Jul 28, 2021
Investing Mid-2021, Inflation, Tech Stocks are Flat, Now What?
- BRT S02 EP30 (77) 7-25-2021
Things We Learned This Week:
- Inflation, The Fed, Macro outlook, state of the market
- Bitcoin – how should average investor think about it, or too speculative ?
- Cyclical Stocks, value stocks, growth stocks (should you hold off)
- Portfolio Turnover, prune out losers, what is working
- Passive vs Active mgmt, why Indexing not the answer
- What Tactical strategy means in investing w Robert
Guest: Robert Raeburn VP Wealth Mgmt, Life Pro Asset Mgmt
Robert’s Weekly Insights - https://www.lifeproassetmanagement.com/insights
LPAM YouTube Channel: Here
Notes:
Review Robert’s basic stock parameters - More about liquidity vs. market cap – mid to large.
Where in the cycle are we at? Secular growth
Rate of change – feeds into earnings
Qualitative side – some disruption, then turn around
Momentum and sales growth – sector trend – positive
Earnings don’t matter, until they matter / can be Balance Sheet, EBITDA. Look at CF, FCF.
Valuations – rise and buy and when to bail.
Screening – difficult to screen certain factors
Machine – many traders using computers and algorithms – see where the money flows are
Commodities – oil, gas, copper – 2010 hot because China building
Software – trades on billings growth, recurring. Does it grow quarterly?
Financials – yield curve and earnings
Utilities – bonds, what is your 10 year yield? (P/E – 5x)
Broadly speaking – is this business growing and capturing market share, leader in the space? Good balance sheet, low debt
Keep it simple, Wall Street makes it too complicated.
2020 – Recession, 2021 recovery. Low interest rates and recovery – S&P up.
Robert was heavy on tech and software from 2010 – 2020
Make money regardless of state of the market
Investing style is over-rated. Dominate investing theme. Do not put yourself in a box – these themes could last 5 – 10 years. Sector themes last up to 10 years.
Investing – 3 changes of doubt, acceptance, & exuberance usually takes 10 years for all 3.
Physics Analogy – takes so much force to push a stock higher, needs so much money buying the stock to push it higher.
Big tech rising so much, gets so big and now government regulates and growth slows.
Passive – buy Market Index and hold for years. No market timing, own group of stocks and hold for years.
Active - minimize exposure to areas getting disrupted and beat up. Move money to sectors growing and buy companies that lead. Companies, like people or Empires, are born, grow and then die.
Mean reversion – catalyst to make it happen, to turn it around. Follow others who discovered turn around.
Oil and gas – 2.4% of S&P
Tech and Comm.– 40% of S&P
Apple and Tesla bigger in S&P than oil and gas, (steel, copper)
Catalyst - rebuild west, materials, oil & gas, commodities, financials (banks)
Re-flationary – banks borrow money low and lending more money now, Volume on loans
Raw material cost is $0 for banks – spread banks pay .05% and make 1.5% spread
Risky and Riskier Stocks, all Stocks have risk
What is your timeline? Needs to be long term, ie - Miss 10 days of recovery, lose 50% gains
Price does not equal truth
What are you investing in? What is your exit plan?
Mid Life structure – making money too easy, too speculative.
Distribution - Top 1%, top 20%, top 50%, Markets teach hard lessons on wealth
Crypto and Block chain are real, but like 2000 tech. Not there yet, take 10 years.
Who will be the winners? 2000 looked like Yahoo, AOL & Netscape, but Amazon + Google won.
Investing Topic: https://brt-show.libsyn.com/category/Investing-Stocks-Bonds-Retirement
Thanks for Listening.
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