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

Certainly in April it was, for good reason. Exuberance is a stage of market cycles that we've all experienced. With AI, we saw exuberance. Companies reported and didn't blow numbers out of the water, or project higher and higher results. So the market said hang on a minute, maybe we priced things in a little too high and too soon.

It doesn't mean that these aren't great companies with great prospects. It's all about pricing. The market spends very little time in fair value. Mostly the pendulum swings from overbought to oversold, and that's what makes a market.

Yes. If you look at the Magnificent 7, which control 30% of the market value of the S&P 500, he's about half weight. So he has about a 15% exposure. Long-term wonderful companies, including GOOG, AAPL and AMZN. But there comes a point where you let risk become too big a part of your investment thesis. Over-concentration is a big definition of risk.

He wants to participate in these major themes, but he's pulled back a bit. Loves these quality companies from the bottom-up. Thinks he can supplement the missing 15% with other companies that are, perhaps, a little bit neglected, better value, more stable. Those can give his clients just as good a return, but with less risk.

You should absolutely get advice from both the investment and accounting sides. Highly complex, specific to each individual. Corporations don't get the inclusion rate advantage, so if there's something in your portfolio you're not sure about and it's on the chopping block, sell before June 25.

Other than that, you might want to get ahead of the game by selling off a little bit. But remember, you're pre-paying the government. And with those dollars, over perhaps 4-5 years, you could recoup the loss that you'd have going from a 55% inclusion rate to 66%.

Be aware of it and plan, but he's hesitant to say you should be on the trigger to pre-pay on capital gains. Plus, a different government could potentially move the rate right back to where it was. Important to at least have the discussion.

For a general understanding of capital gains, see the blog from 2022 at goodreid.com.

His firm doesn't use them at all. A vehicle used to lever your outcome. Be very careful, you have to understand them well. As a retail investor, take a plain vanilla view -- you can make a good amount of money just by being a long-term investor in quality companies.

Believes latest earnings from US large cap stocks are strong. Smaller/mid cap stocks not reporting as strong (feeling higher for longer interest rate expenses). Equity markets on the cusp of all time highs. Upcoming US Fed economic (inflation & job numbers) data will be indicative of state of economy. If economic date is indicating strength - will be a soft landing. If inflation stays high - will not be any interest rate cuts. Large tech names indicating strength for A.I. and cloud technology. Google paying a very healthy dividend, and strong buybacks at Apple indicative of growth concerns (too much cash). Believes Apple price too high - waiting for weakness is share price before buying. 

Believes structured notes can be a good way for investors to get returns in a TFSA. Not a "one size fits all" approach. Many ways to setup account to generate ~8% return with guarantee of principal return. Very expensive, but good options for investors who want security with reasonable amounts of dividend yield. Can be an opaque market - would not recommend for retail investors. Learn more about structured notes at Larry Berman's website. 

It is a challenging market with interest rates at their highest level in decades along with rate reductions being pushed out further. and economic growth being stagnant or slowing both here and abroad. In spite of this, there is still lots of momentum investing going on and there's even a momentum ETF (MTUM) which is up 30% since November. Even stocks that have consistent returns have rising valuations: eg. Costco with only 6% growth in the top line. Investors should be aware of why a stock they own is rising. Is it because of fundamentals or just momentum which is really a form of speculation.

The question was on the consumer retail sector. It is under pressure since the consumer is now feeling squeezed. They have now spent the last of the extra pandemic money and are saving less now. Credit card balances are maxed out and are at their highest levels. Even Starbucks has 2% less sales. Pick retailers that are building more stores such as the one mentioned in his top picks.

Believes stocks are at a cross roads between inflation & opportunity in technology. Investors should focus on companies that are not held hostage to interest rates & inflation. Housing prices stubbornly high, but companies like Amazon bringing down costs in consumer goods. Markets are awaiting upcoming CPI reading & jobs reports. New A.I. tech making record breaking advances. Machines are being used to speed up development time for new drugs. Would advise investors not to get too optimistic about inflation coming down. Immigration keeping down wage inflation, but also adding to housing costs. New Chat GPT 4.0 is incredible with translation skills. However, new technology doesn't solve housing problem, or demand for other physical goods (cars etc.) Near term, there are major concerns. Reminder of past internet bubble where promises of tech revolution eventually came true - but took years.  Also - like 1999 - tech promises didn't solve short term problems (costs etc.).

Preventing Investment Fraud: Don’t ever send money back

A common scam is that someone sends you a cheque and asks you to send money back to them. Sometimes, they message you for whatever reason, or want to buy something you are selling online, and “accidentally” send you a cheque for too much and ask you to send back the extra money. In some cases, you’ve allegedly won a prize, but you’re told to send money to cover taxes and fees.

Using your intuition helps here. Everyone knows, or should know, that banks will often hold cheques until they clear. There is no reason to do anything at all until you know you have the money in your bank. Also, how many times have you bought something and accidentally paid thousands of dollars too much?

Sure, mistakes can happen, but that’s why banks allow cheques to be stopped. Asking for cash to make up the difference is a giant red flag of a likely scam.
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Approaching record territory for S&P 500. Copper & gold prices remain strong, while oil prices have fallen off a little bit. Energy stocks gaining strength as the market broadens out. Large Canadian banks are at bargain levels prices for investors. Expecting gains for large Canadian banks going forwards. High multiple stocks like Meta are experiencing large amounts of volatility. Strong results from major tech stocks is propping up highly valued stock market. Perhaps money is starting to rotate out of FANG, into more companies throughout the economy. 

Markets starting to become confusing to bear investors. Done Jones closed up for 8th straight day in a row (up ~100 points today). Investors realizing public figure statements are not to be trusted as accurate all of the time. US Fed viewpoints are far from certain. Predicting US Fed "hawkish" stance will be pushed in order to to cool markets. Cool economy will allow US Fed to cut rates. US Fed Chairman - J Powell is very capable which is encouraging. Upcoming earnings from "Blue Chip "companies like Home Depot will be indicative of economy. CPI reports the most visible reading on markets - upcoming reports will be closely watched. 

Market Update:

The Bank of England maintained its interest rates at a 16-year high of 5.25%, edging closer to a rate cut as early as June. On the other hand, the U.S. Labor Department reported the jobless-benefit claims of 231,000 in the week ending May 4, the highest level in nine months, compared to the estimate of 214,000. The Canadian dollar was 73.06 cents USD. The U.S. S&P500 ended the week up 1.6%, while the TSX was up 2.3%.

All but one sector rose this week. Materials and energy added 5.0% and 3.3%, respectively, while industrials gained 2.7% and financials added 2.4%. Consumer staples and real estate edged up 1.5%, each, and consumer discretionary rose 1.3%. Technology ended the week gave up 2.3%. The most heavily traded shares by volume were Athabasca Oil, B2Gold and Argonaut Gold.
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Yes, but it's also because markets have gone up so much. It's not about the actual print, but more about the expectation prior to the print and did it meet, exceed, or miss that expectation? That's where you have the emotions that run wild.