Written by: Mike Simonato, Ontario Presenter: “Investing for the Long Term, presented to the Feb. 6, 2021 International Online Forum, you can watch by CLICKING HERE.
Well, that was a fun week. Monday had everybody jumping out windows followed by a nice run to more record highs in several markets. I have always said ride the bull until he kicks you off. For me, I’ve seen more than enough warning signs that he’s getting really tired of me on his back. In the attachments I’ve shown My Actual Portfolio along with My Forum Portfolio (Which I intend to own on the pullback I’m watching for).
I’ve shown the YTD results but also this week’s results. I’ve shown this week merely to show that what I have found over time is that Quality companies usually rebound quickly after a big sell-off and you really want to buy after a correction (hopefully this fall). This week we saw that stupidity continues to abound. Someone paid $667,000 over asking for a house. Earnings season kicked off with some very revealing commentary. Earnings reports along with several news reports showed the key to success for businesses in the “New Normal” and thus companies/ sectors we want to trade in.
Here is what I will be watching going forward re Trading opportunities:
- ABILITY to ADAPT to CHANGING MARKET CONDITIONS: Last year, companies that thrived developed an online presence and did very well (thus Amazon, Shopify and Etsy were very profitable trades). NETFLIX this week gave a perfect example of a company reacting to changing market dynamics. Subscriber numbers fell for the first time ever in North America and were weak elsewhere. They are adding gaming to their platform to try to attract more subscribers to solve the problem. (Something to watch for sure and a possible profitable trade shaping up)
- ABILITY to ATTRACT and KEEP a QUALITY WORKFORCE: This week it was highlighted once again that nobody can find quality workers. The Restaurant industry is a prime example. Many owners were interviewed and all said even if applicants show up for the interview they tell you flat out that they will work a max of 30 hours so they don’t lose CERB and even when they hire these losers, over 50% don’t show up for their first shift. These are not quality workers and shows one of many challenges facing this industry. American Airlines said it needed to hire 1,000 Pilots. Let’s hope they have better luck or Flying the Friendly Skys may get a lot less safe.
- ABILITY to FIND and MAINTAIN ADEQUATE SUPPIES/ SUPPLIERS: Taco Bell is the latest restaurant to announce that due to supply issues they won’t be able to offer all the usual meals. One of the biggest but not surprising announcements was GM is shutting down its assembly lines due to the ongoing Chip Shortage issue. Ford announced the same about a month ago. Coke and Pepsi along with a host of other companies are struggling to find and keep reliable supply chains as well as quality manufactures for their products.
- The ABILITY of the CONSUMER to SURVIVE and thus KEEP BUYING and SPENDING: This week it was announced that one third of Canadians are insolvent (a nice way of saying bankrupt/ screwed). 50% won’t make it until the end of the year. 40% spend 75% of their income on their Mortgage and Taxes leaving nothing for repairs/ upkeep etc. (Does that mean paying $667,000 over asking isn’t smart?) If the consumer has no money to spend then points 1-3 have little meaning.
Now you can see in my last couple of essays the payroll system where you can get paid daily and last weeks Australian views re After Pay are going to be popular.
To me, these 4 points are going to be the keys going forward and only the Strong and Smart will survive both in business and individually. Fortunately we have Stan, Vector Vest and each other to help keep us in the survivor camp.
As always nothing more than my 2 cents and I hope it’s of value and interest
Now for the Markets:
DOW JONES: Monday’s sell-off was a higher low leading to a nice recovery and a Record High on Friday
NASDAQ: Monday’s sell off stopped right at support and again recovered to a new high
S&P 500: Same setup as the NASDAQ
MKT TIMING: Mixed week but finished higher than last Friday
READ VIEWS (ties in nice with Tom Cauley’s Forum Presentation) Strategy Could be in a C/UP again soon
PTSE: Held the 79 SMA. Still below stubborn resistance and RT sill below the channel
VENTURE: Continues to be ugly
MKT TIMING: Just below resistance
READ Views Strategy, Climate Adv/ Decline continues to fall
EUROPE Read Strategy
BRITAIN: Read Views and Strategy
AUSTRALIA Read Views and Strategy