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

Gold and inflation. Current gold malaise is due to investors knowing about incipient inflation, but not being bitten by it yet. Reminds him of 1968-72 when inflation was on the board, but investors ignored it based on two decades of benign inflation. But then it began to eat away at their living standards. We're in the same position today. It takes about 2-3 years of inflation's bite for people to lose that feeling of security of benign economic times. The decline in the price of gold and equities is a common feature of gold bull markets and, for him, represents a buying opportunity.

Gold price target? A better question is where could the USD or CAD go? Because, over time, gold is a constant. He sees the possibility of prices that are much, much higher. In 5 years, gold at 4-5 thousand USD would not surprise him. You'll see a response in gold equities when gold clears 2,000 USD. The efforts of the Canadian Parliament and US Congress almost guarantee that occurs.

Precious metals vs. streaming companies vs. equities. Depends on the investor. To retain purchasing power, own the precious metals themselves, as they've safeguarded investors for hundreds of years through periods like this. For those who are willing to take on more risk, for the prospect of higher returns, own the higher quality mining companies such as ABX, FNV, and WPM. Those who can stomach volatility and real risk can come further down the quality trail to the junior companies. The latter does not suit all investors and all speculators, as it involves a lot of research and a lot of work. Over the 50 years he's been doing this, the median quality of management teams has improved markedly.

Should I own speculative exploration stocks? He does a lot of homework on this type of stock, and he has access to a great team of geologists. He suggests that if you're not willing to spend an hour per month per exploration stock analyzing filing and geology statements, then you shouldn't own them. An absolutely rewarding sector, but one that will punish you if you don't do the work to understand it.

With earnings about to report, any particular Canadian bank of interest ? He owns TD and RY in his core equity portfolio. Banks tend to be the foundation of an economy. Looking at them can give you insight into how the economy and consumers are doing.

What to watch for during market volatility. Key issue is we're clearly in a bear market in stocks. The economy is, or will be, in a recession in the next little while, though it may be mild. This increases volatility substantially. When SNAP, WM, or TGT post disappointing results, stocks fall precipitously, as people are nervous about being in the stock market. The other difficult part is there's no place to hide, as the debt market is doing poorly as well. Whereas in March 2020, the stock market fell, but the debt market did really well because yields fell. Now, yields are rising. At the same time, this is the opportunity that people always talk about: to do your homework and buy great businesses at a discount, though it's nerve-wracking to do. You really need to have a long-term financial plan, which helps get you through these kind of situations. Otherwise, you get fearful and sell at the wrong time instead of putting your money to work. Over the long term, the stock market will do well and grow your wealth for you.

Time to step into tech? The NASDAQ was trading at 33-34x earnings, and now it's at 22x. The S&P was at 24x, and now it's at 16.7x forward earnings. The market has fallen a lot, and perhaps can fall more. If you like some of these companies, take time to understand their businesses and take the opportunity to invest. It's hard to hit the absolute low, but if you have a long-term approach, you can buy them at a discount. Though stocks have fallen, see if they have a good earnings profile, good free cashflow growth, and strong balance sheets. It's not the end of the world but, rather, a good time to invest.

Sadly, we have more selling ahead before the market capitulates. Apple has held up the best, down 18.5% this month. Microsoft too, but both names need to feel more pain. Key here is the Fed--they need to keep tightening to tame wild inflation. The Fed isn't concerned about the painful stock movements.

Consumer staples this week have been beaten. It's disappointing that we can't sustain a rally like today, even though earnings recently have been good--except this week where retail earnings were terrible. Consumer demand has been strong, but higher costs are eating into profits. No, she sees no recession this year. Next year, we'll see. Not just the Fed, but supply chains will also fight inflation. Tech and comm. services are 35% of the S&P and are still over-owned. Buy companies that make money, have earnings.

It's a tough market for tech. Any increase in shares leads to taking profits. She still likes Amazon, Apple and other big tech stocks and has lightened her holdings, but still owns them, because she sees more choppiness ahead, like today.

To consider in this market: 1) Will the Fed be more aggressive, like hiking75 basis points? 2) When will the consumer roll over? Doesn't see it yet. 3) Has the market capitulated? No. To do so, what he's looking for is one big blow-out day, like a Bitcoin company going zero, some company that's huge and over-levered. That will be our bottom. Now, we're seeing a slow, painful grind-down. There are great deals out there, like some tech companies trading at once-in-a-lifetime low PEs. We're two-thirds of the way there before we hit bottom.

Believes cash is king for investors given market volatility. Investors should de-risk highly leveraged/valued stocks. Market will present opportunities for investors with cash.

Believes energy will present opportunity in the services area. Room to take money off table for energy investors who have made significant gains. Technology stocks that consistently earn profits are presenting buying opportunity. Stocks in the tech sector that don't earn profit, will be eliminated from the market.