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

Classic Investment Mistakes: Chasing Hot Investment Trends.

Do we really have to explain why this might be an investment mistake? Chasing investment bubbles can be dangerous. A simple rule is this: If you are repeatedly hearing about an investment theme in the media, or at your neighbour’s BBQ, you might already be too late.

In the early days of a hot theme, investors can make a ton of money. Typically, though, valuations get completely out of whack when everyone is participating in a trend. Promoters start hyping garbage companies only remotely connected to the theme. A theme can certainly work for a while, but make sure your investment is backed up by solid numbers, not just hype.
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Inflation came in lower today. The Bank of Canada is playing catch-up. They were initally dovish, then caught up last time then will announce on July 12. Today's inflation number is moving in the right direction and influencing today's rally. Will it influence July 12? He doesn't know. But you're seeing robust economic data in the US and here. Cash is the belle of the ball, paying 5%. Also, some tech is oversold and attractive. It's more likely we will avoid recession, with a 25% cash. Bonds and cash are great.

Believer in Portfolio Theory and risk/return profiles taught by Harry Markowitz.
Risk/return theories taught by Markowitz very important to investor.
Uprising & conflict in Russia not a long term impact for investors (short term only).
Long term investors should focus on long term.

Gold sector very interesting right now.
Real interest rates (bond market) - 10yr - directly correlated with gold price.
Believes that unless UD Fed cuts interest rates - gold prices won't rise.
GDX (basket of gold mining stocks) good way to get exposure to gold market.
Waiting for catalyst - US Fed - decreasing rates to buy gold.
Methods to earn yield off gold stocks with certain gold stocks.

Importance of Cash Flow: Many companies have various accounting charges which impact earnings but not cash flow. REITs also have different accounting treatment on some items. Thus, for certain industries (oil and gas also) it is better to look at cash flow metrics. Cash flow is a very good measure of a companies strength as it is hard to mislead investors on pure cash flow numbers. However, investors need to take a holistic viewpoint when evaluating companies, rather than focusing on a single metric. 
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Until about a week ago it was all about the tech stocks which amounted to irrational exuberance to him. There is now a correction mostly in the tech area and a reversal with some return to value stocks and some early movement into neglected sectors. The TSX, not being tech heavy, is oversold. He is watching market breadth and sentiment indicators which are flashing sell based mostly on tech stocks. This all leads to a short term correction. but the long term trend focusing on value sectors is good.

Bulls and bears prosper, but pigs get slaughtered. Don't get greedy. Take profits. Pay the taxman your capital gains, or you could lose your gains and then some. Wait for something definitive, like something said in the quarterly conference call.

Two more investing lessons: don't own too many stock and hold some cash. A personal investor holding more than 10 stocks probably has too many. He has found that pro investors don't own that money stocks, but they know those stocks well. If you own a lot of stocks, do you know each one? If you own too many, then sell some and put the proceeds in cash. Cash protects you from a lousy market.

You are your own worst enemy in investing, because you have emotions. Do not panic! Great investors ignore their emotions in time of panic. An example: In spring 2000 during the depths of the pandemic, there was panic selling. The S&P However, technical analyst Larry Williams counselled buying during that time; looking at other countries, he deduced that the US would be out of lockdown by mid-May 2020. The S&P made new highs that summer and kept going once vaccines surfaced.

Two investing tips: Do your homework, like read quarterly reports, analyst reports and listen to the conference calls. Not doing research is lunacy. Buying and holding without homework is no excuse. Also, diversify. Don't put all your eggs in the same basket, like oil in 2014 or energy in 2022. Avoid sector risk by diversifying to at least five. 

Expecting a recession on the horizon. 
Recent cooling in markets reflective of over heating after the US debt ceiling deal.
US Federal Reserve "hawkish" comments also cooling markets.
Expecting further interest rate hikes. 
Equally balanced S&P 500 index starting to catch up to cap weighted S&P 500 index (good for economy).

Housing Shortages: In spite of high interest rates, the housing shortage still remains a structural issue. Although new supply continues to make headlines and overall housing shortage still remains, interest rates continue to rise with the gap between rent-to-own rates making it harder for our residents to become homeowners. We continue to experience strong rental rate growth in all of our U.S. sunbelt markets. For Q1, our blended lease trade-out for our portfolio including Jackson Park -- excluding Jackson Park, was 6.4%. Despite the reports of elevated supply, we believe our well-located and high-quality product will buoy our future occupancy and continue to support our rental growth.
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Like everyone, he's a bit fixated on when the Fed will stop raising. Not quite there yet, maybe 1 or 2 more. They're going to talk tough until they're not going to raise anymore. The talking tough is part of diminishing expectations. Volatility is going to continue until we get to a more stable central bank rate. Could be this summer, this fall, or longer. 

Overall, he's noticing that it's very hard to contain spending because people aren't spending just wage money. This is the boomer generation, the first generation that's going to retire with relatively decent pensions. These people have a lot in savings -- some of it in housing, some in the form of a pension, some in the form of managed investments. Their spending isn't going to drop when they retire. Many can keep spending at the same level for 20-30 years. This is a generation that's going to live longer and keep on spending. People at the lower income end, however, are more reliant on CPP and OAS and GIS. 

In previous times, you could jack up interest rates, throw a lot of people out of work, and consumption would immediately come off. Intergenerational wealth makes it much harder this time around.

Won't cut dividends, but some may delay dividend increases until we get through this rough patch. The hard thing to predict in Canada is how bad the housing mortgage situation may get. 

There's a view that higher interest rates will automatically crush homeowners. However, about 33% of Canadian homes don't have a mortgage, and another 1/3 have a fairly low ratio mortgage. So only 1/3 of mortgages are somewhat at risk. Many millennial homeowners also have boomer parents who are able to help out.