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

Yes. He heard a speaker last week, who defined risk as what remains after you've accounted for all the risk you can think of. 

There's quite a bit of risk in the world right now with respect to geopolitical disruption. Conflict in Middle East is escalating instead of abating. The invasion of Ukraine is in its third year now and going strong. US election year, and a lot is riding on those results. 

Canada, relative to the rest of the world right now, is economically and politically stable. Inflation's coming down, so the bite of higher rates is beginning to take effect. At around 16x earnings, valuation multiples of the TSX continue to be very attractive relative to many markets around the world. Whereas the S&P 500 trades at about 22-23x earnings. TSX has a great yield of about 3.1%, compared to the S&P 500 at less than half of that.

He's finding a lot of opportunities in the interest-sensitive stocks, which includes telcos, banks, and utilities. These groups tend to have higher dividend yields so, in a higher rate environment, investors shift funds from these higher-yielding equities to fixed income for the better-perceived risk. This shift has made the higher-dividend payers attractive.

Energy sector continues to be very defensive. High dividend yields by returning cash to shareholders through share buybacks. Energy share prices are supported by the higher price of the commodity, oil.

See his Top Picks.

Lots of moving parts in the global economy. Want to invest in high-quality companies with strong balance sheets. Have a diversified portfolio. For more on portfolio diversification, go to his article for the National Post at goodreid.com.

Most efficient way to move goods. Most environmentally friendly way. Economic moat, as you can't outsource the service they provide to areas of the world where labour tends to be cheaper.

All these fundamentals should exist for the next 10, 20, even 50 years.

Overall, view on pipelines fairly bullish. Shipping energy off is to capture a higher price, a good idea. Does have favourites in the space, the order shifts over time based on fundamentals. He doesn't get attached. The business looks very positive going forward.

Favourite right now is TRP, as it's the most contrarian of TRP, ENB, and PPL. PPL is great, but trades at a higher multiple. ENB has considerably more debt, a concern especially with higher interest rates.

Last week, it was sell the rallies. This week, it's buy the dips. Who knows what happens next week? This year is all about active management. You have to go with the flow, go with the momentum. 

In these volatile markets, stick to your discipline of buying in thirds. Not only buy in thirds, but also sell in thirds. Sell 1/3 within 5% of price target, another 1/3 at price target, and then re-examine and re-evaluate the price target for the final 1/3.

He'd have thought that if we were in danger, it would have happened already. Whereas all we had was a 5-6% pullback. 

We started the year with expectations for 6-7 interest rate cuts in the US. Then it went back to 3-4, and now it's probably 1 or 2. Some are even saying none until next year. With that backdrop, it's pretty amazing that the stock market, particularly the NASDAQ, has hung in there. 

However when you look at the Russell, it's a different story. Smaller-mid caps are more sensitive to interest rates. Large caps have a lot of debt, and interest rates influence them, but they have constant cashflow. 

There's a benchmark provided by the American Association of Individual Investors. It very much shows when things get overheated or oversold. As of a couple of weeks ago, it was overbought. The end of last week, it was oversold. So the pendulum keeps swinging faster and faster, and you just have to keep your eyes on the overbought/oversold benchmark.

You can almost pick any of them. Even TSLA was a bit of a surprise, and you had to have a lot of faith in the whole robotaxi and FSD concept. If he were to pick one that would stand out, he'd choose GOOG. 

GOOG reports tomorrow. Today is MSFT and IBM, and they should do pretty well. Interesting in how GOOG frames the whole Gemini offering in AI. Gemini stumbled, but has now come back into fad. So you could look to add that one.

He'd have to look at all the price targets, but one that's been beaten up is AAPL. But it probably won't spotlight its AI until June. Probably the most limited downside at this point, so you could also add that one.

His buy points are constantly changing, much like the price targets. Sometimes he buys into strength, but it doesn't often happen.

For example, look at NVDA. He took profits, as it was bumping up against the price target. But after it reported, he realized that the price target was much lower and bought into that strength.

Drop the guest a line and he's happy to chat about how a particular stock's price targets may have changed.

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The Fed has been selling many bonds yesterday and tomorrow at attractive yields, which is compelling shareholders to sell shares to buy those risk-free bonds.  Also, the Fed is expected to cut rates later this year. This puts pressure on stocks.

Looking at the cycle forecast of the indices over 7 years, Williams correctly predicted the Nasdaq peaking around March 15 followed by extended weakness (true), and a bottom around October 22. He calls the current decline to continue till around May 20. He also called the S&P peak around March 7 (he was slightly early). Another indicator if the Dow vs. bond prices, which indicates that the Dow will fall further.

We need to see Q1 earnings growth and to hear moderating impacts of inflation. Labour demand remains strong and input prices could rise as commodities rise. Holding some US stocks offsets the strength of the US dollar in a portfolio. Also, lock in yield with the US 10-year now at 4.6%. You can buy bonds at 5-5.55%, and hold part of your portfolio in these.

As long as US unemployment remains below 4%, he predicts the Fed won't cut interest rats.