David Driscoll's Top Picks: October 8, 2021
BNN Bloomberg
Top picks from David Driscoll, president and chief executive officer, Liberty International Investment Management
David Driscoll, president and chief executive officer, Liberty International Investment Management
FOCUS: Global stocks
MARKET OUTLOOK:
After a two per cent to five per cent drop in global stock markets in September, we enter October with lots of questions. Among them are:
The last time the Federal Reserve raised rates by 0.25 per cent was in the fall of 2018. Between Oct. 1 and Dec. 26, the S&P 500 Index fell 15 per cent. The FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) fell an average 25 per cent. If rates rise, tech stocks are vulnerable because they need cheap borrowing costs to offset their high cash burn rates. And if earnings disappoint in conjunction with a rate increase, we could we could face a Price-Earnings multiple contraction and get a deeper correction than anticipated.
That said, late October/early November is the time of year when I like to buy stocks. That’s because markets are often weakest and the fourth quarter tends be the best of the four in terms of profit reports. The next upward climb in the stock markets will rest on earnings growth and the direction of interest rates.
