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

Last week we talked about markets pricing in the anticipation of an event. Typically, the happening of the event is a good catalyst to take a profit on the trade. The energy sector really ramped up on stocks and underlying commodities, but now the sector (in US and Canada) isn't making higher highs from when it opened last Monday.

How long it will be a catalyst for market volatility could be weeks, probably won't be months. But certainly longer than it was initially suggested from the US administration.

It's got to be sticky here. Doesn't think the world adapts well to WTI over $100 a barrel. We've seen examples in the last 15 years where that's been the case, with economic weakness to follow.

The consumer can generally deal with a month or two of slightly higher gas prices. But after 6-12 months, it starts to eat into other consumption.

If you're a trader and on the screens all day, then you can react to the latest headline and trade the energy stocks back and forth. But you have to be watching everything that could come out of the White House and the Middle East, and you're competing with the trading desks around the world that do that.

The average investor shouldn't be doing that. During events like this that cause market dislocation, you should be looking for opportunities.

Nat gas is harder to distribute than crude oil, given that it needs to be liquified and there isn't enough global capacity to do that efficiently. Vast majority of distribution through Strait of Hormuz is on the crude oil side, so less (though some) impact on natural gas.

He's not an expert, but there's probably some capacity that can be turned off and on more easily. They're not shutting wells off completely, just slowing production. Geopolitical events tend to be short-lived and shocking, so he'd be surprised if wells were being taken off totally.

You want something tax-efficient, as it looks as though these proceeds are in a taxable account. With a bond, you'll pay full tax.

Look for a preferred security, with no reset but with a dividend, will have a tiny bit of risk, but will pay you a higher after-tax yield than what you'd get in a money market instrument. He can't recommend a specific one.

You don't want to be in equities if you need the $$ within this timeframe.

Private markets will be way better in the long run despite current noise. What's happening in those markets is due to the average investor not understanding the liquidity constraints around private credit markets. They're intended for very long-term investors. A lot of people see headlines, then sell first and ask questions later.

Impact of Higher Oil Price

Geopolitical events like this are short-lived, and you never know when they're going to change. Markets have been trading red for most of the day; a headline just crossed the tape where Trump says the conflict won't last even 4-5 weeks, and now markets are green.

You need to look for areas of dislocation. In this case, it's which sectors is oil a big input cost? Airlines and cruise ships. It will also impact consumer discretionary like clothing, and areas sensitive to inflation. Not consumer staples.

Don't run out and buy everything today. He hasn't bought yet, but is writing options to generate income. In a couple of weeks, these stocks might get a bit cheaper, and that's when you want to be accumulating.

It won't be safe to buy stocks until the Strait of Hormuz is open to traffic. Once this happens, the market will go higher. We're not out of the woods. During war, oil goes up, stocks go down.

When there's chaos like this, there are always opportunities. If you like a certain company, these are opportunities to buy cheaply (on price or valuation). You may, for example, think that its earnings won't be impacted negatively by what's going on.

It's hard to do when stocks are falling precipitously. But if you've done your homework, here's your chance to buy at prices you may not see again for a while. That said, you may have to suffer them going down even more from where they are now.

One reason is that the TSX was up a lot last year and this. A lot of the valuations were very high, so that creates some volatility. Gold and resource stocks are slowly getting beaten down.

It's a weird time. Usually with these events the USD strengthens, which is not really happening. And interest rates go down a lot, but that's not happening either.

We also need to look at the VIX, which is only at 25. Needs to be much higher for people to say "I'm out of the stock market". 

No. Once things start to settle down, you'll see oil start to fall back very quickly. Oil may be stuck here, as the conflict looks as though it may go on for longer. But it's dangerous to buy oil stocks now.

In reality there's lots of oil around, and that's what's been keeping the price lower. Recent spike is simply due to what's going on in the Middle East.

Even in 2025 they were bad. Job growth has been negative, which people have been dismissing. They (Fed included) have been saying the job market is stabilizing, but it's not. It's gotten worse. Bond market's doing a bit better today, as people feel that rates may come down because of that. 

Losses were broad-based -- banks, construction, manufacturing, leisure/hospitality. Productivity numbers, though, are better. This may be the nascent beginning of what AI is doing to the job market.

With US deregulation, he sees consolidation in the industry over the next couple of years. So, if you're so inclined, you could buy a regional bank or its index.