Do’s and Don’ts for the Next Bear Market: Infographic

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US stocks are on track to end the year with an excellent return this year. The S&P 500 is up by over 28% so far this year. Globally other developed markets have also increased by doubt digit percentage points this year. For example, Germany’s DAX has shot up by over 26% year-to-date.

With stocks earning such high returns this years, some investors may become complacent. But now is the time to be cautious and be prepared for any market volatility. In fact, it is important to ensure one is prepared for a down market should things turn for the worse next year. That said, below is an interesting infographic from Schwab showing some of the do’s and don’ts for the next bear market:

Click to enlarge

Source: Charles Schwab

Five Deep Value Foreign Stocks For 2020 And Beyond

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One of the strategies of investing in equities is to identify and invest in stocks that offer deep value. These are stocks that are currently hated by the market but have strong fundamentals and are trading at deep discounts. They are also cheap relative to their peers and fades. While it may not happen in the next few months it could happen in the next year or so. For example, an investor willing to wait for 5 years will definitely find their investment now yield better returns. With that brief overview below are five foreign stocks that can be considered for 2020 and beyond.

1.Company: Banco de Chile (BCH)
Current Dividend Yield: 4.80%
Sector:Banking
Country: Chile

Dividend Withholding Tax Rate for US Residents: 35%

Chile has been hit by protests since October. For the most past the protests have subsided now. Protesters demanding better social justice including against high inequality brought chaos and severe impact to the Chilean economy. The equity market collapsed with some stocks falling 50% or more. However Chile has low debt and is the world leader in copper exports. Moreover Chile has the most dynamic economy in all of Latin America. Once the current situation improves by April next year or so stocks will soar. So investors can pick up a few stocks on the cheap now.

2.Company: Westpac Banking Corp (WBK)
Current Dividend Yield: 7.21%
Sector:Banking
Country: Australia

Dividend Withholding Tax Rate for US Residents if held in Qualified Retirement Accounts: 0%

Dividend Withholding Tax Rate for US Residents if held in Regular Accounts: 30%

Australia’s banking stocks are in the dumps now. Westpac in particular is involved in a money-laundering scandal that has decimated its stock price further. In general, Australia has one of the highest dividend yields in the world. The current issues will be thing of the past in next few years and investors would be happy they got into Westpac at current levels. Currently the dividend yield is 7.21%.

3.Company: Pampa Energia (PAM)
Current Dividend Yield: N/A
Sector: Electric Utility
Country: Argentina

Dividend Withholding Tax Rate for US Residents: 0%

Argentina’s economic problems led to a sudden plunge of 48% one day for S&P Merval Index in August this year. Though some stocks have slightly recovered, Pampa is still off by over 50%. As an electric utility Pampa offers deep value now.

4.Company: Continental AG (CTTAY)
Current Dividend Yield: 4.14%
Sector:Auto Components
Country: Germany

Dividend Withholding Tax Rate for US Residents: 26.375%

Continental issued multiple earning warnings this year and the company also announced bleak forecasts for the next 5 years. The stock has fallen heavily from its peak and seemed to have reached bottom at current levels. Parts for regular autos and tires are not going to go away despite the rise of electric vehicles.

5..Company: Ultrapar Participacoes SA (UGP)
Current Dividend Yield: 2.35%
Sector: Oil, Gas & Consumable Fuels
Country: Brazil

Dividend Withholding Tax Rate for US Residents: 15.0%

The oil and gas sector is one of the most hated sectors in global equity markets now. Brazil is on the recovery mode and Ultrapar offers attractive value now at under $6 a share. Early last year the stock was going for about $13.One of the areas the company operates is in gasoline retailing. As with the above point, this business will continue to exist for years to come.

Note: Dividend yields noted above are as of Dec 20, 2019. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: Long BCH, WBK and CTTAY

Mexican Airport Operator Stocks Soared Recently

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Airport operators in Mexico offer one of the unique investment opportunities to profit from the growing tourism and domestic air travel there. These firms hold term concessions to run many airports. They generate revenue from a variety of items such as parking, retail space, services to airlines, etc.

The three publicly listed Mexican airport operators are:

Grupo Aeroportuario del Pacifico SAB de CV (PAC)

Grupo Aeroportuario del Sureste SAB de CV (ASR)

Grupo Aeroportuario del Centro Norte SAB de CV(OMAB)
Last week PAC announced a 5-year master plan which was approved by the regulators. As a result, the stocks has soared in the past few days. Competitors ASR and OMAB also have rallied following PAC.
Mexican airport operators – Year-to-date Return:
Click to enlarge
Mexican airport operators – 5-Year Return:
From an investment perspective, it is wise to wait for a pull back and add in a phased manner.
Disclosure: No positions

Checking on Australian Bank Stocks

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Australian banks are going through some of the worst crises they have ever faced. Billions of dollars in shareholder equity has been wiped out due to recent scandals. More recently Westpac(WBK) is under investigation for money laundering charges. Total fines imposed on the bank may exceed $1.0 billion, With that intro, let’s take a look at how they have performed in recent years.

Australian Bank stocks year-to-date return:

Australian Bank stocks 5-year return:

Note: The above returns show only price returns (excluding dividends)

Source: Yahoo Finance

Clearly of all the four major banks, CommonWealth Bank has been the best performer.

Related stocks:

1.Company: Australia & New Zealand Banking Group Limited (ANZBY) 
2.Company: Commonwealth Bank of Australia (CMWAY)
3.Company: National Australia Bank Limited (NABZY)
4.Company: Westpac Banking Corp (WBK)

Disclosure: Long NAZBY and WBK