I have spent about 10 hours over Wednesday and Thursday of last week visiting with some of our core institutional money managers as well as some outside our normal holdings. I am going to outline some of the views:
We are still in a period of global growth...low but growth non the less
Quantitative easing (QE) has lessened and in the case of North America there is tightening of monetary policy
Shorter term bond yields (2-5 year) have moved dramatically higher (which is why investment grade bond funds are negative for 2018 so far)
Technology and demographics continue to put pressure downward on inflation
Lower corporate tax rates in the USA have probably not been fully priced into the market
There may be additional stimulus in the USA if the infrastructure spending package is passed
Corporate cash is moving back into the USA (2 trillion dollars)
While a recession does not appear to be right around the corner volatility may increase as investment grade bond yield move higher and compete with certain income equities (utilities and certain financials)
The markets still have liquidity and the ability to borrow...that is supportive
Business have the cash flow to invest in technology
Emerging markets can borrow and are backed by a growing global economy
CDN$ should see lower levels I’d rate hikes are fewer here than south of the border
Moving forward into 2018
I continue to put significant faith in the Signature management team and in particular the signature global income and growth portfolio. This team is extremely tactical and this fund has moved from 35% equity to 70% equity depending on their view. The fund has been around over 10 years and over that time has been top quartile (this includes the horrible 2007 through 2009 period.
The fun has averaged over 6% during this extremely challenging time frame
As I believe that the next recession is much closer than the one we left behind I do want to reduce ‘recession volatility’ by adding or increasing exposure to:
TREZ short term commercial mortgages
Long term government bonds
Preferred shares (individual and CI preferred share pool)
Nationwide Self Storage (open for limited time)
While none of these may be exciting my goal and job is to provide the target client return with the least amount of volatility over the next 3-5 year time frame.
NOW FOR SOME INDIVIDUAL SECURITY SUGGESTIONS :)
BCE: (BUY) this stock has pulled back as short term rates have been moving higher making it an attractive entry point for those who do not own or accusation point for those that do. The 5% distribution makes it great for growth investors and those in retirement looking for tax efficient income.
For those looking for USA exposure consider VERIZON
Cineplex: (ACCUMULATE) the theatre chain (almost a monopoly in Canada) hot hit this past week as one form said it miscalculated earnings and therefore adjusted its target price. That new consensus target price is about $40 which is about 17% plus close to a 5% distribution.
For those looking for USA exposure consider CINEMARK (3.1% distribution)
The Liberty Braves Group (BUY) this idea came from the manager of the Sentry Global Small and Mid-cap fund. This stock represents the value of the Atlanta Braves baseball team. Forbes gives the team an approximate value of 1.5B which is above the current trading price. The current owner of the team is not a real baseball fan so value could be created by a sale. Now you can own a ball team...or at least a small piece.
OPPORTUNISTIC TRADES (20% short term target returns)
JUST ENERGY: (accumulate) hurt during the last quarter on what are said to be one time charges.
DETOUR GOLD: (accumulate) coming off recent lows BUT well off recent highs of 2017. A sniff of inflation giving gold bullion a move higher should lever this stock much higher.
‘The views expressed do not necessarily reflect the opinion of Argosy Securities Inc. The information contained herein may not apply to all types of investors. Please consult a professional before making an investment decision’
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d has averaged over 6% during this extremely challenging time frame