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

Thinks so, but let's take a step back. This tends to be the case in most situations -- from the European debt crisis all the way back to the 2010s. The first shock is the greatest, and then markets act more like a shock absorber.

It is a bit binary, however. The next stage of this is not status quo, but an escalation from where we are today. We're 24 hours before a pretty binary data point.

A few weeks ago, he would have been a lot more optimistic. At this point, he's more balanced. We've seen quite a recovery in the market, and valuations aren't as cheap as they were a few weeks ago.

Earnings so far have been pretty good. Expectations are higher, but in most cases they're being met and making stocks cheaper on a PE basis.

Technology has its own different drivers right now. Healthcare tends to move to the beat of its own drum.

Generally when you think about big macro sectors, think of financials, industrials, energy, and materials. Sectors that are left out include utilities, healthcare, and technology -- they move to their own idiosyncrasies, whether oil or inflation is up or down.

When you buy an ETF, understand that there are lots of moving parts in the sector. Global defense budgets are significantly rising, and this should continue. Where it gets murky is which part of the military chain do you want to invest in? What's also changing is how wars are fought.

There will be winners and losers, and with an ETF you're along for the whole ride. He's bullish overall, but he'd be particular as to where you put your $$.

Pretty well priced for perfection. 25-year highs on valuation of ~15x PE, and that implies very calm seas ahead. Implies no housing or credit issues, with growth from benign to strong. Doesn't leave a lot of room for error. Investors should focus on growth, credit, and CUSMA. He's more cautious than what the market's pricing in.

Unequivocally, he'd trim.

It's really been to look through the noise. What he means by that is you can't get caught up in the day-to-day rollercoaster. 

When we look at the price of oil, the real price is the price at the pumps in both the US and Canada. Thinks that will dictate a lot of the geopolitical strategy. Mr. Trump cannot afford to have a bad economy going into a midterm election. A lot of his reactions to events in the Strait are based more on what can happen to the US economy.

Market likes certainty (and there's never certainty), but it's much less certain now. On renegotiations, they've come out and said that some things are "pillars". He doesn't think everything will just be scrapped. 

It would be nice to see more clarity, so businesses can actually plan for the next 2 years. If we get that clarity, it'll be good for our economy.

Look at Kentucky. He didn't realize that we drank that much bourbon in Ontario, but they lost a distillery over it. So Americans are hurting a bit with tariffs.

Path of rates depends on what's going to happen with inflation. If inflation's caused just by higher gas prices (we saw today that gas prices are up 20% in a month), is this temporary? Does it really mandate a rate raise? He doesn't think so.

On the other hand, does this affect our economy? If the spill-through to the economy continues, and we go into a recession, rates will have to be adjusted lower.

The last of the 5-year mortgages at very low interest rates are coming off this year. So mortgage inflation won't be as big. If you really want to see housing and real estate get back on their feet, you do need rates to stay here or lower.

Best-owned oligopoly you can get. No one else makes 20-40% ROE. Though the valuation changes, he never considers them overvalued. Perpetual cash machines. 

If you sell, where are you going to put the money? If you've made a lot in capital gains, you'll pay a lot in tax. They could go up another 30% before they correct 20%, we just don't know. Good long-term hold. Actually doing pretty well right now.

There are great companies, but it's all about the price you pay. Patience can be your best ally in this market today.

His team is sector-agnostic. There are spaces they avoid, such as gold. They're looking at info tech companies, as some names have fallen off quite a bit.

They look for companies that, regardless of industry, can deliver returns. If they don't like an industry, they'd rather hold cash than try to force an investment in a sector.

One area they've probably been overweight in is financial services. Think banks, insurance companies, Brookfield, TMX Group. These types of names tend to do very well over the long term, and never get too expensive. Not a bad area to be in.

Last time he owned gold was perhaps 15 years ago. If you look at a stock like ABX, it had a 30-year negative return before it took off last year (even though the price of gold was up 8-9x). Stocks don't necessarily follow the gold price.

What often happens is the price of gold spikes, they make a lot more cash, CEO pays themselves a lot more, and they find some country they've never been to before and throw $$ in the ground. It never works out.

It has its uses, but there are a lot of animal spirts in the sector today. But that's just him ;)

It's absolutely valid to focus on geopolitics, but it depends on your timeframe. He and his team are very tactical, so events that cause dislocation in markets matter a lot. 

In the long run, markets are driven by earnings and global economic growth. When a geopolitical event disrupts earnings momentum and global growth, it matters a lot. Should most people be trading that? No. If you're the type of investor who looks at statements once a month, you shouldn't be overly worried about it. Your portfolios should be set to deliver returns over the next 5-10 years, not the next 5-10 hours.

But if you sit on the screens and that's all you do, then absolutely. There are opportunities that develop.

Yes. The S&P 500 made a new all-time high last week. The NASDAQ was up 13 days in a row, which hasn't been seen in many years. Clearly, we're back into a risk-on environment.

We're entering the meat of earnings season, where the next couple of weeks will see 50% of the S&P 500 companies report. Very soon, it'll be most of the Mag 7 stocks -- it'll matter a lot what these stocks have to say about AI, capex, inflation pressures, costs, etc.

Always, always, always, earnings matter. The Mag 7 have been driving growth. Earnings growth is still very much concentrated in technology and healthcare over the next year. Still a bifurcated market, but a lot of those Mag 7 got fully priced. Market just had to catch up to those lofty earnings expectations. We will, but a lot of those stocks can go sideways for a year or two.

Likes the idea in general. Thinks gold will pull back to $4000 before it goes to $6000. Peaked for now, but will continue to rise in the world we live in today. Makes more sense to add on a correction than now.

You could look at gold equity ETFs with a covered call in Canada.

Generally speaking, reinvesting and compounding puts you further ahead in the long run. Usually, a distribution is taxed in the year it's paid. So you're better off not taking the distribution and deferring it for some sort of long-term capital gain.