Ross Healy, Chairman, Strategic Analysis Corporation; Portfolio Manager, MacNicol & Associates Asset Management

FOCUS: North American Large Caps

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MARKET OUTLOOK:

The market outlook is murky to say the least. Valuations are extended and so investors are doing the sort of thing that I usually associate with very expensive markets – they are throwing in their lot with a glib investment “solution,” one stop investing, a.k.a., investing in ETFs. This has not been a “value-driven” market for some time (as many “value managers” will sadly attest); it has been driven by momentum, and some very highly valued industry-disrupting themes led by the FANG stocks.

Not that I am knocking the success of these companies. But I have looked at their historical volatility and know that they can get really slammed, and slammed badly, in bear markets. The problem with ETFs is that they have to buy, and therefore reward, the highly priced, large cap stocks by pushing them higher and higher, in the process rewarding the ETF investors who has given up on value in the short term and setting them up for some poor performance in bear markets. The market has really just “discovered” ETFs as index-beaters, and now it has become de rigeur to dis the value managers as being lack-lustre has-beens and load up on ETFs.

I remember being told by an investment adviser (with a straight face) in 2000 at the peak of the high tech boom that Warren Buffett was dead. And in 1971 by Charlie Ellis (in his book, Institutional Investing), said the Nifty Fifty were the only investments that made the most sense in the long term. I have seen the one stop investing train before, and don’t want to board it now!

Top Picks:

Eastman Chemical (EMN.N)

MetLife (MET.N)

Home Capital Group (HCG.TO)

 

Disclosure Personal Family Portfolio/Fund
 EMN N  N  Y 
MET  N  N  Y 
HCG  Y  N  Y 

 

Past Picks:  MARCH 3, 2016

Amaya (AYA.TO)

  • Then: $19.83
  • Now: $24.26
  • Return: +22.33%
  • TR: +22.33%

Fortis (FTS.TO)

  • Then: $38.87
  • Now: $44.73
  • Return: +15.07%
  • TR: +19.47%

Alamos Gold (AGI.TO)

  • Then: $6.88
  • Now: $8.57
  • Return: +24.56%
  • TR: +25.08%

Total Return Average: +22.29%

 

Disclosure Personal Family Portfolio/Fund
AYA N N Y
FTS N N Y
AGI Y N Y

 

Company Twitter Handle: @svainsights

Company Website: Strategicanalysis.ca

Blog: The Occasional Contrarian