A Comment -- General Comments From an Expert (A Commentary)

He doesn't like buying put protection, as it's really expensive and then Trump changes his mind and it expires worthless. Do that a few times, and you get tired of it. It's tough. Leave it to the institutions that specialize in that strategy. 

Always loves selling calls. Take a stock that's had a big move, with markets still dancing near highs. When markets erode, find names that you like and sell puts. You get a premium both ways. Selloff today, but markets are still near market highs, still room to sell calls.

Clarity from Trump will trigger a relief rally, especially in momentum names, and banish the current volatility.

Market's getting a bit numbed by the whole thing, yet the market is still constructive. When he looks at the recent pullback, it's more of a consolidation rather than a rolling over.

He looks at it very constructively (whether or not you can believe the narrative on it), as it's propelled the AI revolution.

Investing Basics: Take a long-term view, avoid panic selling

Given the constant stream of information through news channels, endless YouTube debates, never-ending podcast suggestions, unlimited market gurus, and so on, it is easy to feel overwhelmed and seek out data that perfectly aligns with your fear-prompt emotions. This is known as confirmation bias, where one can find and frame data to fit or accommodate any idea. There is one truth in the market, however, which is that long-term investors are eventually rewarded. Headlines such as economic recessions, geopolitical tension, terrorist attacks, and reactive monetary policies trigger market volatility that are short-lived. It is important for investors to understand historically volatility and market performance are pieces of a cycle that are tested on a regular basis. While past market performance is no guarantee of how the market would perform in the future, Peter Lynch says, far more money is lost preparing for or anticipating corrections than been lost in the corrections themselves.
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BMO and BNS reported today, and the market rewarded BMO for its US outperformance. BNS has less of that presence, so the market is favouring a US presence, given the Trump tariff threats. There's tons of uncertainty in the market, and nobody has a good understanding of what is actually happening. Will tariffs be implemented on what goods and sectors? Stay diversified, and consider sectors in a weaker market and when interest rates decline, which he still expects. The US 10-year rate has fallen a lot in recent weeks, and there are more homes for sale in the US sunbelt now. He expects homebuilding levels to come down in the spring, and the Fed to ease rates. He expects US deregulation to come later, in 2026, as Trump decides where to cut back in Washington, which will have a negative impact short term. The market will be choppy till then. It's hard to invest when you don't know what the policy is going to be, the main issue with the Trump issue. 

This week, Nvidia's earnings will pull a lot of investor attention, but last week Microsoft demonstrated a significant shift in their thinking about their investment in AI. Those two were the cause of last Friday's reversal--will Nvidia confirm MSFT's caution over AI, partially due to DeepSeek? Then, you have volatility about Trump's tariffs and chaos. Any news that questions the status quo of a market priced for perfection will create a lot of volatility. The Mag 7 no longer leads the market. Also, the market has already priced in the chance of only one US Fed cut this year.

Gold stocks are cheap vs. the price of gold, and gold as an asset class is definitely a buy on dips, because of major uncertainty on central bank debt for some years. Given the recent run, he'd sell, not buy. Gold could fall back to $2,700.

Everyone knows that the US budget is on an unsustainable path. No secret. Enter DOGE and Elon Musk firing federal employees. Total US federal debt to GDP is at an all-time high and will worsen. Trump's policies are trying to fix this after many years of ineptitude in Washington. Tariffs are intended to raise revenues and bring more jobs to America, but tariffs are highly inflationary. Also, create a sovereign wealth fund by taking social security and investing it better, and revaluing gold: that idea has been floated, which he thinks is good. DOGE will get rid of some debt and lose some baggage. But issuing a zero coupon 100-year bond is impossible, because you can't force anybody into buying this debt. He doesn't love Trump's style, he's starting to get things down, but that will be disruptive, volatile to markets. Also, he's not sure that Trump has a complete solution to reducing the debt, because his policies will be inflationary (which means higher interest payments). At some point, market will care about this volatility.

The volatility in the markets is partly due to the unpredictability of what Donald Trump will do. Also the market has been trading at high levels and interest rates are about 4.5% so it does offer an alternative to stocks. The Fed is unsure about what to do. We were on a path to lower interest rates globally but now the U.S. says maybe not. The tariffs would basically be a supply shock to the economy.  However you can use volatility to buy companies you really like for the long term at cheaper valuations. This is not necessarily good for short term traders. It is difficult for people to go from cash into the market.

Investing Basics: What is the P/E Ratio?

The price-to-earnings ratio, or otherwise known as the “P/E” ratio, is a financial metric commonly used to measure how expensive a stock is compared to its earnings. The ratio can be rephrased as the amount that an investor is willing to pay for every $1 of earnings for a specific company. The ratio involves two components; the first is the ‘P’ portion, which is the current price per share of the stock, and the second is the ‘E’ portion, which is the Earnings Per Share (EPS) of the stock. For example: if Stock A has a current price per share of $30, and an EPS of $1, then the P/E ratio is 30X (calculated as: $30 Price / $1 EPS = 30X P/E). To maintain a stable P/E ratio over time, the price must appreciate at the exact same rate as the earnings per share. For instance, for the P/E to remain at 30X in the next year, if the share price increases by 10% from $30 to $33, then the EPS must also increase by 10% from $1 to $1.1 (calculated as $33 Price / $1.1 EPS = 30X P/E).
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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. 

Behavioral Finance: Anchoring Bias

The anchoring bias is when an investor uses their information from a previous experience with a stock as a reference point for any future data. An example of this is if an investor had the opportunity to buy Stock A at $100 one year ago but did not act upon it and currently the stock price is $300. That investor, now seeing that the price has tripled, may only wish to buy Stock A close to a price of $100, as that is when they first could have bought it. The investor might feel that a share price of $300 is too expensive and that the stock price should come down to $100, however, the investors’ previous experiences are irrelevant to the share price as the company has likely continued to grow and generate revenue and become a more profitable and valuable company.
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We'll see what happens, and if the full 25% is applied. With these tariffs, there's always delayed implementation. The US needs our lumber; they can't supply their needs domestically. If tariffs of 25% do get implemented, it'll hurt the US homebuilders who will have to raise prices, and then hurt the entire US housing market.