Wall Street’s beloved tech trade is back on.
U.S. technology stocks this week took back their title as the stock market’s most profitable bet of the year, and the so-called FANG stocks have regained their shine after investors dumped the high-flying group in December over fears that the decade-old bull market was dying.
San Francisco’s unicorn startups are pouncing on tech’s newfound momentum. Ride-hailing company Uber Technologies Inc is planning to kick off a long-awaited initial public offering in April, Reuters reported on Thursday.
That puts Uber close on the heels of smaller rival Lyft Inc , which released its filing for an initial public offering at the start of March following two solid months for technology stocks. The Nasdaq index is now on track for its strongest quarter since 2012, rebounding from its worst quarter since 2008.
“There was a lot of forced de-risking by hedge funds in December,” said Joel Kulina, a trader at Wedbush Securities who specializes in tech stocks. “Now there’s a lot of FOMO,” or “fear of missing out,” he said, a familiar motivation among U.S. investors in recent years.
The S&P 500 information technology index has surged 3.6 per cent so far this week and is up 16.4 per cent year to date, edging out a 15.4-per-cent gain in the industrial index , which led since February but was held back this week by a slump in Boeing.
In another sign of turning sentiment, the FANG stocks - Facebook, Amazon, Netflix and Google parent Alphabet - each logged year-to-date gains on Monday that were better than the S&P 500, a first in 2019.
-- Noel Randewich, Reuters
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Stocks to ponder
Boyd Group Income Fund (BYD.UN-T). This security appears on the positive breakouts list (stocks with positive price momentum). It has delivered positive returns to unitholders since 2007. Year-to-date, the unit price is up over 14 per cent. Winnipeg-based Boyd Group operates a network of non-franchised collision repair centres across North America, mostly in the U.S., under banners such as Boyd Autobody & Glass, and Gerber Collision & Glass. Boyd Group also operates auto glass shops across 34 U.S. states under banners such as Glass America, Auto Glass Service, and Auto Glass Authority. Jennifer Dowty reports (for subscribers).
Enghouse Systems Ltd. (ENGH-T). This stock is the most oversold company in the S&P/TSX Composite Index this week, followed by NFI Group Inc., Winpak Ltd., Premium Brand Holdings Corp., Cascades Inc., and Maple leaf Foods Inc. These stocks are trading at attractive technical levels with Relative Strength Index (RSI) readings below the buy signal of 30. Enghouse Systems is a provider of logistics software for telecommunications and utility firms. Scott Barlow reports. (for subscribers).
Six stocks uncovered by using the ‘magic formula’
Avoid overpaying for stocks. That’s the consistent message from the world’s most successful investors. This rule applies under any market condition, including the current long-running bull market. December’s rout cleared out some room for bargain hunters until the rebound so far this year reclaimed the lost ground, but there still are ways to spot the good opportunities while eliminating some of the guesswork. Warren Buffett’s technique is to buy well-priced stocks of quality companies. It is a slight twist on the view of Benjamin Graham, the father of value investing, who looked for stocks that were trading cheaply relative to others and the value of the underlying businesses. Some professional investors have found that combining factors can help identify opportunities with more precision. Joel Greenblatt, the investor, academic and author, developed what he calls a “magic formula” that combines Mr. Buffett’s quality with Mr. Graham’s value approach. John Reese explains.
How to tell if the fees you pay your adviser are money well spent
An investor recently asked Rob Carrick the smartest possible question about paying fees to an adviser. “How can I figure out if a financial adviser’s fees are money well spent?” he wondered. “Is there a formula that can help me with this question?” More and more investors are realizing the impact that fees have on returns. But too often, they adopt the view that the way forward is to hammer their fees as low as possible. They neglect to consider the value they’re getting for the fees they pay, and that makes them vulnerable to bad decision-making. Low fees without good advice can put you in a worse position than higher fees and helpful advice. There’s no formula to help show if fees paid to an adviser are money well spent, but he has created a worksheet. Its purpose is to document the extent an adviser is contributing to your financial success with planning and advice. (For subscribers).
U.S. funds focus on media stocks, banks to find value as mid-caps rally
The S&P 400 Mid-Cap index has surged to its best start to a year since 1991, both rewarding fund managers and forcing them to work harder to seek out bargains in a group that is now the most expensive part of the U.S. market based on their historical averages. The rally in mid-cap stocks - companies with a market valuation between $2 billion and $10 billion - has come during a broad rally in global stock markets as investors price in a resolution in the trade talks between the United States and China and fewer interest rate hikes by the Federal Reserve. Yet fund managers from Janus Henderson, Hotchkis & Wiley, and Fairpointe Capital are among those who are still finding values by concentrating on financial, energy and media stocks and eschewing the high-priced real estate investment trusts and utility companies that make up nearly a fifth of the benchmark index. David Randall from Reuters reports.
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Others (for everyone)
Ask Globe Investor
Question: We have cash from selling off some equities earlier. It is earning 3 per cent at RBC for six months. An adviser there is suggesting that we invest part of this cash in the RBC Select Balanced Portfolio, a fund of funds. We have always been a bit leery of bank products and would appreciate your opinion on this. Also, with this kind of fund, do they charge management fees per fund as well as the overall fund fee?
Answer: The banks are like all other mutual fund companies – they have some products that are very good, some that are very bad, and some that are simply mediocre.
I would rate this one in the good category. It holds about 41 per cent of its assets in bonds and cash, with the rest invested in various RBC equity funds. The management expense ratio is 1.94 per cent. You don’t pay anything on top of that to the other funds in the portfolio.
The fund lost 3.6 per cent in 2018 (the first annual loss since 2011) but was ahead 5.5 per cent for the first two months of 2019. The three-year average annual rate of return to the end of February was 6.5 per cent. That was good enough to rank number 28 in the Global Neutral Balanced category, out of a total of 1,095.
The bottom line is that this is a respectable fund. It won’t make you a lot of money, but you’re unlikely to lose much either.
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What’s up in the days ahead
There may be hope for value investors yet. Ian McGugan will explain next week.
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Compiled by Gillian Livingston