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

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.

The time from now to the Fed announcement of March 15 will be the most dramatic in the market perhaps all year. Bad news is high inflation and the yield has flattened into "a bear flattener" meaning fear in the market that we might make a mistake. Good news: St. Louis Fed president Bullard already freaked us out, so we're pricing in the worst, hawkish situation. So, we might be surprised to the upside if the Fed does (on March 15) less than what Bullard said.

He doesn't see 7 interest rate hikes this year; Goldman Sachs does as they announced today in response to the St. Louis Fed's Bullard hawkish comments. The Fed's Jay Powell is a man of his word and seems to do things at a measured pace. Powell announces what he will do and he always follows through. He himself expects at least 4 hikes this year.

The market is already pricing in a 50-basis point hike on March 15, so the Fed has the option to do that or not. If not (and they hike 25 points instead), then they should communicate that appropriately. She doesn't think they should hike 50 points and to decide by basing it on data. Watch volatility in order to find opportunity in individual names.