A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
Michael Batnick, Ritholtz Wealth Management’s director of research, described five common beliefs about finance that he believes aren’t true. The mistaken beliefs on the list are stocks are riskier than bonds, gold is a good hedge against inflation, timing the economy is the same as timing the market, all-time highs for the market indicate an approaching crash and, the one that will repel Canadians across the country, ‘your house is a good investment’,
“Real home prices went nowhere for 100 years. I am not suggesting home ownership is bad in any way, but there is this idea that you buy a house, sell it after thirty years, take your gains and retire to a beach. The truth is closer to what my friend Morgan Housel once said: “A house is a large liability masquerading as a safe asset.’
“Opposite of Conventional Wisdom” – Batnick, Irrelevant Investor
The research marketing team at Wells Fargo has attempted to pick five stocks that Warren Buffett would consider for his portfolio. The criteria are valuation based, including return on equity higher than 15 per cent, low debt to equity, price to earnings ratios below ten year average and price to cash flow below the industry average.
The stock are Facebook Inc. (A), CNX Midstream Partners LP, Cognizant Technology Solutions, EQM Midstream Partners LP, Regeneron Pharmaceuticals, Inc., and Shell Midstream Partners LP.
“@SBarlow_ROB WF: What would Buffett buy here?’ – (stock list) Twitter
“ @SBarlow_ROB WF: Buffett buy guesses methodology” – (research excerpt) Twitter
Citi strategist Johnathan Stubbs has written a series of reports on the severe underperformance of value as an investment strategy. The latest publication contains valuable information and a surprising correlation (my emphasis),
“Value is back to 2009 on P/E relative, back to 2000 on P/book relative and trading around record cheaps vs Quality and Low Risk. History tells investors to buy “Value”, but few are willing to engage, even Value investors. There are widespread signs of fatigue and capitulation. Value has been tracking, pretty much 1-for-1, the OECD global lead economic indicators over the last 8-9 years. The relationship prior to this period was also strong. Currently, lead indicators are below 2012 and 2016 lows. The key question for investors is whether growth can stabilize into 2020; that should support some Value outperformance.
“@SBarlow_ROB C: "Value has been tracking, pretty much 1-for-1, the OECD global lead economic indicators over the last 8-9 years" – (research excerpt) Twitter
Morgan Stanley provided a list of stocks they’re analysts believe could make big price moves on earnings results. The list of U.S. stocks include those where analysts are much more bullish on profits than consensus - American Express, Gilead Sciences and Nabors Industries are examples – and companies like Moody’s and Visteon where they expect results to disappoint.
“@SBarlow_ROB Like trading earnings? MS has some options” – (full stock list) Twitter
Tweet of the Day: “@lisaabramowicz1 Global equities created over $44 trillion in shareholder wealth between 1990 & 2018, but the total is reliant on huge returns from a just a handful of companies. A study found 60% of 62,000 stocks did worse than 1-month Treasuries in that period. bloomberg.com/news/articles/… “ – Twitter
Diversion: “The 40 Best Disney Songs, Ranked” – The Ringer
Newsletter: Investors might be better off with a trade war – Globe Investor