Ross Healy, chairman of Strategic Analysis Corporation and portfolio manager at MacNicol & Associates Asset Management
FOCUS: North American large caps
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MARKET OUTLOOK

There’s a whole new market theory in town called the “market melt up” originated by Jeremy Grantham of Grantham Mayo in Boston, but now picked up by others on both sides of the border. It probably follows from watching bitcoin and cannabis stocks as they followed the exponential curve until they were rising at an almost vertical rate. The theory goes that the market will follow a similar sort of trajectory – until, that is, the day that it doesn’t, and comes crashing down. It’s one heck of a way to invest – hold on for dear life as the market soars regardless of its intrinsic value, and then jump out at the top before it all lets go. Maybe it will actually happen. And why not? If it worked for the cryptocurrencies and is working for the cannabis stocks, why not the whole market?

Personally, from our own valuation and balance sheet numbers, I don’t see it. The fair market value of the S&P — even with the revised numbers due to the new Corporate Welfare Act (or whatever the Americans call their new tax act – “reform” somehow does not appear to me to fit the reality) — in our database, the market is fairly close to its maximum potential valuation, although not quite there. So if you want to leap in here, get fully invested to catch this move, and then get out at the top, be my guest. If the melt up guys are right, you will feel stupid if you don’t, but eventually, I fully suspect, you will feel much poorer if you do.  

TOP PICKS

YAMANA GOLD (YRI.TO)

ENBRIDGE INCOME FUND (ENF.TO)

CIBC (CM.TO)

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
YRI Y Y Y
ENF N N N
CM N N N

PAST PICKS: MAY 8, 2017

EASTMAN CHEMICAL (EMN.N)        

  • Then: $79.28
  • Now: $97.66
  • Return: 23.18%
  • Total return: 25.44%

METLIFE (MET.N)                           

  • Then: $47.28
  • Now: $53.30
  • Return: 12.72%
  • Total return: 14.50%

HOME CAPITAL GROUP (HCG.TO)       

  • Then: $6.83
  • Now: $15.48
  • Return: 126.64%
  • Total return: 126.64%

TOTAL RETURN AVERAGE: 55.52%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
EMN N N N
MET N N N
HCG N N N

WEBSITE: www.strategicanalysis.ca