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

He sold gold too soon. His mistake. Copper has broken momentum, but steel has monentum.

Markets in tug of war between earnings and interest rates. Strong earnings pushing markets to all time high. Big US tech companies are surprising analysts on the upside. Interest rate cuts are not appearing in markets despite investor expectations. Growth stocks continue to outperform traditional value stocks. "Mag 7" stocks outperforming most indexes, leading the markets. Dividend oriented investors have been frustrated in 2024. 

Insightful Investment Quote:

“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” – Warren Buffett

Volatility is an investor’s best friend. Market drawdowns have historically been a good buying opportunity, and after a certain amount of time, broad-based fear can be easy to spot, and buying this fear can lead to high returns.
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Starting the year off on the right foot. Unfortunately, things don't just go up in a linear straight line. Similar to last July, the market's had an extended runup, with everyone feeling good. Then there was a bit of a dip. 

This market run could have more legs in it yet. But at some point, maybe in late spring, he wouldn't be surprised to see a bit of a pullback, but then leading to a strong finish to the end of the year.

Yes, definitely. For the rest of the year, it'll be a buy-the-dip mentality. Any short-term pullback should be used as a buying opportunity, primarily in high-quality investments, individual stocks, or ETFs. If you follow that this year, you should have a successful portfolio with good returns.

Yes, he's more focused toward the growth-oriented securities. This will be reflected in his Top Picks. You still have to look at earnings and different sectors of the market and do some analysis. But right now, with lower inflation and interest rates expected over the next 12-18 months, he'd tilt toward more secular growth names over traditional value type of names.

For the next 12-18 months, his preference for sure would be the US market, and a tilt toward the NASDAQ over the S&P or the Dow. In his opinion, the TSX will have lagging returns over that timeframe.

Yes, as an active manager that would be his preference. Commodities don't act the same way at the same time. Some commodities will be breaking out at the same time that others will be pulling back. If we were in more of a commodity bull market, he'd say go with the broad-based exposure. 

But commodity markets are moving more independently right now, there's less correlation between them. You want to pinpoint your exposure to the area where you see opportunity.

Problem with looking for a high-dividend US ETF, in USD, is that there aren't many of them. In Canada, when we think about high dividends, we're thinking 7-9% yield. A lot of similar US ETFs pay only around 3-4%. Depends on an investor's goals. 

When he invests in the US, he's looking for more growth-oriented securities. In Canada, he'd focus on income-type companies that can generate a more sustainable cashflow. Canada is more a low-growth environment. Whereas US is more about growth, especially with the NASDAQ.

An ETF gives you broad-based exposure to a specific market or sub-sector of a market. So if you own something tied to the S&P 500, you're going to get similar returns to the S&P, minus any fees charged by the fund. He likes to keep things simple with his choices.

If you're a DIY investor, you're probably not a pro in terms of currency swings, etc. If you buy the hedge, you never have to worry about an increase or decrease in the currency having an underlying impact on your investment. So for a novice investor, he'd recommend buying the ETF with the lowest cost, hedged, broad-based market exposure.

For professional money managers, they'll factor in whether to go one way or the other and what the cost is of being hedged.

For the most part, should be neutral to slightly up. Won't see significant growth in the stock price of banks in the sector. Still concern with mortgage renewals and commercial properties. No major issues, but no major catalysts either. Covered call ETF can probably work pretty well in that environment.

We've seen an expectation of rates coming down, or at least not going up, and people are more comfortable with that. That's why we've seen a rally in stocks over the last little while. Earnings numbers were reasonable.

People have slowly come to terms with rates not coming down immediately. There's some volatility around that, but the market's getting used to it, which means that it can continue to do well given that the expectation is that sometime down the road, rates will come down again.

They were reasonable. It's the quality of earnings that's important in the long run. And the quality was reasonably good in the US. Decent revenue growth, bringing down cost structure to more normalized levels for their particular businesses. This is what people are happy with, as opposed to "beating" a particular number, since that's a little game that management can play with analysts.

The quality of earnings being better means that companies are adapting to the existing environment and are comfortable with it.