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Stocks for 2017
Dian
Posted: 14 December 2016 06:10:21(UTC)
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I mentioned below some interesting predictions or expectations for 2017 made by various fund mangers, investment bankers and other analysts and so on.

Buy the laggards and under-performed markets in 2016
Frontier markets to watch for 2017
Picking the right sectors for 2017
Strategists Predict Growth in Asian Markets for 2017
Overlooked stock and market picks for 2017
Entering 2017 the same way as 2016
Consumer staples and health care stocks for 2017

What would be your winning stocks/ ETFs for 2017? Do you think sector rotation is a good strategy to consider?

What I like most for 2017: Great value stocks and out of favour markets in previous years.
King Lodos
Posted: 14 December 2016 07:04:39(UTC)
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If you break the market down since 2010, into value/commodities and growth/quality, it's like half the market's actually been in a protracted bear market.

And now the likes of Fundsmith are on PEGY ratios of 2.2, while Emerging Europe is closer to 0.2.

About the only time-frames you can really predict are what happens in the next month or two (momentum), and what happens in the next 10-15 years (valuation).. So while I wouldn't try to predict 12 months, there should be much more upside in the rotation to value – but also a million events that could derail the current move to Financials, Industrials, etc.. But I think inflation and stretched valuations make a strong case for these value sectors, even without the 'Trump trade'.
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Micawber
Posted: 14 December 2016 08:42:55(UTC)
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So, Dian and KL, we read general waffle by fund managers all the time where they don't back up their views with stock selections. What are your stocks/sectors/countries for 2017, as per the thread title? I am sure there would be general interest.
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Martina on 14/12/2016(UTC), Guest on 17/12/2016(UTC)
King Lodos
Posted: 14 December 2016 09:17:28(UTC)
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My current positioning:

http://i.imgur.com/rkdrGc3.png

i.e. banks and industrials.

This time 6 months ago it was basically consumer defensive and emerging markets.

All I can say is at the moment I'm buying more Russia, more US Micro-caps. (I guess I have been touting Russia for a while)

I've got some anxiety over bank stocks. I'm holding most via Source Direct US Financials ETF. Key with being active is working out when you're wrong very quickly.. Someone tell Crispin Odey.
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Micawber
Posted: 14 December 2016 09:42:11(UTC)
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I have also been buying a little Russia (via JRS) and am thinking of buying more.

in UK, ITV remains in bargain territory for me, as long as Crozier is running it. Primarily because I have long been attracted to its emphasis on growing content development. This might interest ITV aficionados: http://www.telegraph.co....-collaboration-britbox/

I think at some point next year tech, which means primarily US tech might be my sector pick but that depends on how Trump handles things like outsourcing (which might penalise Apple but not so much Microsoft) and corporate tax/cash repatriation.

But I'll think about my picks list over the dead period between Christmas and New Year ....
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Martina on 14/12/2016(UTC), Guest on 17/12/2016(UTC)
King Lodos
Posted: 14 December 2016 10:06:37(UTC)
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Compared to the first 16 years of the century, Tech stocks are dirt cheap.

Some might say it's a case of looking thin when you're standing next to a very fat guy though. I've been looking at the Peter Lynch earnings lines on big tech stocks, and Apple's about the only one that wouldn't make me feel nervous.
Tom Mozy
Posted: 14 December 2016 10:22:56(UTC)
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I wouldnt be able to sleep with 13% of Russia in my PF, let alone all those bank stocks. However i dont rule them out, but missed a large part of the rally I suspect.

I have been selling down some consumer staples Ulvr, RB, DGE but keeping a core holding in each.

My Fundsmith holding is as big as ever however.

I have bought value type stocks with the proceeds.
CARD, SUS, GAW, ITV, HAT, GLE

Started buying Old Mutual Gold and Silver. Dow at 20k scares me.

Not had any bonds in my PF for a long time.
I hope 2017 gives me the change to add some. I have a figure of 10 year US yield at 3.5% before I start looking.
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Mike L on 15/12/2016(UTC), Guest on 17/12/2016(UTC)
King Lodos
Posted: 14 December 2016 10:48:30(UTC)
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As Jesse Livermore said: A stock is never too high to buy and never too low to short.

I'm watching bank stocks carefully, but it's all psychology when we start making predictions about how far a rally's likely to run. You never know whether you're in the first 10% of a rally, or the last.

I remember when gold miners were up 30% earlier in the year, and all sorts of fund managers and technical analysts were selling out and telling everyone the reversal was 'due'. I held on as they went up another 100-120%.

As a value investor originally, Russia feels very safe compared to developed market stocks.

The UK market *could* have 80% downside, based on current p/e ratios. And we've got huge debt.. Russia's cheap and practically debt free.. And I think you can get something like a 7-8% dividend on the index.
jvl
Posted: 14 December 2016 11:00:10(UTC)
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King Lodos;40412 wrote:
Compared to the first 16 years of the century, Tech stocks are dirt cheap.

Some might say it's a case of looking thin when you're standing next to a very fat guy though. I've been looking at the Peter Lynch earnings lines on big tech stocks, and Apple's about the only one that wouldn't make me feel nervous.


Google, Amazon, Facebook, Apple et al could, at some time, decimate traditional banking. They have the technology, the brains, cash and they're trusted more than old financials.

I wouldn't feel comfortable about having 13% in Russia, just as I wouldn't feel comfortable living in a house built on the edge of a cliff prone to subsidence. Putin could decide he wants to confiscate your assets at any time on any trumped up charge he wants.

Not sure about ITV. I spend all my time watching Netflix and was hugely impressed by it as soon as I got it a few years ago. I took a look at its shares at the time but didn't buy because I regarded them as too expensive. They've more than doubled since.

The other one that has got away is Disney. On my watch-list for a long time, mainly because I've noticed how effectively it can hold the attention of my daughter and her peer group (and those of many other ages too). It took its content off Netflix and AmazonPrime and launched its own DisneyLife, which I've also been impressed with (Amazon, by contrast, is rubbish).

If a 3 year old kid is happily addicted to films, characters and associated merchandise from movies created in 2013, 1959, even 1937, what does that say? And yet I'm still sitting here watching it go up!
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Jon Snow on 14/12/2016(UTC), Guest on 17/12/2016(UTC)
King Lodos
Posted: 14 December 2016 16:51:23(UTC)
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They could .. but it's also not that common for any tech firm (no matter how dominant) to stay at the top for long.

Then there's whether they can do it profitably, while in competition with each other .. If you think about investing in aviation shares at the birth of plane travel – now we've got thousands of planes in the sky at any moment – you wouldn't think the sector had made virtually no positive return since inception.

I'd be prepared to go 45% Russia. Russia's gone to 0 before, but the US and Japan have both gone down 80%, and in effect you're not much better off .. Definitely not a recommendation. But the potential for very high returns from Russia is something I'd want to capitalise on.







Jim Thompson
Posted: 14 December 2016 16:57:44(UTC)
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Re ITV: I watched this channel while I was in South Africa recently. Just like the BBC, it's programmes are aired all over the world. And it has some great shows. Was it the director deals which saw the recent price drop?

I have today initiated the transfer of my small cash ISA over to my ISA Share account. I see no reason to continue with it when basic savings accounts are tax free at my level. More to spend next month!
jvl
Posted: 14 December 2016 18:27:06(UTC)
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King Lodos;40425 wrote:
They could .. but it's also not that common for any tech firm (no matter how dominant) to stay at the top for long.

Just today this article happened to list the top 5 companies in the world in 2000, 2006, 2016. The only constant? Microsoft.

Out of 15 places over 16 years, 10 were tech, 2 energy, 2 industrial, 1 bank.

Quote:

I'd be prepared to go 45% Russia. Russia's gone to 0 before, but the US and Japan have both gone down 80%, and in effect you're not much better off .. Definitely not a recommendation. But the potential for very high returns from Russia is something I'd want to capitalise on.

Throwing a KL favourite back at you, I'd say it's gambling. When you can't rely on the laws of a country, not only do you not have a level playing field but you have a completely corrupt referee.. You're gambling on the whims of a few all-powerful completely corrupt ruthless people.

Apart from the risk of corruption, seizure and controls, Putin could invade another country, be subject to more sanctions even from Trump, etc, etc.
Jon Snow
Posted: 14 December 2016 23:27:34(UTC)
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I just love this type of story, why does anyone think that a year ticking over will cause anything different to happen. It won't alter the past and it won't change the future.

If you want to review your pf it may be a convenient bookmark, beyond that not much.

Hot stock tips for 2017, I suppose it fills empty space in newsprint just like the experts predictions for the FTSE at the end of the year.

If you want a prediction from yours truly for 2017 - I have read the tea leaves and they say expect your council tax to rise by 4% to "pay for social care".

Just like Gordon Browns 1% (uncapped) hike to NI back in the day to "pay for the NHS". A significant part of that is to pay the index linked pensions of former DB staff.

Off topic and ranting now.

It's been a bit of a day for me and then there's Yahoo hacking....

Jon Snow
Posted: 14 December 2016 23:30:46(UTC)
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King Lodos;40408 wrote:
My current positioning:

http://i.imgur.com/rkdrGc3.png

i.e. banks and industrials.

This time 6 months ago it was basically consumer defensive and emerging markets.

All I can say is at the moment I'm buying more Russia, more US Micro-caps. (I guess I have been touting Russia for a while)

I've got some anxiety over bank stocks. I'm holding most via Source Direct US Financials ETF. Key with being active is working out when you're wrong very quickly.. Someone tell Crispin Odey.


KL,

Did he ditch Sky as well.
Jon Snow
Posted: 14 December 2016 23:46:19(UTC)
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jvl;40415 wrote:
King Lodos;40412 wrote:
Compared to the first 16 years of the century, Tech stocks are dirt cheap.

Some might say it's a case of looking thin when you're standing next to a very fat guy though. I've been looking at the Peter Lynch earnings lines on big tech stocks, and Apple's about the only one that wouldn't make me feel nervous.


Google, Amazon, Facebook, Apple et al could, at some time, decimate traditional banking. They have the technology, the brains, cash and they're trusted more than old financials.

I wouldn't feel comfortable about having 13% in Russia, just as I wouldn't feel comfortable living in a house built on the edge of a cliff prone to subsidence. Putin could decide he wants to confiscate your assets at any time on any trumped up charge he wants.

Not sure about ITV. I spend all my time watching Netflix and was hugely impressed by it as soon as I got it a few years ago. I took a look at its shares at the time but didn't buy because I regarded them as too expensive. They've more than doubled since.

The other one that has got away is Disney. On my watch-list for a long time, mainly because I've noticed how effectively it can hold the attention of my daughter and her peer group (and those of many other ages too). It took its content off Netflix and AmazonPrime and launched its own DisneyLife, which I've also been impressed with (Amazon, by contrast, is rubbish).

If a 3 year old kid is happily addicted to films, characters and associated merchandise from movies created in 2013, 1959, even 1937, what does that say? And yet I'm still sitting here watching it go up!


And the Disney stable now includes the Star Wars (Rogue One, rave reviews) and Marvel Universes too, some smart strategists there.

ITV, their problem is that they're FTA and depend on ads and jeezus do we get ads, I can't remember the stats in detail, Ofcom Ok'd ads rising to 12 mins/hr from 8/hr plus the pre prog sponsorship. You're lucky to get 40 mins of tv from an hour on ITV so I pre-record and FF the ads, is that a sustainable model.

The future is content, not platform. Which is why Lindsell Train Global Equity are big on Nintendo, Pearson and RELX as well as Mickey Mouse.


Jon Snow
Posted: 14 December 2016 23:53:25(UTC)
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Microsoft, the smartest guys in the room (after ENRON) made a decent OS and office package for years. Imho because of the head start they had (see the history of MS) they were so profitable they became complacent and un-focussed.

It took a new CEO to say, hey, how about we sell our software on an annual renewable licence, rather than as a standalone. Such a simple idea, imagine the impact on cash and profits though. Monetising IP again.

King Lodos
Posted: 15 December 2016 03:20:57(UTC)
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jvl;40432 wrote:
Just today this article happened to list the top 5 companies in the world in 2000, 2006, 2016. The only constant? Microsoft.

Out of 15 places over 16 years, 10 were tech, 2 energy, 2 industrial, 1 bank.


Microsoft's one of my top 10 holdings .. But who'd have thought they'd still be up there with the migration away from Windows, a string of high-profile failures, and a games division still yet to make a profit?

School classrooms used to be full of Windows machines, needed regular updates, support, subscription services, etc. now they're more likely to be iPads.


Quote:
Throwing a KL favourite back at you, I'd say it's gambling. When you can't rely on the laws of a country, not only do you not have a level playing field but you have a completely corrupt referee.. You're gambling on the whims of a few all-powerful completely corrupt ruthless people.

Apart from the risk of corruption, seizure and controls, Putin could invade another country, be subject to more sanctions even from Trump, etc, etc.


I think my philosophy is that it's always really gambling, but recognising it as gambling, the key is betting where odds have been miscalculated.

Right now, with Trump, the conditions are about as far from cold war-esque as they're likely to be. I'd still say there's more chance of the UK dropping irrecoverably (>80%) than Russia. Debt and valuations in developed markets worry me much more.

But one thing I won't do is hang on to an investment like Russia when markets are telling me I'm wrong. I think that's what gets people in trouble: not being able to change their minds quickly.
Joe Soap
Posted: 15 December 2016 04:05:48(UTC)
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Here's my suggestion for 2017 and the next five years or so.

Disclaimer, any shares I buy always go down and any I sell always go up. Any I decide not to buy also always go up.

Anyway -

AMEC Foster Wheeler.

Less than half the price they were a short while ago.
Big exposure to nuclear projects which now seem to be creeping ahead.
Big exposure to Oil and Gas which now seems to be stabilising as long as the production cuts stick.
Some big players, BP and Chevron for example recently announced major investments, others will surely follow.
Plans to divest several hundred million of non core businesses.
AMEC were always very big in upstream O&G and Foster Wheeler were big in downstream - Now they're one company.
Still scope to close down regional office overlaps to reduce costs.
Other companies in energy services have done rather better than AMFW the last year or two.

What does the audience think?
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Simon Owen
Posted: 15 December 2016 07:10:44(UTC)
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Morning KL

Would I be correct in saying that the pie chart above represents your equity positioning only rather than your entire
portfolio?
I think your approach is to take an aggressive equity position, but to hold a high allocation in cash, gold & "real assets". Would you be prepared to share a breakdown of your entire portfolio?

Thanks

Simon
King Lodos
Posted: 15 December 2016 08:07:20(UTC)
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Simon Owen;40449 wrote:
Morning KL

Would I be correct in saying that the pie chart above represents your equity positioning only rather than your entire
portfolio?
I think your approach is to take an aggressive equity position, but to hold a high allocation in cash, gold & "real assets". Would you be prepared to share a breakdown of your entire portfolio?

Thanks

Simon


Absolutely.

It's the part I actively manage. Then I've got half my portfolio in cash, short-duration bonds and a few hedge funds.

I used to be a big proponent of being fully invested and diversified ... But most years you'd have maybe 1/3rd of your portfolio going down, 1/3rd offsetting that by going up, and 1/3rd going whatever way the market was going ... So effectively it could be like holding 2/3rds cash anyway (which really describes the charts of most multi-asset funds).

So I've come around to Warren Buffett's view of cash as a "call option with no expiration date".

No gold at the moment. I said I'd always have a minimum allocation to it – but we knew it was going down a few weeks ago, and cash takes a lot of anxiety out of making more active decisions.
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