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

U.S. corporate earnings so far have flagged a strong USD as a headwind. Will earnings be revised downward? JNJ, which she owns, is maintaining their earnings guidance this year, which is encouraging, because it means earnings in general are growing. The US banks state that the consumer is still healthy, loan balances remain healthy, card balances are growing and default rates are low. However, it remains uncertain the impact of higher interest rates on consumer spending and lending. JPM is raising loan provisions. Generally speaking so far according to earnings, the consumer remains strong. A lot of pessimism in the market now can be a positive, contrarian indicator. Also, there's a lot of cash on the sidelines which drives rallies like today.

Market view for value investors. All intelligent investing is value investing. Buy something for less than what it's worth, and hope that it goes up in value over time. The key words are "over time". The last 6 months have been tough, and investors are making bets for the next 2-3 years based on that. July has started nicely, not for the TSX, but for good reason. He wants oil and gas prices to go down. Bottom line is that US markets having fallen 20%, and with the NASDAQ down close to 30%, you should be buying. After 20% drops, S&P 500 returns are generally very strong 1-3 years out. If you're selling now, you're being emotional and selling stocks after they've fallen and already priced in a lot of the bad news. Now is the time to put money to work.

Do investors need to decide about a recession before they jump in? The markets have already told us we're in a recession. We're in a bear market. Stocks have fallen 20+%, and many have fallen more. The market anticipates a recession well before it happens. The good news is that when the recession is announced, the stock market will look forward for the next 6 months. At that time, central banks and governments look ahead to see how they can facilitate improving the economy. Don't be afraid of a recession. Data shows that markets start to rebound once the recession announcement has been made. If we're in a recession, it's the weirdest one he's ever seen. Consumer spending is strong, full employment.

Will raising rates to tame rampant inflation slam the brakes on the economy to the point of negative growth? Absolutely possible, and that's what will probably happen in the next few quarters. That said, stocks have already fallen a fair bit. Time will tell what's priced in and what's not. He's finding many stocks to buy at these levels.

Copper miners. No, he wouldn't buy these right now. A year ago, everyone was talking about the copper shortage and demand from EVs. Now, copper's at multi-year lows and demand has dried up. One would have thought that inflation and the war in Europe would drive commodity prices to ultra-high levels. They did, and then they crashed. He's not interested in trading vehicles.

Strong USD affecting US services sold abroad? Yes, this does apply to large multi-nationals like GOOG. Temporary issue. Won't affect the underlying business, but could hurt earnings for the rest of the year.

Portfolio construction: percentage cap on sectors? Tries to limit each stock to 7-8%, within reason given the size of a client's portfolio and what stage of life they're at. Sectors change all the time. For example, is NFLX media or tech? Is AAPL tech or consumer products? It can get challenging. Oil was the big winner this year, but who knew what weighting you should have had? Invest according to your conviction, being diversified across all asset classes and geographies. He doesn't quantify one sector as more conservative than another, for example, telcos vs. utilities. But he sleeps at night by owning companies with beautiful balance sheets, recurring revenues, and high quality products and services. Those factors will protect your portfolio over the long run.

Where's gold going? He's as shocked as anyone that gold's not doing well in an inflationary environment. Shows how hard it is to predict which sectors will do well. He'd be interested in some of the royalty streamers like FNV, as there's less risk. He has no views on the direction of gold.

If stagflation, own high tech growth vs. value? His comfort level is to own companies that generate profits, deliver cashflows. He can't predict which will be the next AMZN or SHOP. And when the bloom comes off, you see how badly they do. He focuses on companies and businesses, not labels. His job is to buy profitable companies that will generate the most money for his clients over the long run. He doesn't know what's going to happen in the next month or beyond, so he doesn't sell in a panic. What goes down could easily pop right back up, if it's a strong business.

Averaging down. He's happy to buy businesses on sale. When good companies pull back, put your money to work.

2007-9 was much worse then the curent bear market. However, stocks are still up huge long term with even the Nasdaq up far higher than Treasury bills. Since March 2005, the top stocks are: 1) Netflix reports tomorrow. Up over 13,000% since 2005. 2) Apple up over 10,000 3) Regeneron, thanks to its various drugs. 4) Monster Beverage. 5) Booking Holdings after beating its online travel competitors. 6) Nvidia whose chips are essential to computer and high-performance computer. 7) Amazon after taking over retail and cloud computing. 8) Illumina. 9)Monolithic Power. 10) Tyler Technologies up over 4,000%. You could have made huge gains it you had stuck them out and didn't sell like many did today.

2007-9 was much worse then the curent bear market. However, stocks are still up huge long term with even the Nasdaq up far higher than Treasury bills. Since March 2005, the top stocks are: 1) Netflix reports tomorrow. Up over 13,000% since 2005. 2) Apple up over 10,000 3) Regeneron, thanks to its various drugs. 4) Monster Beverage. 5) Booking Holdings after beating its online travel competitors. 6) Nvidia whose chips are essential to computer and high-performance computer. 7) Amazon after taking over retail and cloud computing. 8) Illumina. 9)Monolithic Power. 10) Tyler Technologies

Given hot inflation and retail sales today beat, he believes the Fed will hike rates by 75 points this month and September then step back to see how the economy is doing.

Even the poorer consumer is still spending and consumers as a whole are taking on more credit card debt. These are positives. Market sentiment has been too negative, too mired. The economy is still healthy. The consumer is a giant driver of GDP group in the U.S. Coming weeks will see corporate earnings and offer more insight.