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

Invest a third of your money in an invest fund before you look at individual stocks. It's a safe approach.

We're entering a new cycle with AI being the big story. He's bullish overall. The market bottomed last October/November, but the appetite for growth is coming back, so IPOs could return later this year. He likes medtech and fintech, driven by AI. You need 3 things to set for the next growth cycle: great valuations, investors are out of the small/midcap, growth asset class and interest rates are flat or falling.

Insightful Investing Quote:

“Sometimes you're flush and sometimes you're bust, and when you're up, it's never as good as it seems, and when you're down, you never think you'll be up again, but life goes on.” – Fred Jung

This is one of my favourite non-investing quotes that I relate to the markets. The emotional joy of making money in the markets is never as extreme as the emotional pain of losing money in the markets. But the key is understanding that the financial markets are inherently cyclical, and it is all a part of the natural ebb and flow of money. To this end, I try to enjoy the purchases I made at lower prices, and I am grateful for the opportunity to buy at lower prices.
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The Central bank is not supposed to meddle in the U.S. elections so in theory they shouldn't be doing a new set of interest rate cuts. There is growth so the economy is not slowing down and therefore why are rate cuts needed. Maybe rates should stay at 5% with low unemployment, decreasing inflation and continued growth. Since last October there has been a very strong S&P and large cap tech market. The S&P could continue to go up or turn down and that will depend on the catalyst of interest rates. He is looking to add high quality businesses that are doing well and also a little bit ignored. Money will flow around the stock market and push things around so these types of quality businesses may get a boost from that movement. He is therefore not negative on where things are going.

The question was on owning gold bullion itself. If investing in gold he would not recommend going into the futures market. Gold holds its value over time but there could be stretches of 5 years where it goes nowhere. The price of gold has just broken out. The cleanest way to play gold in the stock market is through royalty companies.

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.