Full episode: Market Call for Friday, November 2, 2018
Brian Acker, president, CEO and chief investment strategist at Acker Finley
Focus: North American large caps
We believe we’re in the middle stages of a secular bull market in the U.S. dollar (It’s now been four years since I first started mentioning this on this show). This will ignite the rates of return of all U.S. assets, including equities, real estate and others.
According to Model Price metrics, we believe the S&P 500 has a fair value of 3,648. That’s 30 per cent higher than this index is trading today. Fair value is 4,234 twelve months from July 2018, assuming current earnings estimates.
For a value manager like us, there are many discarded, unloved and broken-down growth story stocks to choose from. If the U.S. economy can struggle along here or, God forbid, accelerates, these value names would produce great rates of return in our opinion.
At the same time, we’re in the midst of ever-increasing interest rates (or interest rates in the U.S. are normalizing). That’s a good thing. Even though it’s 2018, this market has the feel of 1994, which was our last bear market in fixed income. This American equity market will keep on looking over its shoulder at the U.S. Treasury market.
As interest rates make new highs, American equities go into a spasm, a correction, until the U.S. Treasury market settles down. Then equities will try to move higher. Wash, rinse and repeat throughout 2018.
BANK OF AMERICA (BAC.N)
Last purchase: $29.62 on Dec. 20, 2017.
WALGREENS BOOTS ALLIANCE (WBA .O)
Last purchase: $67.99 on June 26, 2018.
Last purchase: $1,650.84 on Nov. 1, 2018
PAST PICKS: OCT. 17, 2017
- Then: $72.19
- Now: $66.41
- Return: -8%
- Total return: -6%
- Then: $160.47
- Now: $207.30
- Return: 29%
- Total return: 31%
- Then: $39.79
- Now: $47.37
- Return: 19%
- Total return: 22%
Total return average: 16%
Acker Finley Select US Value 50 – F
Performance as of: Sep. 31, 2018
- 1 month: -0.64% fund, -0.595% index
- 1 year: 12.64% fund, 7.74% index
- 3 years: 10.09% fund, 9.36% index
Index: S&P 500 total return in Canadian dollars
Returns are net of fees.
TOP 5 HOLDINGS AND WEIGHTINGS
- Apple: 6.1%
- Microsoft: 5.3%
- Pfizer: 5.3%
- Cisco Systems: 5.4%
- Marsh and McLenn: 4.8%