Kim Bolton, president and portfolio manager at Black Swan Dexteritas
Focus: Technology stocks

MARKET OUTLOOK

Global equities were in free fall throughout the better part of March before recouping some of their losses later on. The COVID-19 outbreak continued to worsen across more than one hundred countries, with the U.S. overtaking China as the country with the highest number of confirmed cases. North American authorities were forced to implement lockdown and stringent social distancing measures to contain the outbreak, resulting in an increase in unemployment rates and slowing economic growth as non-essential businesses were forced to temporarily cease their operations. In response, the U.S. administration introduced an economic stimulus package worth $2 trillion on top of the Fed’s emergency policy rate cut and restart of quantitative easing. The moves were aimed to support the economy from the negative impact of the disease outbreak and increase market liquidity. The North American equity benchmarks recorded their worst quarterly performance since 1987, as they ended the month of March with double-digit losses. In the same vein, European bourses underperformed their global peers as the coronavirus outbreak situation worsened in the region, turning it into the new epicenter of the pandemic. On the other hand, Chinese equity markets outperformed other regions as mainland China was on track to ease its months-long lockdown.

Equities started to pare some of their March losses in the last week of the month, and by the middle of April, the broad market equity indexes had rallied 20 per cent from their lows after falling by 35 per cent these indexes are still down double-digits for the year. We can begin to see that markets are tiring, with the broad market indexes trading sideways since April 9. We believe the stock markets will get their next catalyst for a move higher, or lower, as we continue to move through earnings season. Overall, the trend in earnings and the market’s earnings multiple seems to suggest that stocks aren’t cheap. Should those earnings estimates continue to fall as they have been, then it looks like the stock market could be due for another look at the March 23 lows.

UPDATES

We sold Shopify at US$578.71 on Feb. 12 (bought at US$311.74 on Oct. 8) as it achieved our price target. We took profit on this 3.5 per cent position.

TOP PICKS

FACEBOOK (FB NASD)

SERVICENOW INC (NOW NYSE)

PLURALSIGHT INC (PS NASD)

PAST PICKS: APRIL 17, 2019

ALPHABET (GOOGL NASD)

• Then: $1,240.14
• Now: $1,352.40
• Return: 9%
• Total return: 9%

AMAZON (AMZN NASD)

• Then: $1,864.82
• Now: $2,331.95
• Return: 25%
• Total return: 25%

SQUARE (SQ NYSE)

• Then: $72.76
• Now: $67.52
• Return: -7%
• Total return: -7%

Total return average: 9%

Website: www.bsdmi.com