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

Oil & gas -- big cap vs. leverage. He doesn't look for leverage, but for quality. Big or small, he wants a good management team, quality assets, and commitment to the dividend.

These days, it's easy to trigger panic selling. Don't blame US Fed Chair Powell, who is smarter than you think. Critics want Powell to be imprudent and jack up rates. In contrast, the doves want Powell to continue to be accommodative. Sellers this afternoon are afraid the Fed won't sell its bonds fast enough. Powell didn't do anything that surprising. Forget the bulls and bears, but stick to companies that make money and aren't speculative, selling real things and services. Since earnings season began, we've seen beats from AmEx, MSFT, JNJ, 3M, Wells Fargo, P&G and others. Disappointments came from Netflix, JPMand Boeing for instance, overall fewer than the beats.

It's been exciting, not fun. It's hard to call a bottom when markets are this volatile. There's a lot of uncertainty about the Fed, Russia/Ukraine and Covid. It feels like a market top for the lower-quality, speculative names. Today, we're starting to see discrimination between high-value, dividend payers and low-quality tech. Yesterday, everything was going down, but today the focus is on the latter....Cryptos are not an investment at all; they are at best a trading vehicle. Just because supply is constrained doesn't mean anything; elephant dung is intrinsically constrained and what is that worth?

Liquidity and trading First, he invests, doesn't trade. He holds a stock indefinitely, like Buffett. But if you trade, you want to be a high-volume stock, not illiquid, especially if you're a margin trader.

Oil stocks Oil is a sunset industry. Eventually, people will get off the fossil fuel train. Also, commodity prices are out of the hands of the commodity companies. He avoids commodities. He does like pipelines for their steady income, like TC Energy, Keyera and Pembina.

Educational Segment. There is an indicator that is showing an opportunity. Valuations are still high, but business cycle is positive. Credit conditions and yield curve is positive. The indicators are showing some negative indications, like seasonality. However, there are many indicators point to over sold territory. There is opportunity right now. It will probably be choppy for a few months however.

S&P500 Have come off highs and seeing a decline led by large cap tech. Meme stocks and high valuation stocks are seeing a big hit. Could last several more quarters. A lot will depend on what the Fed does on policy. Seems clear there will be not much more fiscal support. There will be some spending though.

10-year yields rising. The principle of risk off is that money does go into bonds. However, if the market is going down because of inflation and rates, then it is more important wha the Feds are going to do. There are 6-7 rate hikes already priced in. If the Feds aren't able to do that much due to financial conditions, then the markets are over priced. Equity markets will be more volatile over the first half of the year until we get a better idea of inflation rates. If it falls, then the Feds won't have to raise as much.

Overvalued stocks are the ones you want to look at liquidating. Companies at decent multiples should be alright, like Apple. Over priced tech companies with no revenues would be what he would be worried about.

Markets got ahead of themselves with some valuations a bit extreme (major sell-off day). It's painful but healthy for markets to be doing this. Valuations now getting more reasonable. This is all against a backdrop of rising interest rates, Russia/Ukraine, momentum driven market. New money is coming into the passive side of ETF's rather than stock picking. This cycle will change at some point. The market may be nearing the bottom. Shopify could be an example of what is happening. Before it pulled the broad index up, now it is pulling it down and is valued pre-pandemic. It is still a good stock and the shorts will eventually cover allowing it to rise again.

Question was on hedge funds. This is a leveraged play. You can make a lot of money or lose a lot of money. Some are very well managed. Their management teams look forward. You need to consider rising interest rates.

It's almost never as bad as it seems. Like today when markets plunged, then rebounded huge. Sometimes you need to buy, not sell. Bears sold like they were afraid of a recession. You almost always see a bounce after an overselling session. The bottom can happen at the blink of an eye. Bears fear that Powell will take a hard line when he speaks Wednesday. Yes, Russia/Ukraine is a factor, too. Many money managers dumped stocks today with the chance of buying back after Powell on Wednesday. He doesn't think Powell will repeat the mistake he made in December 2018. He doesn't see another recession and he's optimistic about earnings that'll be reported this week. An investor must be disciplined to buy when others feel the sky is falling, or selling when others keep buying. Discipline means avoiding the meme stocks. Adobe and Servicenow both led the tech stocks up. Homebuilders also recovered. Today saw those who wanted to see exit the market; they had run out of shares to sell, exhausted. Such a crescendo is a buy signal. We haven't seen a crescendo since 2020. If you bought into today's weakness, you will be positively surprised Wednesday when Powell speaks.