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

Ukraine, rising interest rates and pandemic creating volatile markets. Best plan for investors is to focus on individual companies with good long term prospects. Double check your portfolio to ensure not exposed to problems in Ukraine.

Opportunities in small/mid-sized companies that have been overlooked the past few years. New asset classes such as Bitcoin with no tangible assets/earnings will be risky. Air being let out of market as low interest rates(free money) begins to reduce. Focus on value investments that operate in non-cyclical industries. Lots of speculative assets such as real estate positioned for a correction.

Markets. It's been a crazy 2022. Markets and investors are challenged this year with rising interest rates, inflation, and geopolitical tensions. Some of these concerns are somewhat misplaced. His research shows that equity markets generally do not become impaired unless inflation remains at 6%. US inflation is at 7% today, but he sees supply chain disruptions easing into the year, so inflation pressures will fall. Yields will continue to climb as the economy expands. Historically, rising interest rates on 10-year treasuries coincide with bullish equity markets. Escalating tensions between Russia-Ukraine have increased investor fear. Looking at similar past events, they fail to have any lasting impact on global economy and equity markets. In 2014, the S&P dropped 6% leading into the annexation of Crimea, but for that calendar year the S&P turned out a 14% return. It's emotional and scary, but take advantage of those fears and see what's ahead for the next 12-18 months. He doesn't see a recession around the corner. Equity bear markets are very unlikely.

How to ride out the storm in the near term? Cyclicals is where you want to be. Likes the energy sector. Capacity constraints have caused supply to remain static while demand keeps going higher. Oil and nat gas prices will continue to be strong. Also favours financials and industrials. Healthcare is a nice place with good, defensive growth.

Tech holdings in a portfolio. Tech sector has outperformed the S&P 500 for the last 8 years. Can this continue? He's not sure it can, as valuations are right up there. Sector is 6.5x price to sales, where we were in March 2000 when the tech sector dropped 82%. The market's shifted away from growth. Some of the beaten up names could be a trade on a bounce. A 60% tech weighting in your portfolio is a sign to trim.

Investing on geopolitical events. Don't buy something just because of what's happening in the world today, because those reasons may go away in short order. Same as you don't want to sell everything and go to cash today. You want to look for names that are good quality for the next 12-18 months. For example, maybe some travel names are down that you can take advantage of. He wouldn't buy defense contractors, consumer staples or gold today. Geopolitical events don't have a meaningful or lasting impact on the market. You want to take advantage of the fears in the market, but not invest in things that have responded quickly to geopolitical events.

Market concerns. Investors are nervous. Possibility that the Fed will increase rates as the economy slows. We've seen short-term rallies, but no follow-through. If you look back a year ago, we saw strong increases. It will be difficult to show Y/Y increases. If we see declines, plus moderation in inflation, the market might have to look through that and then start to recover. Expects choppiness through the next quarter. Then, it will depend on geopolitical events, economic numbers, and where rate increases are going.

Portfolio positioning. Opportunities in select sectors like energy, add on dips. Risk in price of oil due to geopolitical tensions, but even if the price does pull back, these oil companies are generating a lot of cashflow. Selectively in financials. Banks are expected to have slower growth, but will have higher earnings with higher rates. Consumer staples. Gold really starting to increase, and this should mean positive things for producers.

Seasonality of marijuana sales. Pandemic spiked sales. Numbers have come down as restrictions have been relaxed. January and February have the usual lulls after the holiday spending. Once the credit cards are paid off, people get back to spending again.

Two factors are creating volatility and sinking markets: Russian invading Ukraine and high inflation. The latter is the more powerful force. This current volatility and sell-off will continue until Russia backs down or the US Fed's Powell slays inflation.

Buy, says technical analyst Larry Williams Williams says we should be ready for a great buying opportunity in the next five trading days. Williams is looking at commercial hedgers--from data released every Wednesday on the net holdings of small and large speculators and commercial hedgers (banks, mutual funds and perhaps governments that buy and sell stocks). Then the latter get very bullish, it's almost always a buy signal. Right now, his readings (stretching back to 2018) are at peak--buy. A lot of sophisticated money has entered the money on the long side. A rally is coming. The last time his indicators showed this signal was late-March 2020 (when markets bottomed during Covid). Hold your nose and buy. The market could bottom by next Tuesday. Also, stocks are too cheap compared to the bond market, says William's data. William's indicators stocks are very undervalued/cheap vs. bonds. There will be market choppiness, but Williams expects a meaningful rally. Now is the darkest before the dawn.

Tensions between Russia and Ukraine. To put it in context, the number of Russian troops gathered is 25% larger than the entire Allied invasion force going into Normandy on D-Day. Putin's not just posturing. Depends on how far he's willing to go. He's amassed enough forces to go all the way to Kiev.

Will oil continue to climb? It wouldn't surprise him at all. Russia has a very thin economy based on materials. Some call Russia "nothing more than a gas station masquerading as a state". Definite price pressure on oil. Germany has suspended a nat gas pipeline from Russia. Generally speaking, geopolitical tensions don't have that much effect on markets. And if they do, it's relatively abrupt and short-lived. 9/11 was different, as we didn't know how many attacks were going to come.

Rising interest rates. We need to have rates increase to smother inflation. Market's already priced in rises in rates. Question is whether Fed will raise 1/4 or 1/2 a point. Some say 1/2 point wouldn't be a bad thing, as it would be more of a rebuff to markets. But we don't want to tip everybody over into recession as they did in the 1980s. Gradual rate increases will be absorbed fairly well.