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

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The rollout was awful. The US administration talked about fair treatment, so he went and looked at existing tariffs on US goods into other nations, and they're astronomical. So he sort of gets it. Vietnam, for example, was slapped with a 45% tariff; well, they have a 90% tariff on US goods.

When you look at what the end game is, which is some version of free trade, the end goal is kind of noble. But the rollout was terrible. With the exception of food security, everything else is open to negotiation and that's what we'll get to eventually on free trade. 

This doesn't feel as though it's going to break quickly, but we're in a time of cascading news such as China's response today. Every country has to start to negotiate.

There are a couple of different gauges out there, with 100 being total exuberance. Today we're at 4, exceptionally washed out. When things speed up like this, investors should slow down. If you're a short-term trader, and you wanted to short, you're too late. At the moment, you're probably better to look at where there's value right now than trying to protect anything.

He looks for things that pop up and grab his attention to say that we're getting close to a bottom. There is some speculation that the current situation is going to look like a "V" on the chart, because the macro picture is still decent.

The first thing he'd look at would be sentiment. You can look at the Fear & Greed Index, made up of 7 components. Right now we're at 4, and you can't go below 0, so we're getting there. You can also look at the put/call ratio. Look for things that are have suffered a bit but, overall, are working quite well on a day like today. 

You're not going to time it perfectly, but these indicators tell you when it's time to start hunting.

Best way to invest is to put money in over time, taking out some of the guesswork of trying to be spot-on. If you've always wanted to own a stock, buy half today. Then wait and watch for opportunities to dip in again.

Acting quite well. He's been picking some up, including a broad-sector one in the US. Rates coming down has certainly helped, as it makes housing more affordable. Lots of predictability in this sector and usually (though not always) safer. Income you get from it tends to buffer against other issues.

It's also local, so tends not to be impacted as much by the macro. What we're seeing in the markets now is because everyone will be impacted, but having a more "domestic" look insulates you a bit.

We could be on one of three paths: 1) This is a quick bear market (i.e. Covid 2020), 2) year 2000 bear market when tech was laid to waste for a long time, or 3) the big kahuna of October 1987 when the market went down hard on Wednesday, Thursday, Friday then harder on Black Monday, falling 22%. Fortunately, we saw an excellent set of employment numbers, which may make it less likely that a stock market crash will lead to a recession, but if Trump stays stubborn and does nothing to lessen the damage the last few days, he will not be constructive (though contain his anger). None of this has to happen. If Europe moves against our tech companies with tariffs on Monday, we could see another crash, like Black Monday.

Tariffs have plunged the tariffs by over 2000 points. How can we focus on the long term when the short term is a horror show? Tariffs are incoherent, enormous, not reciprocal--and needless. It's like Trump wanted to be as dramatic as possible, like a TV show, not like he's running a country. But the stock market doesn't want Trump or a TV show. We want a president that can get things done and not throw us into a recession. He should be worried about a crash or recession which looks very possible. Mr. President, don't cause a crash--it will be your legacy.

Trying to Time the Market is a Fool's Errand

There is a reason that trying to time market bottoms and tops are what most would call a ‘fool’s errand’, and this is mostly because market bottoms and tops are exclusively obvious in hindsight, but also because it goes against our basic human nature. When the markets are declining day after day, and there is seemingly no end in sight, our instincts are to assume that this trend will continue and fear that the markets will not recover for quite some time. On the contrary, when markets are rising day after day, it is easy to believe that this trend will continue and human emotions stoke a fear that selling at those levels would be ‘too early’. Calling the winter market top of 2021 is now obvious in hindsight – inflation was picking up and the Fed was preparing for higher rates and reduced liquidity, but yet most investors chose not to sell – why? We believe that it is because most investors believed that the markets would continue their climb higher, as was the case in the latter part of 2020 and throughout 2021. Investors’ fear of selling at that point and regretting selling too early was high. 
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Last time we saw this was in March 2020, when everybody thought we were all going to die. Markets came back fairly quickly from that. This has a bit of a different feel to it.

We haven't had a proper bear market in NA since 2009. We've had 16 years of a bull market punctuated by some minimal corrections. So it could be that we're seeing the market turn over here, possibly heading for a bear market.

The Mag 7 have really been the ones leading the market downward. Those were the ones with the highest multiples and that have been lagging the market at least since the inauguration.

Other sectors are doing relatively well. With all the tariffs on retail products that are generally made in developing countries, it's surprising that dollar stores and COST are actually up today.

There are some good and proper times to panic, and he's not sure that today is one of them. If the tariffs had been less robust than feared, the markets would be on a tear the other way. Right now, he has a reasonable amount of cash (between 20-40%) in portfolios.

If you're adding to your portfolio on a regular basis, either by investing cash that's stored up or by regular contributions, these correction days are actually really helpful. These days provide excellent buying opportunities, even if markets go down further tomorrow. 

For stocks that you'd always wanted to get in on, today's not a half bad day to start. If you have $10k to invest, invest $2k today. It'll be easier to make the next decision tomorrow if you started with a smaller one today. If the market goes down, at least you have $8k left; if the market goes up, thank goodness you started to buy.

Yes. They didn't stop paying dividends even during the 2008 financial crisis. Except for MFC, all financial services companies also kept their dividends. At the best of times, it's a severe, career-interrupting move to cancel a dividend. For a Canadian bank, it would be catastrophic. 

Some are stronger than others. RY is the 800-pound gorilla that all the others are chasing. TD has had its issues in the US; but you'll notice it's up from the time US sanctions were imposed. All are resilient, a fiercely protected species.

If there's one thing the market doesn't like, it's uncertainty. And we've definitely seen that this year, a bit of a rollercoaster. Doesn't know why the market's up right now. Market's looking for some clarity, as she and everyone else are. 

You want to be able to digest the news and then take it from there. Have to assess the repercussions on Canadian, US, and global markets.