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

Expecting volatility going forward as a result of the Russia/Ukraine conflict, rising interest rates & over valued markets. Lower prices and volatility creating opportunities for long term investors. Finding good value in UK & Japan. Doesn't believe particular sector offers better opportunities.

Investors looking to invest on their own should be concerned about 1) correct business analysis 2) what business is worth (discounted cash flows) 3) Comparing current market price to discounted cash flows.

Doesn't think US Federal Reserve will increase interest rates at a very fast rate. Yield curve suggesting a recession within 12-18 months.

Markets. He's been quite active. He's against momentum plays and meme stocks. He skewed more towards value and that's paid off. But over the last 2 months, we've seen a reversal of that. With the turmoil between Ukraine and Russia, sentiment has been swinging decidedly negative. Sentiment hasn't been this negative since Brexit, in the summer of 2016. So he's become more aggressive, selling those companies that have served them so well on the value side and buying more risk-on positions. He's anticipating this strategy will pay off quite well.

What risk-on areas are you moving into? More growth instead of value. Away from healthcare. For example, he sold ABBV at near-record highs. He's put the proceeds into growth companies trading 10-20% off 52-week highs. Down the road, these new positions will look like very good entry points.

Advice for risks on the radar? Take a deep breath. There's lots of hyperbole, sky-is-falling talk. Whether it's geopolitical such as the situation in Russia, which is serious, or something else, these tend to resolve though not after serious damage. Russia's economy is actually smaller than the Canadian economy; it's about the size of Australia. But from an energy standpoint, it certainly has an impact. Higher interest rates and inflation numbers are a little scary. Remember, the dislocations we've seen are severe and will start to rectify. Demand and supply will come together and put a damper on inflation, as will the Fed raising rates. Buying good companies will serve investors well. You can see his firm's article on supply chains at goodreid.com.

Stock's way down, should I buy? Don't be lured by stocks that fall precipitously, as there may be no end in sight. He remembers Nortel. The stock ran up to well over $100, but the price had no relationship to its fundamentals. It fell back, a lot, and he was asked should I buy it now, or how about now? How about at 50%? The percentage only makes sense if the original price has some grounding in value, which this stock didn't. Be very careful about buying something simply because it's a percentage of what it used to be.

Worried when a stock price goes down. The key is to believe in what you own. Own companies with good fundamentals and good growth. The more extreme sentiment gets, the less you should look at the stock price. Stocks spend very little time in fair value. They only spend time there on their way from the extreme of overvalued to the other extreme of undervalued. You own the company, not the stock price. Time will take care of the irrational behaviour that impacts the stock price. Be patient.

Buy the dip? No. Your MO should be sell the rallies, as there's a lot of uncertainty out there. He's been pretty defensive. The unrealized losses in his portfolios are offset by the unrealized gains in the hedge. So YTD, he'd down only 1.8%, which is better than the market. Good news is that the upside in his stocks is getting longer, so he's getting quite excited by the volatility in the market.

Where's the stability right now? It comes from actively managing your portfolio vs. the last dozen years where 85% of the time the market would go up. Especially with inflationary concerns, rising interest rates, and geopolitical concerns. It's more of a trading environment than an investing environment.

A scary time for new investors. You just have to have some trading tools in your bag to protect your portfolio. He shorts the equity indices, as it neutralizes the portfolio.

Semiconductor segment of a portfolio. The segment has 4 moving pieces: designers, foundries, manufacturers, equipment suppliers. For example, you can have a designer, represented by NVDA. Then a foundry like TSM. Hold a manufacturer like a MU. Than add a supplier like LRCX, KLAC, or AMAT.

EV car manufacturer suggestion? All beaten up lately. He'd go back to BYD, which is an ADR on NYSE. Good runway, massive company. Biggest EV and battery manufacturer in China. See his comments today.