Ask us anything

Before the Jackson Hole Meeting – I posted a blog entitled “Market Musings” early last week. In that blog, I cited several reasons to be cautions coming into the end of the week. I also noted that ValueTrend had raised more cash in our equity models – about 40%. For those not familiar with the culture within the Portfolio Management Business (which is substantially different than managing your own portfolio) – it is considered highly unusual and, quite frankly – a fairly bold move to go much above `10% cash. But, that is where ValueTrend differs from our competitors. We are not afraid to make strong allocation changes according to our rules.

Anyhow, I do hope you paid attention to that blog. So far, it appears that the market may be setting up for a rough September/October. It will be interesting to see if the SPX can hold the round number (psychologically important) of 4000 in the coming days and weeks. I will post a blog later this week with some thoughts on market movements over the fall.

Meanwhile- I thought I would pass on to you some notes I read concerning the current market outlook byt the largest Portfolio Management firm in the world, Blackrock. These guys are definitively in the “Smart Money” group – so its worth hearing them out.

Blackrock is bearish

Investment giant Blackrock recently downgraded view on equities. BlackRock also said traditional 60/40 stock-bond portfolios, and “buying the dip” — or reflexively purchasing stocks after a short-term decline — are no longer likely to be effective investment strategies. The firm indicated it favors investment grade credit along with reducing its stake in equities.

“We see a new era of volatile inflation and growth sweeping aside a period of moderation,” the firm said in commentary Monday. “We downgrade equities and upgrade credit in this new regime. Right now, we think the Fed has boxed itself in by responding to political pressures to rein in inflation,” strategists led by Jean Boivin said in a note published Monday. “Eventually, the damage to growth and jobs from fighting inflation will become obvious, in our view, and central banks will live with higher inflation.”

 In similar commentary last month, BlackRock strategists argued the US central bank’s rate hiking campaign may stall economic growth without necessarily solving inflation pressures. The firm argued high core inflation had been been driven by “unusually low production capacity in an incomplete restart following the pandemic” rather than overheating demand.

Ask us anything: Deadline for questions Sunday Sept. 4th

Long termed readers of this blog will be familiar with my “Ask me Anything” special edition blogs. These blogs allow you to post your questions, and I take them one at a time and post a few follow up blogs to answer the questions.

I’m going to do things a little differently this time. First, I am making it an “Ask US anything blog. I’ve asked Craig Aucoin, who co-manages our Managed platforms to step in to answer any questions pertaining to economic or fundamental analysis issues.

To take it further, the questions will be be answered in a video format. As always, the transcript of the video will appear below the episode, so those who like to read rather than watch can do so.

For those who haven’t followed this blog for long – here are the ground rules for the “Ask me” blogs:

  1. Investment questions should be of broad interest to many investors. They can involve broad-sector questions, questions about various international markets, or questions about individual commodities or bonds.
  2. Please don’t ask about individual stocks. The exception might be in massively followed mega-cap stocks like the FAANG’s. Better to ask about stock sectors, world markets, asset classes, commodities, etc. For example: Cannabis, gold, European markets, the utilities sector, the tech sector, oil, transports, long bonds, etc. Lets say you are interested in the banks. Ask about the US banking sector rather than my opinion on Bank America. Or you might just have  questions on technical/fundamental analysis rules, or unique strategies like hedging or stop loss rules, etc.
  3. You can ask as simple a question as you wish. And don’t worry – there’s no such thing as a dumb question! But feel free to ask the hard stuff too! I’ll do my best to get as many questions covered as I can. One question per reader, only.
  4. Questions on technical analysis methods and contrarian investing are very welcome.
  5. Questions on fundamental analysis are also very welcome, as are broad economic issues. Again…No individual stock analysis questions, please.
  6. YOU MUST POST YOUR QUESTIONS IN THE COMMENT SECTION OF THIS BLOG AND NO OTHER BLOG. DO NOT EMAIL US. POST A COMMENT ONLY.

Thanks, and we look forward to reading your questions!

quote-teal

26 Comments

  • I notice that Valuetrend is going more into cash. In a portfolio of about 80% in dividends, consisting of ETFs,REITs, and stocks. Should a person convert this more to cash even though the dividends are still safe; or should one use technical analysis to sell.

    Reply
  • I am afraid this is a”dumb question”
    How do you define “credit investing” ?
    I have decreased my equity percentage substantially and am uncomfortable with fixed (bonds) income investing.
    I use Saving investments rather than bonds.
    Would appreciate your comments

    Reply
  • Great work Keith as always. Wondering about your thoughts on North American residential real estate over the next few years. If inflation persists and interest rates remain elevated are we on for a crash?

    Reply
  • Hi Keith
    I have some Health Care stocks that took a hit last year then seemed to level off but no come back of significance even in their seasonally strong period.
    Normally in poor markets the health care sector does better than the general market.
    If there is a significant correction do you see this sector tanking with the general market or will they act as a go to sector due to their relative stability?

    Reply
  • I am uncomfortable buying bonds or even Bond ETFs.
    I have sold a large portion of my equity and am holding it in Cash and Savings vehicles, but would like to generate a little more income. I would like any purchases to be liquid enough to take advantage of a getting back into equity when the time seems appropriate.
    Do you have any suggestions?

    Reply
  • It has been a long time since you have been on BNN. Why? Will you be going back on any time soon?

    Reply
  • Can you please explain what “investment grade credit” is as it relates to investing strategies. Thank you.

    Reply
  • Hi Keith
    Like a lot of investors I have cash on the side and when I feel it’s close to the bottom ( I will never pick the bottom) I will start buying. I won’t be using the money for another 7 or 8 years or so,wondering what sector or sectors do you like coming out of this correction/downturn.

    Reply
  • Hi Keith and Craig.

    Can you please give your take on etfs for: copper producers ( copp etf), uranium (ura etf), and metals and mining (xme etf) and whether you would be going long these 3 etfs. I am thinking ura could get very bullish and perhaps copp etf could be an OK buy now given copper prices have be beaten down and I assume they will again head higher as inflation will stay higher for longer than expected so this would help copper producing companies. The XME etf I am not clear on whether it is a good long entry at this point.

    Thanks for your thoughts.
    Lee

    Reply
  • Hello,

    I know you say there are no stupid questions but I hope this is not the exception. Do you do technical analysis of bank of Canada interest rates to try to determine whether they will go up, stay the same or go down in the future? If it is possible to use technical analysis, as with stocks and other assets, could you please perhaps post a chart and/or your thoughts explaining how high you think Bank of Canada interest rates may be in 2023 and 2024 (assuming it is possible to do so- perhaps you would have to do technical analysis of inflation to project BoC interest rate levels for 2023 and 2024). As of now the BoC rate, as you know, is 2.5% and I was reading 6 days ago in the financial post an article titled “Rate hikes will end sooner than markets think” so I was wondering if you could perhaps try to project BoC interest rates for 2023 and 2024.
    I appreciate your response and love the blog as I learn a lot.

    Vanda

    Reply
  • If & when the fiat currencies collapse do you have thoughts on GOLD, the USD vs DXY or whatever that might be and the Cad vs US.

    Reply
  • I have a question about Canadian dividends. If I buy a Canadian dividend paying stock using $US from my US trading account, how is that dividend treated?

    Reply
  • Ask Anything ……
    Please, Your long term outlook on the Canadian dollar . Right now it appears that the Mexican peso is holding up better than we are…. a sad state of affairs in Canada. Thank you.

    Reply
  • Hey Fellas, Thanks for the opportunity to ask your advice.

    If ( when) we enter a period of retraction in the market, what sectors can one hide in that not only have a limited downside but also a decent dividend rate of return. I am thinking perhaps regulated Utilities, Telecoms, Banks, etc. US or Canada?

    As you can likely infer, while not a “hold it and forget it” type, I am not a quick stock flipper either.

    Thanks in advance
    Ron

    Reply
  • Hello Keith …do you still think that SP500 will go down to 3500? Thank you
    Sam

    Reply
  • Hi Keith,

    If you have sold equities and are holding cash, where is the best place to invest the cash to earn some interest income, but not have your capital shrink as interest rates rise and not be locked in, when it comes time to invest in equities again?

    Reply
  • From the fundamental side. When you look at earnings per share do you use diluted earnings, adjusted or GAPP. Depending on what a given source uses there is a wide disparity in some stocks particularly with the diluted number.
    When you or other analysts quote an EPS multiple is there a standard they are referring to?

    Reply
  • Hello Keith and Staff,
    I would like to ask if/how you play the volatility in the stock markets. With so much volatility in all markets there must be a way to capitalize on both the ups and downs. I am looking specifically to ETF’s both in Canada and the US.
    PS. I did take your Technical Analysis course and would recommend it your readers.

    Reply
  • Hi Keith.

    Thanks for sharing your thoughts and insights.

    Wondered on your analysis of Gold. Seems to be in a funk, and not necessarily uncorellated as usual.

    Thoughts?

    Reply
  • Hi Keith,
    What do you think the possibility Gold being a range trade going forward? It has that look to it since last July.

    Reply
  • Hi Keith,

    The talk these days is all about the rising cost of energy. Whether to heat your home or cool it down, it seems there is a shortage of energy and demand is ever growing. There is a lot of chatter about NUCLEAR being the solution to this problem. So I would love for you to talk about the fundamental and technical analysis on the Uranium sector please.

    Thanks,
    Parm

    Reply
  • Hi Keith/Craig

    I’m interested in your views on the auto industry and how EV will disrupt traditional manufacturers. People are likening Tesla to Apple and how it killed the phone market. Some say Tesla will be more profitable than Toyota with fewer cars made due to their high margins. Some say (gees I sound Jeremy Clarkson now) Ford/GM will go bankrupt in a matter of years as EV overtakes ICE and they can’t generate any real numbers in EV and even if they can, they can’t make money doing it.

    So I’d love to hear your view about the industry and if Craig is willing since you know how popular Tesla is, to take on the Tesla fundamentals. Specifically his opinion on the valuation. Some say the valuation is too high but according to my calculations using the PEG ratio, they will grow into it very quickly. IF Telsa is going to do what Apple did to phone companies it’s a no-brainer even at current prices. I definitely want to have a hedge at least since it came onto my radar (as an investment) and hope we’ll have the washout where it will go back down to the $200 level.

    Reply
  • So I think you have recently been at 40% cash. My question is simple but hopefully your answer will shed some light on our decision making process.
    Question: If you believe the S&P500 and other markets will drop, why not go to 100% cash? What type of assets do you hold when the indexes are dropping? I know in past bear markets your performance was better than indexes, but still negative. If you are convinced of retrenchment in the market, why not sell everything and ride out the drop?
    I understand nobody does this but help us understand why not.

    Reply

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