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

The price of oil is really going back and forth. US president's speech last night had mixed messages. It's really day by day.

He'd be looking at the VIX. Right now it's trading around 28-30. Needs to get back below 20 before the markets calm down.

Between closure of the Strait, capacity and infrastructure that have been taken out, and all this uncertainty, he doesn't see oil dropping substantially anytime soon.

He heard that constraints on helium, of all things, have impacted the semiconductor industry. There are these impacts downstream. Fertilizer stocks are doing well because supply is tight.

ETFs show their value in this type of environment, as you don't have to make bets on single stocks and their liquidity lets you sell when you want.

Historically, 25% in Canada would have been too high. But it's the habit of putting $$ in every month that will be the real help to you, not necessarily what vehicle you put it in.

Companies set up an ETF with a basket of stocks, write some covered calls, and estimate what the yield should be. But then life happens and the NAV goes down. How are they going to make up the promised yield? With ROC, a return of your own capital.

Once you start seeing a double-digit yield, you have to look at it very closely. Don't be lured by the high yield. 

Once invested, investors tend to have a hard time selling their stocks that are down. As a younger investor, he's lived through that. You thought your choice was going to the moon but, guess what, it didn't. 

You have to be a disciplined seller and get used to the idea that you're going to be wrong a fair amount of the time.

Damage has been done to the global economy. If the war ended today, the repercussions aren't going to just disappear. If anything, it'll take a long time to reorient not only the oil and gas industry, but industry in general.

The inflationary pressures that the war has created will continue for some time. There won't be an easy fix. We're going to be in a choppy market for a while.

US is spending an exorbitant amount on defense amidst the war in Iran. If you look at what's been attractive in the market for the last few years now, it's been defense. All the NATO countries are beginning to spend more and more in that area. That industry will continue to generate greater revenues.

The questions are how profitable are those companies going to be and who's going to finance them?

In the near term, it's hard to tell what the impact will be from all the defense spending. Tax cuts from the "one big, beautiful bill" are starting to come in. If anything, deficit pressures are going to get larger.

If that occurs, then the attractiveness of US treasuries might become a bit less, which will put pressure on interest rates. That will feed right through the economy.

It'll be extremely volatile. A lot will depend on what's happening in Europe -- demand for energy is going up, and sources of energy are in question. His guess is that the pressures will keep oil above $80 (he could be wrong ;).

Overall, companies will continue to be fairly profitable. He's still very bullish on energy, even though there's some prospect of the Iran war ending (which may or may not happen).

His firm's position fluctuates with the market. In relation to benchmark indices, he's a bit overweight right now.

Long term, he's fairly bullish on energy. Fossil fuels will still be needed. A number of large economies in the world are growing quickly, and renewable power can't fill the gap entirely. Demand will increase for a number of years.

He was expecting a pullback like this for a while, because after a 3-year bull run, he saw valuations rise to overvalued. So, he was raising cash from the frothy tech space. The past month, he bought a tech stock and continued to raise cash. He's ready to pounce. Meanwhile, there remain issues in private credit, layoffs (i.e. Oracle), and no net new jobs being added.

Best way to look ahead from where we are today is to consider which data points are going to filter through for a prolonged period. So, looking at where inflation could be and where interest rates could go over time. Those things will endure longer than any headline events that could resolve quickly.

The oil shock can be temporary, but the lasting effect in terms of inflation is where you want to keep a closer eye.

When you see the market selling off as a whole, there are a lot of stocks out there where that doesn't make sense.

Today's environment gets him more than a little interested in blue-chip companies that deserve higher valuations and have more durable growth rates than the market is giving them credit for today.

The companies that deserve attention are ones that we're all familiar with. This environment is unique in that some of the bigger-cap stocks (MSFT, META, GOOG, AMZN) are phenomenally well-positioned for where AI's going, as well as for their general defensibility. These names are trading at pretty big discounts relative to their own history.

You can pick up low-debt, high-growth companies at pretty attractive valuations. So big tech as a whole is interesting, with specifics determining which names to actually buy.