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

Infrastructure: essential daily services delivered to a majority of the population in a "supply-constrained manner". For example, look at Pearson International Airport in Toronto. You can't have two large international airports in one city, so we're seeing bottlenecks at the one infrastructure asset. Likes infrastructure assets that can capture the value of increased foot traffic and not have to engage in price wars.

Airlines. The airlines are having a tough time. They had to downsize during Covid, and then bounce back. The processes are not easy to turn off and on. Most airports are now operating quite efficiently, though there is a range. He doesn't own any. Too much volatility and price competition. He wants to focus on companies that benefit from volumes and don't take price risk.

Stocks for retirement. You want low volatility, dividends, and dividend growth. That's where utilities shine. But as interest rates rise, you'll see multiple compression. Best approach is to own a basket of utilities and industrial assets. With an infrastructure ETF, such as his firm's SCGI, you get diversity, a monthly distribution, and some capital appreciation. If you want to pick stocks, look at names like FTS, EMA, H, and NEE.

What's attracting your attention? Inflation and what the Fed is doing and saying. We're in a US mid-term election year. His research going back to the 1950s shows that markets tend to trade off badly early in the year, but every time they rally sharply off those lows a year later. See the "Goodreid Guage" under "Insights" on his website, goodreid.com. During times of Fed rate hikes, markets actually go up. Sentiment is so overwhelmingly negative right now. You need to step back and clear your mind. Not a Pollyanna approach, but know that there are many possible outcomes from the current environment, and the mainstream ones are not always the ones that come to pass.

Recession? Recessions happen. They come in different shapes and sizes. There have been about a dozen since the end of WW2. They're not terminal. They're actually the beginning of something. TGT and WMT clearing inventory is deflationary, not inflationary. A recession creates many great opportunities, and he's seeing these.

Investing when stocks are falling. There's no doubt we're in a downturn. Question is how deep does it go? Investors have to be careful about valuations. A low PE might have the E at risk. Do I have a quality company that can sustain itself through an attack on revenues and earnings? How does it come out on the other end? Are there secular forces that will allow it to do much better? This homework will tell you whether a stock is yea or nay for your portfolio. Investing is done in years and cycles, not days/weeks/months.

The economy was too hot and is now cooling off. He doesn't believe we'll fall into stagflation. Today though the bears had the upper hand.

Oil prices continued to climb today and oil stocks rallied then retrenched because investors realized that such a swift rise will destroy demand for oil. Sky-high oil could lead to a recession and stagflation, but he thinks US producers can pump out more and avoid a recession and stagflation.

Credit impulse in China has turned up significantly. For the next 6 months, China is going to lead the world in terms of growth and stimulus. Really attractive on a risk/reward basis compared to the rest of the developed world.

Believes markets will have soft landing after turbulent months. Low unemployment levels, high savings levels, strong currency & relatively low interest rates will carry economy. Supply chain issues will normalize soon. Bullish on the markets and many quality companies available for good prices. Bulk of portfolio is diversified to protect against turbulence.

There's disappointment in the air like today when stocks surged, but closed way off the highs. And it's like this pattern will continue.

OPEC exhaustion, increased consumer demand, falling inventories and under-investment from energy companies leading to robust energy fundamentals. Seeing high energy prices, lean cost structures and commitment from companies to return capital back to shareholders. Expecting company share prices to appreciate back to historical levels.

Sector trading at extremely low free cash flow multiples. Believes party is just getting started for energy investors. Expecting a lot more share appreciation going forward.