A Comment -- General Comments From an Expert (A Commentary)
COMMENT
The markets wants and needs the stimulus. The short term mistake is to not spend enough to get through the pandemic. Things will normalize in a couple years and we may get back to austerity and balanced budgets, but for the next couple years, governments are expected to spend. The central banks should continue to hold interest rates low.
COMMENT
Educational Segment. In relationship to the longterm trend, and the 200-day moving average, the risk and return ratio is not as good as it could be. The market looks like one you don't want to chase rallies in. Given how far we have stretched from the mean, there is a high probability of a market correction around 10%. A note of caution for investors. Look into periods of weakness to be a buyer.
N/A
Market. You have two dynamics that affect asset prices – inflation and growth. You are seeing a switch between these two. We are moving from a deflationary bust to an inflationary boom. Think about the previous decade and what was hot and what was not. We had gold getting a 400% return and the S&P a 5% return, neither compounded. There are shifts, decade by decade between the dynamics for asset prices. This is a really tough environment. Bonds cannot provide any shock absorber as they have done so in the past. He thinks we will revert to the norms in the next decade. You need a diverse set of assets.
BUY
Gold ETFs. Will be covered in past picks. Investors buy gold for uncertainty. With the vaccine coming along and uncertainty dropping we are seeing a shift into the inflationary trade. This is a buying opportunity. Most investors don’t have enough gold in their portfolios. Gold ETFs are viable options. They should be in your portfolios.
BUY
Health Sciences ETF. If you are focused more on the idea of something vaccine related, look at IBB-Q. Biotech is where you will see that type of technology manifest. XHC-T is currency hedged, if you want that now. It is quite diverse. LIFE-T has covered writes, which do well in a slightly flat or slightly up market.
PAST TOP PICK
(A Top Pick Mar 25/20, Up 0%)US $. It could have turned into a safe heaven. The dollar is the primary determinant of many asset classes. Its weakness has create strength in a lot of the commodity complex. He thinks this will continue and things that are resource and commodity based will probably have a bit of a run here.
BUY
Recommendation for a total [global] market ETF, low cost. Consider taxation issues. On a total return ETF you might buy a combination of horizons ETFs so you would not lose the dividend tax credit. HXDM-T and HXEM-T and HXS-T would round it out and avoid any distributions. In your TFSA or RRSP you can use the VXC-T, which excludes Canada.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Earnings have been quite good this year and companies have been showing decent growth. A recovery is expected next year although some sectors are getting a little too hot. Consumer discretionary and industrials should outperform. Unlock Premium - Try 5i Free
COMMENT
He's focused on the recovery stocks as vaccines pick up and the economy recovers. The stock market looks forward, so he wants companies that will do well when vaccines roll out globally next year. Those companies may not be the same ones which led the market after the March 2020 bottom. In recent years, being a passive investor in ETFs or index funds worked, but not now. Namely, tech stocks now occupy 25% of the S&P while other stocks have lagged, but it's starting to change. Now, the cyclicals and interest-rate sensitive stocks will improve, and will really benefit the TSX. He expects the Dow to outpace the S&P and Nasdaq in 2021 as things normalize.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. - The recommendation in terms of holding cash is to have enough to sleep at night. The markets have a lot of different forces affecting it, like a Biden victory, vaccines, good earnings, and low interest rates. Some sectors look to be in a bubble, like electric vehicles. 5i is generally not worried about a giant correction. Unlock Premium - Try 5i Free
COMMENT
Good time to buy in to real estate? Yes, it's one of the most compelling choices today. Combination of low interest rates, low inflation, low growth, and growing demand for tax-efficient income. In 2020, a number of distributions have been reduced, while many in the real estate sector have increased theirs. But you have to be selective.
COMMENT
Cloud over office and retail REITs? Retail was struggling before Covid, and the pandemic just accelerated that. Especially those who didn't have a superior e-commerce presence. Going into the holiday season, lockdowns will be challenging on the bricks and mortar retail locations. Vaccine is a light at the end of the tunnel, but she's still really cautious on retail. Structural challenges remain with over supply. There will continue to be a need for some office space, but flexibility is needed, and how does that translate into office requirements? Next two years will be net negative returns.
'%20fill='%23ffffff'%3e%3cg%20id='Pager'%20transform='translate(423.000000,%201755.000000)'%3e%3cpath%20d='M243.295367,17.286474%20C243.68919,16.9045087%20244.327703,16.9045087%20244.721525,17.286474%20L249,21.4361302%20L253.278475,17.286474%20C253.672297,16.9045087%20254.31081,16.9045087%20254.704633,17.286474%20C255.098456,17.6684393%20255.098456,18.2877274%20254.704633,18.6696927%20L249.35654,23.856763%20C249.159628,24.0477457%20248.840372,24.0477457%20248.64346,23.856763%20L243.295367,18.6696927%20C242.901544,18.2877274%20242.901544,17.6684393%20243.295367,17.286474%20Z'%20id='Path'%20transform='translate(249.000000,%2020.500000)%20scale(-1,%201)%20rotate(-90.000000)%20translate(-249.000000,%20-20.500000)%20'%3e%3c/path%3e%3c/g%3e%3c/g%3e%3c/g%3e%3c/svg%3e)
'%20fill='%23ffffff'%3e%3cg%20id='Pager'%20transform='translate(423.000000,%201755.000000)'%3e%3cpath%20d='M243.295367,17.286474%20C243.68919,16.9045087%20244.327703,16.9045087%20244.721525,17.286474%20L249,21.4361302%20L253.278475,17.286474%20C253.672297,16.9045087%20254.31081,16.9045087%20254.704633,17.286474%20C255.098456,17.6684393%20255.098456,18.2877274%20254.704633,18.6696927%20L249.35654,23.856763%20C249.159628,24.0477457%20248.840372,24.0477457%20248.64346,23.856763%20L243.295367,18.6696927%20C242.901544,18.2877274%20242.901544,17.6684393%20243.295367,17.286474%20Z'%20id='Path'%20transform='translate(249.000000,%2020.500000)%20rotate(-90.000000)%20translate(-249.000000,%20-20.500000)%20'%3e%3c/path%3e%3c/g%3e%3c/g%3e%3c/g%3e%3c/svg%3e)
