A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Considering the current market and inflationary pressure, an allocation in Materials is fine. A benchmark allocation should be around 10%. The sector is looking fine these days. Unlock Premium - Try 5i Free
RISKY
Bitcoin. An asset class that drives people nuts. It could go up a lot from here and establish itself, or it could drop down. There is a fear of missing out however. It is looking like it will become an established asset class. You need insurance just in case it keeps going up. Decide upfront how much you want to own, and buy in stages. He would buy it and put it away. Own in a taxable account since it is binary.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Key market indicators are increasing. Interest rates and earnings are going up and this could be beneficial for sectors like oil. However, investors should have a three year time horizon and should not pre-guess sector shifts. Unlock Premium - Try 5i Free
COMMENT
Is the tech rally over? The best days are behind tech. Don't buy growth in a rising-rate environment. But human nature only buys what it knows. So if you know only Salesforce, you'll buy back into it, like rushing back into a burning house to get burned again and again. The Russell, industrials and chemical names will continue to outperform.
COMMENT
Pent-up demand and value tech names Apple, Microsoft and Google are value plays within tech and will get hit the least among tech names during this rotation into cyclicals. Nobody has any clue what this pent-up demand will be--how big?--because we've never come out of a pandemic. But he expects it will be bigger than many expects, like people taking vacations they never even considered. Hes already sees stores, sidewalks, highways crowded (legally), so he expects there will be huge demand. Also, cycicals and value have underperformed for the last 15 years. He expects the US economy will blow through the roof, which will trip over itself.
COMMENT
COMMENT
Tech stocks during this rotation Tech names are tradable now but only in the very short term: Facebook, Amazon, Apple, Spotify and Nvidia are at longer-term technical support and that's good. Last week, only 20% of big tech was trading above their 50-day moving average, usually meaning a tradable low signal. Bond sentiment is turning bearish, so rates could trade sideways for a bit, so you can play this oversold condition in tech tech trade. However, cyclicals will rule the day longer term especially in the summer with inflation fears.
COMMENT
Is the tech trade over? The play isn't going all in cyclicals, so tech is still alive. Tech won't outperform during historically low rates as it did in 2020, huge returns won't repeat. Don't throw the baby out with the bathwater. That said, certain tech will perform--Facebook, Apple and Google are trading at high-20s PEs compared to Crowdstrike at 200-300x. Two subsets here. You can't say all tech is untradable. For example, Microsoft still holds value. Look for solid balance sheets and sustainable growth.
COMMENT
Still looking at cyclical, economically sensitive areas? Yes. Last few years, with falling interest rates and very low economic activity, people have focused on things that act like bonds such as utilities, telcos, and REITs. People were willing to pay a premium for companies that had long-term, predictable, secular growth. In November/December, we started a new business cycle, with the market looking ahead 9-12 months. We're entering a new, significant reflationary cycle driven by stimulus. As opposed to owning things that are very predictable, he wants to own things that as revenue goes up, margins expand and profitability goes up.
COMMENT
What about rate-sensitive stocks that could be vulnerable if yields go up?(A Commentary)
Mar 11, 2021What about rate-sensitive stocks that could be vulnerable if yields go up? He's had very few of these, such as utilities, for over 6 months. From March to September, they were nowhere in the recovery. They may have been over-owned. SPHD compared to RDVY, dividend growth is knocking the stuffing out of high dividend stocks, because the market is setting up for slowly rising interest rates and a better economic cycle.
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