Full episode: Market Call Tonight for Friday, July 19, 2019
John Hood, president and portfolio manager at J.C. Hood Investment Counsel
Focus: Options and ETFs
Where are we? If the economy looks good, it’s bad for the market because the Fed might raise or not lower rates. If the economy looks bad, that’s good for the market because rates will be cut. Clear so far? Trump wants the U.S. lower to improve exports, but how can you when there is no inflation?
U.S.-China trade talks have stalled due to Huawei. Tech giants are being threatened by the U.S. Congress with antitrust legislation, while Facebook wants to launch Libra, a cryptocurrency, and Apple enters the credit card business. In the meantime some market analysts are despairing, like David Rosenberg, who writes that the U.S. is already in a recession, but no one knows it yet. Others, like RBC’s Ken Bache, are more sanguine, seeing more, but modest growth. Huh?
Large Sarbit, referring to a comment by Warren Buffet about Noah’s ark, recently said that “predicting rain doesn’t count. Building arks does.”
I have mentioned on BNN Bloomberg many times before that none of us are very good at predicting volatility outcomes; what matters is having a strategy in advance to deal with it. Otherwise, you are a deer caught in the headlights. That’s when the boring subject of asset allocation and rebalanacing become important. I remain bullish on U.S. markets and have been for years, but having taken advantage of this 10-year bull market, I’m looking to be more cautious.
- Sold the iShares TSX Info Tech ETF (XIT.TO). It gained 35 per cent, but Shopify dominated and makes it look vulnerable.
- Sold the BMO Equal Weight U.S. Banks Hedged to CAD ETF (ZUB.TO). It’s not doing anything. It was replaced by BMO Cover Call U.S. Banks ETF (ZWK.TO) for the 5.8 per cent yield.
PAST PICKS: JUNE 13, 2018
VANGUARD MID-CAP INDEX FUND ETF (VO.N)
- Then: $161.23
- Now: $168.75
- Return: 5%
- Total return: 7%
ISHARE S&P U.S. MID CAP CANADIAN-HEDGED ETF (XMH.TO)
- Then: $19.68
- Now: $18.70
- Return: -5%
- Total return: -3%
ISHARES TSX HIGH DIVIDEND INDEX ETF (XEI.TO)
- Then: $20.91
- Now: $21.21
- Return: 1%
- Total return: 7%
Total return average: 4%