Keith Richards, president and chief portfolio manager, ValueTrend Wealth Management
FOCUS: Technical analysis
Top Picks: Berkshire Hathaway, Meta Platforms, Caterpillar
MARKET OUTLOOK:
When we look at the DJIA chart going all the way back to 1900, we can draw a trend channel. Historically, markets tend to regress to the middle of a long-termed trend channel when they hit an extreme. This, especially after a period of parabolic returns. Let’s face it, the stock market has been the only game in town for some 15 years. Markets returned to the top of the trend channel after the 2008-09 crash by 2021. Since then, there has been an overexposure to equities on household balance sheets. The concept of risk by ordinary investors has been totally distorted. Since 2009, the S&P 500 Index has an average compound rate of return of nearly 15 per cent to December 2024 including dividends. This, compared to the longer termed average (1900- 2024) of less than 10 per cent. What this means is, the market has returned a full 50 per cent higher return over the period it has run along its upper trend channel.
At some point, the market will do what it always does. It will regress to its mean. At that point, investors attempt to bail out. But who to sell to? Let’s face it, there aren’t exactly a whole lot of folks out there with a cash position. I am not making any bold predictions as to when the inevitable pullback to bring returns back in line with historical averages will happen, but what I am suggesting is that an investor make sure they have a systematic approach to selling, should the hammer fall. My books and courses can help investors do just that.
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TOP PICKS:
Berkshire Hathaway (BRK.B NYSE)
Pulling back to support within a larger up trend. Value play in a questionable market.
Meta Platforms (META NASD)
cant argue with that breakout.
Caterpillar (CAT NYSE)
pulling back to support.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| BRK.B NYSE | Y | Y | Y |
| META NASD | Y | Y | Y |
| CAT NYSE | Y | Y | Y |
Past Picks: SEPTEMBER 27, 2024
Laurentian Bank (LB TSX)
- Then: $27.40
- Now: $28.70
- Return: 5%
- Total Return: 6%
Microsoft (MSFT NASD)
- Then: US$428.02
- Now: US$436.08
- Return: 2%
- Total Return: 2%
Tecsys (TCS TSX)
- Then: $39.90
- Now: $44.97
- Return: 13%
- Total Return: 13%
Total Return Average: 7%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| LB TSX | Y | Y | Y |
| MSFT NASD | Y | Y | Y |
| TCS TSX | Y | Y | Y |