Lorne Steinberg, President, Lorne Steinberg Wealth Management
Focus: Shares with global value and high-yield bonds
MARKET PERSPECTIVE:
The high level of inflation lasted longer than expected, which led to an aggressive increase in interest rates by the Federal Reserve. The war in Ukraine has put additional pressure on commodity prices as supply chain problems and labor shortages continue. There are already signs that the increase in interest rates is having an impact as the housing market begins to cool.
It is worth noting that it usually takes about nine months to test the economy to the full effect of changes in interest rates. Therefore, there is a growing concern among investors that the Fed may “exceed” by raising interest rates too aggressively, which could lead to a recession.
Rising profitability, the war in Ukraine and fears of a recession have led to market sell-offs and plenty of opportunities. As we look forward to the next twelve months, the war in Ukraine is likely to end (probably without anyone’s satisfaction), supply chain problems will subside and inflation must be significantly lower than today.
Fear and uncertainty always lead to opportunities for long-term investors, and today’s situation is no exception. In the current market, investors can buy some of the world’s largest businesses on sale, which should lead to significant wealth creation over the next many years.
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TOP CHOICE:
Lorne Steinberg’s best election
Lorne Steinberg, president of Lorne Steinberg Wealth Management, discusses her best choices: Amazon, Morgan Stanley and Berkshire Hathaway.
AMAZON (AMZN NASD)
The technology sector has suffered more than most, as rising profitability has led to a compression of multiple estimates. Amazon’s revenue will exceed $ 500 billion this year as it continues to expand into new businesses, usually with flawless performance. It finances this growth by generating cash, and we expect profits and free cash flow growth to accelerate over the next few years. The recent drop in stock prices has allowed investors to buy this great company with a safety margin and a significant profit.
MORGAN STALLY (MS NYSE)
Bank stocks have been another victim of the recent market downturn, and Morgan Stanley is no exception. This company is the largest wealth manager in the United States and has reduced its exposure to more cyclical businesses such as commercial and investment banking. The company is extremely well managed, which is evidenced by its growth and profitability after the financial crisis. The shares are currently trading at a P / E of 10, with a dividend yield of 3.8 percent, a really convincing value.
BERKSHIRE HATHAWAY (BRK.B NYSE)
Shares of Berkshire Hathaway are lower today than a year ago, offering investors a truly unique opportunity. The company is Apple’s largest shareholder, whose shares are declining with the technology market. Berkshire is also a large insurance company through its ownership of GEICO and other insurance companies. Of course, it also has a significant portfolio of private and public companies that have created exceptional value over the years. Despite criticism for holding a large cash position, the company is now in an ideal position to place its money at opportunistic prices, as it has done successfully in the past. By the time Buffett and Munger were in their 90s, they had hired capable heirs to run the company, adhering to its core principles.
PREVIOUS ELECTED: June 28, 2021
Lorne Steinberg’s last election
Lorne Steinberg, President of Lorne Steinberg Wealth Management, discusses his previous elections: Compass Group plc, Corning Incorporated and Taiwan Semiconductor Mfg. Co. Ltd.
Compass group (CPG LON)
- Then: 1509.00 GBp
- Now: 1695.00 GBp
- Return: 12%
- Total return: 14%
Corning (GLW NYSE)
- Then: $ 40.99
- Now: $ 32.27
- Return: -21%
- Total return: -19%
Taiwan Semiconductor (TSM NYSE)
- Then: $ 119.61
- Now: $ 87.62
- Return: -27%
- Total return: -25%
Total average return: -10%
CPG LON YYY GLW NYSE NNN TSM NYSE YYY
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