GIB.A is the ticker for the CGI Group, a high teck IT company that made big waves back in the tech bubble in 1999 or so. Then it went dormant barely moving for some six or seven years. Even so the stock basically went up uninterrupted from the low of $6 to the recent high of $42 . We have no idea what count to put on that, but, looking at only the past two years or so, we have a very nice wedge shaped structure. They are deadly once they peak. Look for about $22 for a first target.
Turkey’s Central Bank just increase their discount(?) rate from 7 to 12 percent per annum. That is 5 full percentage points in one fell swoop. By the way, the Turks were not alone as India did something similar and Argentina is on an even worse path. The market is applauding this as a good move, perhaps because it will, briefly, stem the downward trajectory of the Lira. Above is the MSCI ETF, it earns a little over 5%. The question now is, how is it that low rates are good for the markets and high rates are also good for the market. The other question is why would anyone buy this ETF to earn a respectable 5+% if you can earn almost three times as much with owning the proverbial “risk-free” Turkish government bonds??
The Turks have done amazing things in the last twenty/thirty years. There are now two bridges over the Bosphorus and a tunnel recently completed. There are plans to dig a canal across the European side, much like the Corinth Canal in Greece but much longer (about 45km) in order to relieve the congestion in the Bosphorus itself ( projects like this have been proposed at least seven times before, first by the Ottomans back in the fifteenhundreds). Such ambitious plans will die on the drawing board at rates above 10% and or the lack of foreign capital. One of the unintended consequences of the US Fed. policy, that has no regard for consequences outside the US despite being the world’s reserve currency, is that it gave rise to false hopes that will soon be completely dashed.
For those of you that have never sailed through the Corinth Canal – today’s cruise ships do not fit – , here is a picture that shows the massive scale of this only 6 km long canal completed just before the turn of the last century (1893). Makes digging a subway in Toronto look like a picnic in the park.
This is an interesting website that you may wish to visit every now and then ( www.stawealth.com) . This chart is freely available on this website so I am reproducing it to alert you to its existence. It is an excellent website. Shown here are 1. Margin debt, that is how much money is borrowed against stock as collateral and 2. The net credit balances of mutual funds etc. The first has never been higher and the second never lower. Both are expressions of an unbelievable bullish outlook on the market. And, by the way, the correlation between the margin debt and the stock markets, say the Dow or the S&P is readily apparent.
What we are still missing is a good chart of the number or value of stocks that have been bought back. My understanding is that over the past 12/13 years the total for buy-backs is now running at $3.1 trillion, which, by the way, is about three times as much as the entire assets under management in the Canadian mutual fund business. Some things just keep on going un till, of course, they stop.
We know that buy-and-hold does not work (anymore?). We also know that owning airline stocks has NEVER worked. Ergo if it does by chance work that is because it was a trade and you were lucky. A ten-bagger in a little more than two years is lucky indeed. We are now at the nice 50% retracement Fibo level, to the tick almost, and we would let caution prevail again by getting out, now. See more detail below;
