Market Commentary — Page 271

Market Commentary

COMMENT

There has been a huge rotation into value. The incongruence between value and growth has been around for so long. Value is still very cheap. There are easier ways to make money. When you have days were the rally fades, there are mini-rotations into growth names. The easy money according to the recovery script is the value names.

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. 5i expects the odds of a rotation from growth to value and cyclical stocks at 40%. It is best to approach this rotation with balance. There is no reason for tech companies to not continue to perform well. Unlock Premium - Try 5i Free

COMMENT

Investors are holding cash--$5 trillion on the sidelines waiting for a selloff to buy cheaply. That's one reason stocks were battered today. We may have a couple more down says as Washington wrestles with the stimulus bill, but he expects markets to bounce back. The big box retailers will do very well if stimulus comes.

COMMENT

What's the big driver in the market now? Rally based on vaccine optimism. Stimulus is back on the table. Not exciting that governments are spending money they don't have. Low interest rates, fiscal deficits blowing out. Risk assets seems to be responding to this. No idea how long this will go on. Bitcoin is top of mind these days, going vertical here.

COMMENT

Explain the biggest shift in momentum that we've ever seen. He does fundamental plus technical analysis. S&P 500 and TSX are very bullish charts. Looks like a teacup and handle, and these can be very bullish. His sneaking suspicion is that this is a very bullish setup and he wouldn't be shocked to see stocks rally quite hard from here. In the past, January and February have been strong for equities. If you forced him to make a prediction for 6-8 weeks from now, stocks will be materially higher.

COMMENT

Gold. If central banks continue to print money, bodes well for hard assets. Gold is trending higher again, a hedge against inflation. Jury is still out, as we don't have runaway inflation. He isn't saying there will be, but there is a risk. Fed is willing to let inflation run hot. Don't have all your money in gold, but a percentage in gold or the precious metals (miners) does make sense. Doesn't know Barrick well. It's the biggest. Lowest risk way to express this trade in the market. He owns Kirkland Lake and Pan American Silver. These two are the top miners based on his metrics. He also owns PHYS. Make sure any ETF you own is backed by hard gold, not paper gold.

DON'T BUY

Canadian banks. Banks are good companies, but they're not great. He wants above 20% return on invested capital. Oligopolies. Source of their moat is regulatory, and he'd rather they stand on their own two feet. Banks haven't invested enough in tech. He expects tech to come in and give them a good run for their money. Good core holding for income-type investors, but not for him.

COMMENT

What to look for when investing? He looks for proven business models, high returns on invested capital, low debt, capable management, asset light, and increasing shareholder wealth.

Wealthica Track your Stocks in your Watch List

COMMENT

Hard to spot equities at decent prices? On the contrary. The unloved stocks of the last few years have come on well. Value companies, more cyclical in nature, are overtaking growthier companies whose valuations are on the edge of becoming uncomfortable.

COMMENT

What sectors had investors been ignoring and now show value? Cyclicals like financials, industrials, materials, consumer discretionary. Any companies that would benefit from a dose of inflation. These will continue to respond through this rotation in the cycle.

COMMENT

Cheap stocks can stay cheap for quite a while? This isn't the first call toward value. We've had some false starts. Market bifurcated for almost 10 years, back to the crisis of 2008. Many of the companies that have led the S&P 500 are the mega-caps. The underlying companies will do well. A stock-pickers market, and the passive investors will be frustrated. The past few months have seen a rotation and this will continue. You don't want to buy just because it's cheap. Sometimes it's cheap for a reason. But on the other side, there are companies that are market driven. Make sure the price has some correlation to the fundamentals. There's a lot of air under negative news.

COMMENT

Should I stay or should I go? He hears a lot "I'm almost at break even". This can be a damaging view of what we hold. The market doesn't know or care what our break even is. Nor is there any rule that we must end the race on the same horse we started on. If you think there's a better opportunity than where you are, take it. Doesn't matter if there's a gain or a loss, as the tax issues will sort themselves out. But the investment thesis should always be that you employ your capital the best way possible.

COMMENT

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Technology, industrials and consumer cyclicals are 5i’s choice for the best performance over the next couple years. Metals is a variable depending on the right conditions. Unlock Premium - Try 5i Free

COMMENT

Wall Street was negative until 2pm when Washington announced a forthcoming stimulus bill. Again, the bears were wrong. True, now is an ugly moment, but we're about to cross the Jordan to the land of milk and honey. Think of this morning's negativity as fuel for a rally. Rising unemployment and lowering retail sales were drivers for the bears. We're in a best of times/worst of times moment. Best for the wealthy, and worst for the unemployed and small businesses. Investors are actually in a perfect spot to take advantage of this situation as $900 billion in stimulus is coming.

COMMENT

We've had an incredible run, though some businesses are challenged, others are high-quality and doing well. He's looking at steel; Russel Metals should do really well given that the U.S. and steel demand will recover.

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A Comment -- General Comments From an Expert (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)

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

What's the big driver in the market now?(A Commentary)

Explain the biggest shift in momentum that we've ever seen.(A Commentary)

Gold.(A Commentary)

Canadian banks.(A Commentary)

What to look for when investing?(A Commentary)

Hard to spot equities at decent prices?(A Commentary)

What sectors had investors been ignoring and now show value?(A Commentary)

Cheap stocks can stay cheap for quite a while?(A Commentary)

Should I stay or should I go?(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)

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

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