Twitter Poll – So last week-end, Elon Musk decided to poll his followers on the topic of whether or not he should sell some of his shares in TESLA, which of late, had been on quite a tear (I guess bolstered by a) a significant and expected incoming order from Hertz, and b) maybe? the company recently announcing price increase of $5K on a couple of models). Anyways, we all know how it played out: followers voted yes, and TESLA shares saw significant volatility, including a 10% down day wiping about $200 Billion of market cap on Tuesday … (Because according to calculations, Elon was going to have to sell some $10 Billion worth of stock to satisfy tax obligations arising from his exercise stock options otherwise set to expire early 2022).
Of course Tuesday was also the day that US headline inflation came in ahead of expectations (which were already not for a good number …), registering at 6.2%, and causing quite a bit of malaise in equities for that day.
Here is a chart I came across on Twitter (talking of which …), courtesy of famed investor Michael Bury (Big Short), which looks at the issue of transitory versus … hey, maybe not that transitory after all … (quite the good visuals, I’d say, including worth noting … non reopening related component on an uptrend, if you ask me what I see …)
Recent launches: Horizons Global Vaccines and Infectious diseases Index ETF (HVAX) and Horizons North American infrastructure Development Index ETF (BLDR) with Horizons opening the Exchange to mark the occasion => Click HERE
Recent noteworthy news:
GE announcing (the end of?) the splitting of its conglomerate, to be completed by 2023 …
Disney disappointing on all fronts in its latest quarterly … with stock dropping as much as … as a result
- notable strength in Materials (inflation news related?)
- Leisure retracing some of the strength shown last week on the COVID-19 Pill “news”
- Emerge (using ARKK as couldn’t locate daily price info for EARK.NE) – some of that possibly related to $TSLA weakness this past week on Musk tax related selling
I took a look at factors performance, and aside from noticing the sizable (make that HUGE) relative sector allocation found within XCV vs XIC (in terms of exposure to Financials; Energy; and Materials), also noted that such sector allocations were likely to be the primary determinant of where factors ETFs performance take us in the months ahead. (And evidently, in Canada, when we look at Value, as well as Dividends … there is NO ESCAPING the Financials/banks).
But of interest in relation to these categories (dividend; value, but also min, respectively low volatility), should be what the relative sector weights are, and so I took a look, across the following ETFs:
Trailing performance to October 31, 2021:
- as earlier noted, trailing performance to Oct 31, 2021 dominated by Value … BUT within that, interesting to note that “Fundamental Indexing” surpassed value’s performance (without nearly as much Financials …)
- ESG – whether Aware or Leaders, at a glance, VERY close to market performance (even in terms of sectors – below. with ESGA the lowest in terms of energy weighting)
- Low Volatility lagging meaningfully … not just “the market”, but also Minimum Volatility (which if memory serves, it used to “dominate” …
respectively sector exposure vs “market”:
So here you have it … the above gives you a sense as to what your sector concentration across Canada’s top 3 sectors – Financials, Energy, and Materials – looks like. Dependent on the call you wish to make on these 3, respectively what else you hold in portfolios, you might look differently at what “factors” solution you deem appropriate as we look to 2022 and turning the page on COVID-19 …
oh … and also, looking at the visual side of that story in terms of relative performance across these factors through the pandemic:
Jan 2020 to Oct 2020:
respectively Oct 31, 2020 to Oct 31, 2021:
Enjoy the week end 🙂
What have I been up to?
- got myself some more “inflation” related protection … (just in case its not “transitory”, but instead is transitioning to more permanent state …).
- took not of Gold stocks having already done well last month, and bullion ticking up on the inflation data, decided to move some exposure from bullion to gold stocks (bullion’s performance permanently impaired by competition from digital gold – bitcoin – … BUT, IF bullion does somewhat better in the period ahead, gold stocks will likely provide decent leverage to that …
- tilted Canadian exposure more toward key financial; energy; and materials sector … take note here, in passing, that while still expecting deflation to remain the likely outcome, David Rosenberg is taking note of Canadian equities relative appeal in the Globe on Friday => click HERE!
- recently moved some exposure from limited residual fixed income exposure from 4.5 year “ish” duration toward duration-free (or hedged to close to none …) in credit “opportunities”
Have a great week-end!
Note that I will shortly be adding links to all the great content presented at Mindpath Virtual 2021, which is now available for postview on the Commersphere platform => Click HERE!