Market Commentary — Page 264

Market Commentary

COMMENT

What about retail trends? Retail properties need to reinvent themselves, and this will take a lot of capital. First quarter will be choppy. More store closures than last year. He's staying away from retail. Winners continue to be logistics and industrial warehouse real estate. There's growth there. Consumer hasn't stopped shopping; they're just shopping differently.

COMMENT

The current mega short squeeze (i.e. Gamestop): this could mean the tail end of a bubble market, though not in every area of the current market. Also, people have money to spend these days, so these buy stocks in apps like Robinhood. The retail investor used to buy ETFs, but now they buy specific stocks, which worries regulators and institutions. There's no clarity in terms of regulation about Reddit (which is the origin of this short squeeze).

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. In regards to the short squeeze on Gamestop, the failure of a couple hedge funds is not going to bring down the whole market. The weakness is popular stocks is fairly short lived. The situation does not change economic fundamentals asides from increased volatility short term. Unlock Premium - Try 5i Free

COMMENT

The short squeeze propelling Gamestop and Blackberry There are many similarities to the dotcom bubble. We have seen this movie before. But it's rich that these hedge funds are calling foul on chat groups beating them on their own game. That said, these stocks are speculative, not investments. He invests. Gamestop and BB don't have net income, so this is blue-sky. However, he has a soft spot for people sticking it the hedge funds.

COMMENT

We can never know with certainty what might pop the bubble. If you look back 20 years, and the excess in the dot com bubble, we see similar things. While all good, there are evidences that point to a bubble. Few people recognize it as so however. You never know when it will pop.

COMMENT

Are ETFs prices valued by their underlying stock values or what investors are willing to pay for the ETF. Futures are some times open during holidays so that is why the S&P500 ETF trading on the TSX gained during the US holiday. In general, ETFs trade very tightly to underlying stocks. There could be slight premiums from time to time.

N/A

Educational Segment. Credit market risk. There is a gross mispricing of credit market risk. Due to implied fiscal and monetary stimulus, the weaker companies who would not be able to make interest payments are able to get money with a tight credit spread. We see a deterioration in credit spreads before the stock markets turn down. There is a divergence where the stock market makes new highs, but there is less tightness in the credit market. We are starting to see this. It is not signalling a sell yet, but it is cautionary.

N/A

Market. He is watching BB-T very carefully which is a large position for him. He sold his entire position today. The only explanation for the climb he can see is a short squeeze. Some insiders sold some stock last week. He thinks there are momentum, computer driven strategies that were at play this week. His approach to the market right now is that it is a stock picker's market right now. He is a value investor and was careful about portfolio construction. He has not made many changes to his portfolio other than trimming and is now sitting on about 12% cash.

Wealthica Track your Stocks in your Watch List

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. P/E is quite high right now for many companies and indices but it is to be expected with ultra-low interest rates and alternatives paying almost nothing. If there is a big growth rebound out of the pandemic, valuation can increase sharply. A great company will grow into its valuation. Unlock Premium - Try 5i Free

COMMENT

The vaccination Gamestop dichotomy: 93% of the workforce is still employed, and are paying down debt with little to spend on--so these people may be doing just fine. Also consider that super low interest rates make house-buying affordable, especially in the suburbs. That's why homebuilding stocks are booming. It's fair to worry about the slowness of the vaccine roll-out, but he doesn't seem more lockdowns, because governments can't afford them. Rates will stay low and consumers have lots of money that they'll spend when things reopen. Groups in reddit are targeting shorted stocks, like they are doing with Gamestop. Same with Bed Bath and Beyond, also squeezed. Some stocks they target are genuinely undervalued like Blackberry. That said, this is a sideshow, but it won't threaten the overall market.

COMMENT

Coronavirus second wave. The cases are up, hospitalizations are up. Despite vaccine delivery delays, the western world will be vaccinated before the end of this year or early next year. In the meantime, governments are supporting the economy with monetary and fiscal policy.

COMMENT

Governments will not need to spend as much money as the vaccine is rolled out. The central banks have maintained the low interest rates but the bond market is reacting differently. US 10 year bond yields are back over 1% today. Long term bond yields are rising. Investment grade bonds are expected to have a negative yield in 2021 and 2022. However, within PE 25x, there are lots of stocks offering great value.

COMMENT

Travel stocks. Airlines and cruise lines have taken on a ton of debt to survive covid. These companies have also issued a lot of shares so the price will not come back to pre-covid levels. He prefer companies that have stronger balance sheets and aren't reliant on reopening to get back to where they were before covid.

DON'T BUY

Bitcoin and Ethereum. He does not understand it, and if you don't understand it, you shouldn't own it as per Buffet's philosophy. It has seen a wild ride and if you are speculating on it, then keep the position small.

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Investors want growth right now, and low interest rates mean they are willing to pay more for growth. Bonds and savings pay nothing so there is a risk on mentality. There are sectors that are overheating but there is also good value. Earnings and interest rates remain positive. Unlock Premium - Try 5i Free

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We paraphrase the experts by hand, we watch the shows and write down what we understood from the experts’ comments. We are human and can make mistakes, help us fix any errors. If you see something that you know is not right or if there is a problem with the site, feel free to email us at : [email protected].

A Comment -- General Comments From an Expert (A Commentary)

What about retail trends?(A Commentary)

A Comment -- General Comments From an Expert(A Commentary)

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research.(A Commentary)

The short squeeze propelling Gamestop and Blackberry(A Commentary)

A Comment -- General Comments From an Expert(A Commentary)

Are ETFs prices valued by their underlying stock values or what investors are willing to pay for the ETF.(A Commentary)

Educational Segment. (A Commentary)

Market. (A Commentary)

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research.(A Commentary)

A Comment -- General Comments From an Expert(A Commentary)

Coronavirus second wave.(A Commentary)

A Comment -- General Comments From an Expert(A Commentary)

Travel stocks.(A Commentary)

Bitcoin and Ethereum. (A Commentary)

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research.(A Commentary)

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