon also has had activist investors coming onto the board. Supply will still be strained and there is be triple dollar oil. Demand needs to fall with limited supply.
COMMENT
Oil outlook. There has been cost cutting so break even costs have gone down. Margins are higher now. For generalists to come back, there are two forces: performance pressure and return on equity. Energy companies are coming back from the damage due to covid and are now buying back shares and increasing dividends. Small caps give you the biggest opportunity.
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