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

She sees more opportunity in the US than Canada, because quality growth stocks have sold off, opening opportunity. In Canada, energy has held in very well, as have the financials. The Canadian banks outperformed the American ones. Returns for the indices should be higher this year after this pullback, because corporate profits continue to grow and will do so. PEs of the indices have pulled back in the last 15 months, so stocks are more attractive. Everyone is watching the Fed; this is driving inflation. Rates will definitely rise and they have to. Employment has grown faster than expected. The consensus is that the Fed will hike 50 basis points. But if they rise too quickly, the fear is that it will choke off demand. She thinks the Fed will monitor inflation this year before making moves.

Russian threat of invading Ukraine The action of the last few days is pricing in the Russian conflict against Ukraine. Volatility remains and is making is difficult for traders. For investors, they will be okay looking out 12 months. 70% of the S&P has now reported, with many record profit margins. The Russian conflict is pricing out the bullishness not only in oil, but many commodities like aluminum. But it's also a knee-jerk reaction, though it impacts inflation overall.

Russian threats of invading Ukraine The real threat is interest rates. It's a long-term (1-3 years perhaps) consideration/challenge for investors and impacts how an investor values a company and makes investment decisions. Keep an eye on CPI data. What's going on with Russia-Ukraine is terrible from a humanity standpoint, but it doesn't impact her investing decisions; it's short-term.

Russian invasion of Ukraine Russia invaded Crimea in 2014 and that had little impact on the US impact. Today, Russia has little impact on US markets, though perhaps it could impact energy globally, certainly Germany. The real driver is inflation. He's seeking stocks that are impacted by interest rates. Look at how discount rates impact company cash flows (well into the future) and the companies' growth? So, look at shorter-term duration stocks.

Russian aggression towards Ukraine We have the lowest confidence reading since 2011, given sharp inflation. Besides Russian aggression, remember that China has been aggressive towards Taiwan, which could elevate after the Olympics. Stocks will be higher in a year or two. Short-term, take profits and hold more cash. He's been 15-17% cash for quite a while and will stay this high.

Educational Segment. Looking at a Russian benchmark ETF. Compared to the world performance, it is starting to diverge recently. Looking at the exposures, as oil prices go up, the Russian ETFs have not always tracked it. Oil movements are not good enough to move the ETFs. You have a very high component of energy, materials and financials. Kind of like the TSX but stay away. Would wait to see whatever happens in Russia before buying anything. Would only buy tech and wireless in Russia.

Fixed income. This part of the portfolio is being challenged. The returns you get from broader bonds is not enough to yield, in regards to inflation. There is a negative expected return, so it is a broken asset class. A big challenge for the asset class.

Market outlook. Russia has been amassing troops for a while now and it has only affected the markets for a couple weeks. An attack does seem to be imminent. This is an issue that will be around for weeks. Inflation is also a subject that investors have on their mind. We will hear from the Feds on Friday. Much of inflation is coming from supply side shortages. However, the knock-on effects for wage pressures will be more sticky.

Two drivers behind volatile market are the Russia/Ukraine situation along with the Fed possibly raising interest rates by 50 basis points in March. However markets have been rallying from their lows. His company's portfolios have done well since have been in great places, areas that have attracted capital and still have room. There are now opportunities in tech since many have come down enough in past quarter and are now nicely priced to growth. Their funds hold 5 to 10% in energy stocks which are still cheap compared to the commodity.

Question was on banks and stop losses. He doesn't recommend stop losses. May use them rarely but not with banks. They have had a huge move so they're OK at fair value. BMO is one of his favourites. However prefers U.S. banks on Price/Growth and reasonable valuations.

Question was on forestry stocks. Houses have been woefully underbuilt and he would own at these levels. First choice would be West Fraser as a giant player in the industry.

Question on big U.S. home builders. Cheap as a group with decent growth. Cyclical. Look for opportunities and recommends buying the index. Off his radar screen.

Question was on oil prices. RBC in the U.S. has a prediction for $115. The main factor is supply and demand but it is a guessing game based on what leading countries around the world will do. This rally probably has legs but it could go anywhere.