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John Hood.
John Hood.

BNN MARKET CALL

Three top picks from J.C. Hood Investment’s John Hood Add to ...

John Hood is president and portfolio manager of J.C. Hood Investment Counsel. His focus is on options and ETFs.

Top picks:

Vanguard Total Stock Market ETF (VTI NYSE)

Have not purchased VTI yet, but will soon.

iShares TSX Equity Income Index ETF (XEI TSX)

I have purchased this at various prices.

Vanguard FTSE Europe ETF (VGK NYSE)

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First purchased at $59.50.

Past Picks: July 5, 2013

Vanguard Large Cap ETF (VV NYSE)

Then: $74.64; Now: $90.74; Total return: +23.89%

iShares TSX Capped Energy ETF (XEG TSX)

Then: $15.56; Now: $20.25; Total Return: +32.64%

Money Market

TR: 0.00%

Total Return Average: +18.84%

Market outlook:

In recent weeks market observers have been preoccupied with geopolitical events eg. Ukraine, ISIS in Iraq, Hamas, Iranian sanctions and today the unconfirmed report that a Malaysian airliner has been shot down over Ukraine by a Soviet era missile. Further, there are apparent divisions in the EU as to how to respond to the threat of Russian aggressiveness. Former Soviet Bloc states want to take a hardline against Moscow but Germany does not want to disrupt trading relations. All of this is occurring during the summer months which generally are not viewed as market friendly. While these events can cause market turbulence, the fact is that the EU does not want to embrace another financial basket case like the Ukraine is already nor does Putin want to expend more resources in keeping the eastern Ukraine, which explains the recent successes of the Ukrainian military whom the Russians could crush at will.

After months of markets stretching to new highs, a pullback of 10% or even 20% becomes more likely but this would only be a temporary relapse. The US recovery is real and it will continue to expand hence my recommendation for VTI all cap U.S. The CDN market recovery is sluggish but our banks, energy and telcos will continue to prosper and other sectors hopefully drawn up by the U.S. recovery, therefore XIC.

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