Opinions
Jerome Hass A Comment -- General Comments From an Expert A Commentary COMMENT Feb 21, 2025
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There's always something a bit unique, as no two situations are exactly the same. The last time we went through a shocker was during Covid in March 2020, and the market fell over 30%. The message he sent to clients then was whenever you look back at times like these, you always say that you should've bought great companies when they were on sale. That's eternally the message.
Warren Buffett says buy when there's blood in the streets. If you buy great quality (and this is the moment to buy great quality because it's cheap again), you'll be well served when you look back at your portfolio 5 years from now.
An "all or none" approach is probably the wrong thing to do, as it just leads to paralysis. If someone had, say, $50k to invest, just be disciplined and put in $10k (or whatever's comfortable) a month and start buying today. If you wait until calm returns and things improve, you'll have missed the first 25% move.
Buy the world's best companies. Anything from Canadian bank stocks to any of the great technology companies. They've all been hammered, and this is your opportunity. Dividend yields are higher because you're paying less for these stocks. Great management teams will figure out how to navigate these situations.
It's always a mistake to sell when the world is panicking. Don't forget Warren Buffett's advice to buy when people are panicked and sell when everything looks rosy. These quality companies were great 10 years ago, and they'll be great 10 years from now. If you can buy them on sale, why wouldn't you? Investors should be loving these times.
Shortage of housing in Canada. But in Toronto, for example, so many condos are coming on that prices are softening and even rents are softening. The only REIT he owns is CAR.UN.
Office buildings are going through an evolution, and we don't know how it's going to end. Not cheap enough to make a bet on the office space. Malls are certainly going through a worse evolution, being replaced with condos and apartments. The steady area has always been apartments.
Nobody likes these tariffs and bear market. He thinks that before Thursday when Congress steps away from its session, news from Congress or the White House a better path forward. Fingers crossed. If there's no resolution and Congress recesses, more volatility will happen. But volatility offers opportunity through lower prices, like Nvidia dipping below $90. It popped over $100 on rumours that the tariffs were on hold. You can nibble on names that are on sale now. He's cautious. Corrections always happen, so always have some dry powder. If you're worried by this sell-off, you don't have the right portfolio for your long-term goals.
Needs more details, but it sounds like the caller is hedging long exposure to his underlying bank stocks by owning put spreads (great). Depending on where the put strikes are, take your profit on the long end and expose your naked put to add to the position. Look at the price of volatility in the short run vs. what you will pay to roll those out to the back months. Needs more time to explain more. Don't sell calls here, not when the market is down.
We're seeing emotional, knee-jerk reactions, "I need to get in. I need to get out." People should step back and look at their asset mix, what and why they're holding. If you're more than 5 years from retirement you're fine being all in stocks, can withstand volatility, which allows to take advantage of swings like this. If not, can't withstand it, you should hold some fixed income to give you safety. Being concentrated only in Canada, making up only 3% of global stocks, doesn't make sense. Diversify. We've seen 20% drops like now in 2018 and 2020 and 2022--the average intra-year drawdown over the last 75 years is 14%. Drawdowns are normal in markets, though this time it's self-inflicted (through tariffs). Before, dips allowed investors to get right away, but this time it depends on one person: Trump. Will this be V-shaped, or will it be prolonged, which will likely lead to a recession.
Believes Donald Trump is likely to follow through on tariffs in order to assert dominance. As a result, is starting to build up cash in the portfolio and take defensive position. However, tariffs on energy sector will be very hard to manage from a US perspective (critical part of economy). Is surprised that the market continues to rise in the face of tariff threat. One explanation for rising stock market is the perception that Trump will cut taxes, and deregulate industry.