Jan 7, 2020

Brooke Thackray's Top Picks: Jan. 7, 2020

BNN Bloomberg

Full episode: Market Call for Tuesday, January 7, 2020

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Brooke Thackray, research analyst at Horizons ETF Management Canada
Focus: Seasonal investing and technical analyst

MARKET OUTLOOK

Many investors believe that because the U.S. was one of the strongest markets in the world last year it will not repeat its feat for a second time in a row. This has not proven itself to be true, with emerging markets only outperforming the S&P four times in the last 10 years and the TSX only outperforming it twice.

To look for a turning point for U.S. markets, it is important to follow the performance of the U.S. dollar. If the U.S. dollar starts to falter, the probability that emerging markets and other stock markets around the world will outperform increases.

TOP PICKS

Brooke Thackray's Top Picks

Brooke Thackray, research analyst at Horizons ETF Management Canada, discusses his top picks: The Horizons S&P/TSX Capped Energy Index ETF, the iShares Silver Trust Index ETF and TJX.

HORIZONS S&P/TSX CAPPED ENERGY INDEX ETF (HXE:CT)
HAC purchased on Dec. 23 at $16.14.

Energy was one of the worst-performing sectors last year. Over the last few months, it has been improving relative to the broad stock market. The seasonal period of strength for the sector is from Feb. 25 to May 9. Often, energy can bottom in January. Even aside from the geopolitical tensions, the energy sector is poised to move higher.

ISHARES SILVER TRUST ETF (SLV:UN)

Silver has a seasonal period that lasts from Dec. 27 to Feb. 22. Recently, it’s shown an improving relative performance to the broad market. Its recent rally has been mainly predicated on its precious metal qualities. Silver has benefitted from lower interest rates and increasing geopolitical tensions.

THE TJX COMPANIES INC (TJX:UN)

TJX has a similar seasonal period to the retail sector and tends to perform well from Jan. 23 to March 31. From 1990 to 2019, TJX has produced an average gain of 7 per cent yearly during this period, being positive 87 per cent of the time. TJX sells products at the lower end of the price range with its different brands. Some of its brands have benefitted from the online sales hurting the traditional bricks-and-mortar companies. With many of these companies have gone out of business, TJX has bought their product at dramatically reduced prices for their inventory.

DISCLOSURE	PERSONAL	FAMILY	PORTFOLIO/FUND
HXE	N	N	Y
SLV	N	N	N
TJX	N	N	N

PAST PICKS: DEC. 6, 2019

Brooke Thackray's Past Picks

Brooke Thackray, research analyst at Horizons ETF Management Canada, discusses his past picks: Horizons Gold ETF, SPDR Portfolio Small Cap ETF, the iShares Rusell 1000 Value ETF.

HORIZONS GOLD ETF (HUG:CT)
HAC purchased on Dec. 23 at $16.14.

Gold performed well in the summer months as a result of interest rates moving lower. In the second half of December and into January, gold has moved higher amid increased geopolitical tensions.

Then: $12.73
Now: $13.66
Return: 7%
Total return: 7%

SPDR PORTFOLIO SMALL CAP ETF (SPSM:UN)

Small caps typically perform well at the beginning of the year, bouncing in January from tax-loss selling. So far, they have underperformed the S&P. The U.S. dollar being under pressure has not helped this performance. On a seasonal basis, the U.S. dollar can garner some strength in January and into February. If the greenback manages to do so, small caps could perform well over the next two to three months.

Then: $32.08
Now: $32.55
Return: 1%
Total return: 2%

ISHARES RUSSELL 1000 VALUE ETF (IWD:UN)
HAC purchased Nov. 13 at $132.70.

Growth has strongly outperformed value since the start of the bull market in 2009, though value has occasionally taken its turn outperforming, mainly in its strong seasonal periods. The value sector has its next strong seasonal period from late February to mid-April. When the stock market moves into a corrective phase, value tends to outperform.

Then: $134.67
Now: $135.92
Return: 1%
Total return: 2%

Total return average: 4%