Macro trends are still healthy

Since march 2009 we have been witnessing the run of  a long term secular bull market. Of course it is only visible on a graph in 2018. Granted valuations are not as attractive as they used to be, however there are still very good long term growth opportunities.

What is supporting the Macro trend?

  1. The US labor market is very healthy and jobs are still growing.
  2. GDP numbers are strong & the federal reserve is tightening interest rate policy.

What is supporting the selective investor?

  1. Corporations specifically in Tech, healthcare, some financials will post strong earnings due to the 1 trillion dollar combined buybacks &  favorable corporate fiscal policy.
  2. Strong labor market will continue to support demand for those businesses.
  3. Bonds face value is still way to expensive compared with historical data, which supports higher stock valuation.

I would like to point your attention on the graph below:

If you look carefully we have been since 2013 above the 2000 & 2007 levels.

This means that from 2000 to 2013 we have witnessed a long term secular bear Market

This secular bull market might not be around 10 years old but 5.5 years old…. to be continued.

 

secular 2018

 

Trade disputes are real but just another bump on the road to wealth

Lately we have been witnessing trade disputes between the US & China not to mention the tension between the US & ( Canada + the European Union). Tariffs are tools from the past to get a concession from a trade partner. If we take the US & China the recent trade goes around – 350 billions for the US. ( China imports around 150 billions of goods from the US & The US imports around 500 billions). Trump’s desire is to “level the playing field to diminish the negative yearly balance on the trade. Will those tariffs have a meaningful impact in the future? : I don’t think so.

tarrifs

  1. Presidents come and go, the next one might have a completely different vision on this matter.
  2. You can not artificially bent a natural competitive advantage a country might have on producing a product or providing a service.
  3. Even if those tariffs apply for a few years the consumer will  not sense it that much because the effect is diluted on thousands of products that most are not essential to your every day living.

 

SO PLEASE DO NOT FREEK OUT AND DO NOT LET THE MEDIA SCARE YOU OFF

Why settle for 5% if you can achieve over 20% per year.

As you can see below my track record in terms of total return is by most standards impressive. The most important think to do, is to read successful people`s  strategy and read financial statements to make sense of it. In my case I took the following people as mentors: Warren buffet, Jim Cramer, Peter Lynch. So many others are available don’t shy away from their wisdom. Read them and see how they became successful.

Last 2 lines are the SP 500 Return in CDN$ & US$total return

 

Believe in yourself

 

How to invest like a Pro

With all the information available via the internet it is sometimes hard to summarize what are the most important metrics to take an investment decision. Since I started to build my investment portfolio I can confirm the following metrics have been the pillars of my market beating total return along the years.

 

Let’s take a good student 10Q Quartely report :

Apple computers inc

1st important metric is net income in Billions$

 You can see that the growth from 2017to 2018 is heading the right way. In any given business if the last 10 years is an uptrend that is a good sign.

data

net income

2nd is the EPS ( earnings per share)

In apple’s case their buyback program is so big that it has a benefit effect on the shareholder return for the future. The trend you want to see as per below is the shrinking numbers of shares in this case from 5,274,394 to 4,926,609 and by consequence the earning per share going up.

EPS

Because the share count is shrinking it gives more room for the company to grow the dividend per share faster as shown below, there is no doubt in my mind that this company can grow the dividend per share by at least 10 to 15% per year for the next 10 years at least.

dividends

 

3rd Crucial metric  the available cash & assets available to the company.

Why?

Because this gives options for the company to invest in Research and development to grow the business, acquire another company to grow its presence in another area, buyback more of its own shares to increase shareholder value among other corporate decisions.

as you can see below numbers again are impressive : no one has 253 billions $ of available cash assets to grow their business but Apple computers

 

cash

 

there you have it. By applying this method for each of my holdings I have been able to get an impressive total return on my investments.

 

be well & get wealthy

 

T

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