Keith Richards' Top Picks
Keith Richards, portfolio manager at ValueTrend Wealth Management of Worldsource Securities
Focus: Technical analysis
I mentioned on my last appearance on June 6 that our market risk/reward model (the ValueTrend Bear-o-meter) is showing slightly higher-risk conditions for the market. This indicator compiles numerous trend, breadth, sentiment and momentum indicators into a relative risk/reward status for the market. It ranks the risk/ reward profile of the market into three main categories via a scale of zero to eight, where “zero” is very high risk, and “eight” is very low risk.
The ValueTrend Bear-o-meter is not a market-timing tool. It simply reads the relative ranking of risk versus reward present on the U.S. markets at a given time. No matter what its current level, readers must recognize that the potential for both downside (risk) and upside (return) exist simultaneously at all times; the Bear-o-meter simply ranks the potential of those two outcomes. Readers interested in obtaining a full research paper detailing its methodology that was published in the CSTA (Canadian Society of Technical Analysts) can contact my office to obtain a copy.
The numerical score provided by the Bear-o-meter’s readings are classified into three relative categories: Higher risk, Neutral, and Lower risk. The Bear-o-meter had been meandering between two and three, suggesting a relatively poor risk/reward trade-off. It has now moved to a “Neutral” reading of four. Refer to my latest blog at www.valuetrend.ca for details.
Despite the neutral reading, one should take a “cautiously optimistic” market stance. While some of the indicators suggest a potential for some volatility, the bigger picture remains longer-termed bullish. That’s because the stock market has not broken its primary bullish trend. The S&P 500 remains above its 200-day moving average, and it’s remained above the last significant low on the weekly chart of 2,580. The ValueTrend Equity Platform's cash exposure is currently contained to about 20 per cent.
FAIRFAX FINANCIAL (FFH.TO)
PAST PICKS: MAY 1, 2018
BMO LOW VOLATILITY CANADIAN EQUITY ETF (ZLB.TO)
- Then: $29.69
- Now: $30.81
- Return: 4%
- Total return: 4%
CONSUMER STAPLES SELECT SPDR FUND (XLP.US)
- Then: $50.01
- Now: $52.11
- Return: 4%
- Total return: 5%
BMO INDIA EQUITY ETF (ZID.TO)
- Then: $23.91
- Now: $24.98
- Return: 2%
- Total return: 2%
Total return average: 4%
ValueTrend Managed Account Equity Portfolio
Performance as of: June 30, 2018
- 1 Month: 0.4% fund, 1.3% index
- 1 Year: 9.0% fund, 8.0% index
- 3 Year: 6.5% fund, 4.7% index
* Index: North American Index.
* Gross of any fees and assumes reinvestment of all distributions with no cash outflows or inflows.