Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web.
Thankfully, I can report some glimmers of hope for energy investors for a change. CNBC's Jim Cramer, who while admittedly adopting a goofy persona was also a highly successful fund manager, listed a number of reasons for a bounce in oil prices in an extended rant.
There are also reports of hedge fund positions betting on $20 and $15 per barrel oil with short positions. This extreme bearishness in futures markets has in the past resulted in sharp rallies on short covering.
It may just be tactical and short term, and though there are no guarantees, an increasing number of signs that oil is trying to form a sustainable bottom are becoming apparent.
"Cramer Makes the Case for a Bottom in Crude" – CNBC
"Extreme Oil Bears Bet on $25, $20 and Even $15 a Barrel in 2016" – Bloomberg
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Let's hope this story is hyperbole but Bloomberg argues that 'the worst is yet to come' for the Alberta and the rest of the Canadian economy,
"The worst isn't yet over in the heart of Canada's oil patch. Some of the city's largest employers are poised to cut more jobs in 2016 as they reduce spending for a second straight year, adding to an estimated 40,000 oil and natural gas positions lost across the nation since the crude price rout began 18 months ago.
"'We all know someone who has lost a job,' Naheed Nenshi, the city's mayor, said in a speech this month, lamenting the 'funeral'-like atmosphere in the business community."
"Canada Economy Unexpectedly Stalls in October on Factory Drop" – Bloomberg
"The Oil Price Crash Is Taking a Heavy Toll On Canada. And the Worst Is Yet to Come" – Bloomberg
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The Value and Opportunity blog has what I think might be the best piece of investing advice for 2016 – spend less time trying to find winning investments and more time trying to avoid losers,
"The percentage of big losers is almost equal to winners. Most astonishing for me however were the 40% of stocks with negative "lifetime performance".. This is a lot if you assume that "on average" the stock market makes something between 6-8% p.a. long-term … avoiding losers is much easier than picking winners. For instance I guess that the negative lifetime returns have a lot to do with expensive IPOs of risky companies. So by consequently avoiding IPOs you might miss some winners but also you will in the long-term eliminate a much larger percentage of badly performing stocks.
"From my personal experience, I would add a few other criteria with how one can identify potential long-term underperformers relatively easy:
– aggressive balance sheets & aggressive accounting
– managers with questionable motives & background
– businesses with questionable way of doing business
– story stocks
– underlying business and/or industry in structural decline"
This advice closely conforms with Warren Buffett's investing rule #1: don't lose money.
"It's hard to find the winners but maybe easier to identify (and avoid) losers ?" – Value and Opportunity
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Tweet of the Day (will 2016 be the year of public finances?): "Illinois' unpaid bills total $7.6 billion. Pension liabilities $111 billion. Have now gone 6 months without a budget. But investment grade. " – Twitter
See also: "Commodity indices inflict more losses on pension funds: Kemp" – Reuters
Diversion: "The world's most 'liveable' cities" – Economist
Scott Barlow