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

Megacap tech outlook We will face the megacap tech sell-off, but not til mid-2022. Now, MSFT, Google, Apple, Facebook and Amazon are still fairly valued and so will continue to grind higher.

Santa Claus rally? We're still in a very long-term bull market. The GDP recovery will continue from Covid for the next couple of years. 4% growth forecast for Europe and the US. Consensus EPS is around 7%, which is low and should be easily beaten. We'll see increased EPS. Industrial shortages need to be corrected, which will lead to growth. The market gains have reflected the strong earnings over the last 12 months, but the PE ratios really haven't changed. Stocks are cheap compared to bonds, perhaps even to real estate, a lot of cash still on the sidelines, and we have the infrastructure bill. Green lights all the way down the road.

Reckoning for huge deficits? Grow the economy, get people back to work, and collect taxes from that. Stabilize the debt:GDP ratio with a growing GDP. Taxes are already pretty high in most of the west. US could raise taxes, but in Canada we're fairly well taxed.

Canadian banks. Insurance companies have raised dividends 20%. Banks won't be quite that high, maybe 10%, which will give big support to the market. Loan losses were less than anticipated, and so the banks are very healthy. A healthy banking system is good for a strong economy.

Favourite Canadian bank. BNS has the most upside, as it has major exposure in Latin America. Covid slowed the economy a lot more down there. Highest dividend yield, so in the weakest position to raise it. CM is doing better, nice yield. RY is always a 5-star candidate for long-term investment. TD is great as well.

Berman's call was replaced with special coverage today.

Feels like the late 90s. Hard to argue there's not a lot of speculation going on. See it in crypto and other areas. Tech sector has more fundamentals behind it now. But he has to chuckle at Rivian and Lucid. They make TSLA look like a blue chip, deep value stock in terms of valuation. People get caught up in the momentum, but there's a day of reckoning. Look at Zoom, Peleton, and the pot sector. Be wary of speculation. Still early in the economic cycle, with monetary and fiscal tailwinds. Corporate profits have been much stronger this year, but you can't be unaware of valuation risk and potential potholes.

Equities vs. fixed income. You want to stay in the market, but have to be wary of the risks. What makes the market go higher? Earnings growth or a higher multiple. We've stretched the rubber band on the multiple as far as we can, with low interest rates. So it has to be earnings growth. Cyclical areas will do well for the next year or two like energy, industrials, recovery stocks, airlines and autos. You have to give yourself downside protection. What's the potential upside vs. downside risk? If he has to stay in stocks, he wants a dividend yield, relatively stable earnings, and relatively low valuation. Financials, pipelines, telecoms, rather than chasing runs. Bonds are a money losing proposition for the next number of years. Look for safe stocks, maybe a little downside, earnings stability, big dividend yield. Pipelines tick all those boxes. Some of them are putting excess cash into renewables.

Tech growth good, tech value bad. If you're going to buy tech, buy growth not value. Sometimes with value names, you're chasing a downward trend and you could chase it forever. Buy growth and just pay up the multiple. Make sure the growth is still there. When growth ends, that's when the risks occur. With the Nortels and the RIMs, we've seen the volatility, the best and the worst. When the growth slows down, you don't want to be there.

Banks vs. lifecos with rising rates. He'd take both at this point. It's not either/or. You should own both in your portfolio. Lifecos benefit a bit more from rising rates. They're trying to reduce their sensitivity to rates by diversifying into wealth management.

Semiconductors. The industry will be the building block of growth going forward. SMH or SOXX are good plays across the board. INTC is going to be building its own facility. Supply shortage has been a wakeup call to companies, and many are now going to produce their own chips domestically. A lot of earnings misses this year have been due to those shortages.

Wealth managers took profits on tech stocks today after tech's recent rally. The rest of the market today saw a catch-up in the Dow and S&P to tech, and this catch-up will continue..Jerome Powell's nomation by Biden to continue as the chair of the U.S. Fed was no surprise. You could buy on tech weakness, betting that those stocks will sharply rebound, but he'd rather buy companies that reporting strong quarters recently.

It's crazy that Americans sell stocks when there's a lockdown announced in Austria just because of some vaccine hold-outs. Sure, Covid remains a threat, but Americans can now get boosters and we're in the late innings of this pandemic. Those who sell open opportunities for buyers, particular in travel and leisure stocks. Sellers will get left behind, because markets will grind higher to the end of the year.