Bear-o-meter goes bullish

November 2, 20209 Comments


    • While I won’t give specific stock recommendations on this blog- I would suggest you do the following:
      Go to the iShares US website and look at the holdings of JKF (the value ETF). Chart the names, pick your favorites
      You will find a fair number of US banks, and energy there. We are light on oil, but will be buying into the sector as technical signals suggest a change in trend.
      We bought an initial chunk of US banks, and will buy more going forward.
      We do NOT like REIT’s. We do like grocery names here. Infrastructure too.
      The best way to do things is to find value ETF’s and go thorough the charts. And pick an easy index like the TSX 60 and go through those charts one at a time. Look for stocks that fell, and have based and are showing signs of stability or, even better, progressively higher trend even if its slow.
      Tomorrow (Wednesday Nov 4) I am doing a webinar for the MoneyShow at 2pm EST. I will present a few names on that seminar. I recommend you watch it.

  • Thank you Keith for your excellent article as always. You’ve mentioned oil as a contrarian play, what are your thoughts on cannabis? It seems to be basing at the moment. Are there any signals you would look for before legging into this sector?

    • Funny you should mention that Wanda. We bought a small position in a Canadian-focused cannabis ETF for our Aggressive Strategy. We feel that the Canadian stocks are overlooked vs. the USA counterparts –which have rallied on a potential Biden win.

  • Glad to see a positive Bear-O-Meter. And I’m glad to report I’ve had a very good year. I was in the midst of rebalancing last March when Covid 19 hit. I happened to be 25% cash at that point and was able to hold off purchasing till the turnaround, which I accomplished using some of your methodology. Thanks.

    Re your reply to Vance, just for the fun of it, I looked up iShares Value vs. iShares Growth. Both use Dow Jones Canadian indexes. The Value ETF has an average annual 10 year performance of 3.92%. The Growth ETF 10 year performance is 5.68%. As a long term investor, I’d opt for the Growth fund every time.

    • Fred–thanks for bringing this up. Any overheated sector that has had parabolic short termed performance extrapolates that recent performance over its longer termed numbers. You could have done the same comparative of growth vs value in 1999 and found that growth had better long termed numbers. But – remember my comment on my last blog–regression to the mean brings average returns back to average returns!
      Whatever the case, my point is: I view value as the better place to be now, simply because it is NOT overbought – which growth names generally are. That can and will change – but for now, growth looks way overdone.
      One other thought – true, over the very, very long term, growth does outperform. But right now, there is little doubt that paying a PE ratio of 180 times forward earnings, while the stock is trading 40% above its 200 day moving average like, say TSLA, is rather risky. Hence, my call for better risk/reward on value over growth for the next few months. To me, this is about risk control. Growth could go higher, for sure. But risk is high in that trade.
      That will change, and there will be great opportunities to own growth at a more reasonable level if these names trade sideways (they dont have to fall) for a period. But right now, my view is that buying stocks trading so parabolically makes no sense.

  • Hi Keith,

    Every bad news in the world are on the screen now and the USA stock market going up and USA dollar going down. I am really confused what to do with my cash. I will do nothing for time being.
    What do you think. Regards.

    • I can’t advise you, but I can say that I am stepping in a bit at a time, with a bit of focus on value plus inflation sensitive stocks

  • Enjoyed your response and thank you. As I have mentioned in the past, I have gone the long term investor route as I don’t seem to have the right stuff for market timing. My own portfolio is pretty well balanced over sectors and growth vs. value. But I kinda love watching the market and technical analysis nevertheless.


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