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‘The 3 best Buffett stocks for retirees’

A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web

Ben Carlson, a portfolio manager at New York-based Ritholtz Wealth Management, describes the dangers of single-sector ETFs and how they can distort markets and add to investor risk. Mr. Carlson uses the VanEck Junior Gold Miners ETF as an example of a concentrated product where investor may not be aware of the potential downsides involved,

"The ETF has gotten so big that it now owns giant stakes in its underlying holdings, three-quarters of which are Canadian companies. According to an analysis by Scotiabank, there are 10 Canadian companies that the ETF owns where its ownership percentage is more than 18 per cent ...The low-cost fund revolution is an amazing development for investors but you can't buy something just because it's an ETF or index fund. You still have to do your homework and know what you own and why."

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"When an ETF Changes Its Stripes" – Carlson, A Wealth of Common Sense

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The Financial Times outlines the five most important charts for global investors. The focus is on European managers but does cover U.S. bond markets and earnings,

"The 10-year Treasury yield and it currently calls into question a bullish outlook on the U.S. economy and prospects of significant stimulus from the Trump administration. Notably, the yield curve, as measured by the relationship between two- and 10-year Treasury notes has shrunk to its flattest levels since the election of Mr Trump. In other words, the bond market has effectively erased expectations for Trumpflation … Plenty now rests on first-quarter results from corporate America, and the outlooks from chief executives, to justify current lofty valuations. Wall Street analysts, however, are already trimming their forecasts for the profits that companies have made."

"The five markets charts that matter for investors" – Financial Times
Related: "Follow $17 Trillion of Fund Money to See Reflation Trade Retreat" – Bloomberg

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Investor demand for yield and income remains insatiable as Bloomberg reports,

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"Investors' global reach for income is giving America's largest banks their biggest surge in risky-loan sales on record. Goldman Sachs Group Inc. and Bank of America Corp. on Tuesday joined JPMorgan Chase & Co. and Citigroup Inc. in reporting first-quarter gains of almost 40 percent in underwriting revenues … 'There's a narcotic need for higher yield by debt investors, and the Street is going to create the deals to satisfy that,' said David Hendler, founder of Viola Risk Advisors LLC. 'Those with the better corporate-finance Rolodexes -- Goldman Sachs, Bank of America, JPMorgan and Citigroup -- are going to see the best deal flow because they're connected to the mid-level companies that seek leveraged lending.'"

"Goldman, BofA Cash In on a Leveraged-Loan Frenzy Like No Other" - Bloomberg

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Motley Fool chooses the Warren Buffett stock holdings that look best in the current market environment,

"Using Buffett's portfolio as a source of investing ideas is a fine course of action, especially if you're looking for high-quality companies that can stand the test of time. Retirees who want solid, stable investments need look no further than Wells Fargo (NYSE:WFC), Kraft Heinz (NASDAQ:KHC), and General Electric (NYSE:GE), which are all major Buffett stocks."

"The 3 Best Buffett Stocks for Retirees" – Motley Fool

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Tweet of the day: "@bySamRo "Allocation to US equities plunges to 20% underweight from net 1% overweight last month, the lowest since Jan'08." -BAML Fund Manager Survey " – Twitter

Diversion: "China's Success Explains Authoritarianism's Allure" – Cowen, BloombergView

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About the Author
Market Strategist

Scott Barlow is The Globe's in-house market strategist. He is a 20-year veteran of Canadian investment banks, including Merrill Lynch Canada, CIBC Wood Gundy and Macquarie Private Wealth (MPW). He was a highly ranked mutual fund analyst for 10 years and then, most recently, the head of a financial adviser support team at MPW. More

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