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The best market conditions in nearly 70 years

by

Alain Thériault

June 25, 2019 09:30

Photo : Freepik

Strategist chief investment officer of BMO capital Markets, Brian G. Belski has taken advantage of the event Inside ETF Canada to denounce the predictions early from a recession that no evidence confirms to the horizon.

In 2009, Brian Belski has predicted a bull market of 20 years. His prediction had already taken half of the road. That is it for the second ? For now, the horizon is clear, according to the strategist of BMO. “We live in the best market conditions since 1950. This is the biggest bull market in history “, has launched Mr. Belski at the event, which took place in Montreal on 18 and 19 June.

He also urged the financial community to stop crying wolf at the slightest sign of volatility. While the last quarter of 2018 seemed to give reason to the most pessimistic, the strategist of BMO covers the total loss between December 26, 2018 and on February 1, 2019.

The behavior of the herd continues : after a strong start in 2019, the S&P 500 index climbed to a record level, and then falter under the decline of us stock prices. Once again, many investors panic and predict the end of the bull market.

The manager called the quiet in the quarters to come. “When will there be a recession ? I don’t know ; nobody knows. We will not enter a recession because we believe it is necessary that there is one “, has he hammered.

A bull well in life

The risks are present, acknowledges Mr. Belski. Head, trade tensions between the United States and China, as well as earnings growth slowed.

However, investors are missing him a long-term perspective. He thinks that the bull market is alive and well. “We continue to believe that the fundamental backdrop and macro-economic current remains favorable for u.s. equities,” said Dr Belski.

Among the factors that support these principles are : a growth of the gross domestic product (GDP) in the u.s. in a range of 2% to 2.5% ; profit growth of the order of 5 % ; low interest rates ; inflation contained and unemployment low.

Dikes against the volatility

To better combat the volatility, Brian Belski selects high-quality securities under a disciplined approach focused on quality, value and good prospects for dividend growth. He leans over to the large caps.

It surpondère manufacturing sectors, communication services, finance, health care and information technology. It under-weights the consumer staples, real estate and public services.

Follow the cash

“Follow the cash ! “, urged the strategist of the investment. One of the places where they are going seems to worry about more : the new technologies. Analysts are worried about the worries that many of these companies have not yet demonstrated their ability to generate income in a sustained manner, a gap that had led to the bursting of the tech bubble at the end of 1999.

However, Mr. Belski points out that the technology is no longer the same danger that at this time. In fact, it is estimated that this sector is the main source of new products in consumer staples. “Who has bought a box of soup – Campbell’s these last four months ? That hit his iPhone in the last three minutes, ” he asked his audience.

Technology, Microsoft, Intel, Apple have become products of mass consumption, like Netflix, to the side of communications services.

The milléniaux buy shares

The milléniaux spending, and will thus contribute to maintain the market price of the shares. That is what they are buying ? Of the shares in their RRSPS, pension plans.

In addition, they will buy goods for current consumption in the traditional generic brands inexpensive, and invest their savings in new consumer goods. They are no longer attached to the big brands as has been the babyboumeurs, ” Mr. Belski.

Buy the cartel of banks

Brian Belski believes that the canadian banks are the best managed in the world. He refers to jokingly as a cartel, because they agree to avoid stepping on the feet, particularly in their expansion in the United States. Stop to sell your securities canadian bank, clamp-t-it.

In terms of dividend growth, it believes that it is precisely the financial sector that leads in this regard.

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