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

He's curious about cryptos--blockchain has a future--but he doesn't buy or trade it. He doesn't think we're risking stagflation. Sure, there's inflation, especially in wages, but he doesn't see slow growth because demand is so strong. Higher costs, like lumber, will flow through the system. Because wages have been flat for years while corporate profits have risen, it's a good thing to see some wage growth; real wage growth is finally ticking up.

Market. He owns a lot of Canadian stocks for their dividends. This next decade is going lot be a mixture of inflationary chatters and then more on the growth side when inflation subsides. Energy transition to renewable and clean power is happening but it will take a long time to get where everyone wants to be. This will cause a lot of fits and starts of many sectors over the next decade. The next year will be tougher than the last couple of years. It will be a stock picker's market. The market will be 8 or 10% higher in the next 12-18 months.

Canadian banks ETF. A simple exposure to the 6 big banks with ZEB. Now there are some variations such as overweight, capitalization weighting, etc. There are a number of different ways depending on what exposure you want and strategy. Gold looks to be positive based on current conditions, but it has not acted as it should recently.

Educational Segment. Investors need to keep in mind their goals financially and what risks must be taken to achieve those results. Right now, there is a challenge with bonds. The traditional 60/40 allocation is not giving the historic returns as before. It is no longer the safety net it was. For the last year or so, inflation is higher than what the bonds are yielding. Bonds are now at low 2% to high 1% yields. We need to think outside the box on how to adapt to this change.

The type of inflation we are seeing is not something the central banks can fix. Higher interest rates will not fix the supply and labour constraints behind the price rises. However, the feds can control the asset price inflation. The extent they want to deflate this will be interesting to see. There is high propensity for policy mistakes going forward. We have not seen sustained inflation in decades. If Feds remove accommodations, it could affect equity markets but it will not do anything for oil prices or labour to come back.

Transitory inflation is historically 2-3 months. However, this one looks to be 2-3 years, which is still technically transitory. It may not be sustained like in the 70s. We could see sticky wages and labour ruling. Quit rates are off the charts in the US and people are realizing that low paying jobs are not for them. It will be a transitionary period. Certain sectors can't get labour at all such as the truck drivers. Earnings will be interesting to see with wage pressures.

Gold. Has been the most frustrating trade. Seeing all the indicators for gold to rise and yet it is not happening. Gold stocks versus gold bullion is the lowest it has ever been in history. It is just not working.

Not every asset can go up at the same time. Last week's bullishness cannot last. That said, oil continues to be the Chosen Asset as it stays strong. Energy accounts for less than 10% of the S&P, but has a negative impact on the 90% of the S&P--or should be. Transport and hotel stocks are rising along with oil, when they shouldn't. It's crazy. If production doesn't increase, then oil will reach $100/barrel. And Bitcoin will continue to rally. He likes cryptos, but this is pure speculation; he sold some of his cryptos today. It's frothy. Meanwhile, FAANG is climbing, even Facebook which jumped over 3% today which seems impervious to bad headlines, as long as people keep using the platform.

They invest in all cap stocks, but there is higher growth in the small and mid-cap space. Cannabis has had a challenging year this year, but there is strong growth in fundamentals and revenues.

Have seen many indices hitting all time highs but there is a correction happening under the surface. Have seen the small and mid cap area not do much since March of this year. Now it is changing and we are seeing relative strength. As companies continues to grow, coupled with the fact we are heading into the strongest seasonal period shows good opportunity. Could see a broad-based market rally.

Due to the waves we have seen due to covid, we have seen hospitality and travel still affected. Delta caused things to be impacted and things slowed down again. There is always a lag effect to the economy. We will see more airline bookings and travel.

Inflation risk. Up for debate right now, the way it hasn't been for quite some time. He's always focused on protecting capital against inflation, as that's how you increase your standard of living. He didn't abandon positions in commodity producers last year, as many did. Diversification is key.

Sectors. Avoid technology. Valuations are extended compared to where interest rates are. The sector most inversely correlated to rising rates. A lack of dividends in that sector also makes it unattractive for his clients. This market is incredibly policy dependent from both the Fed and governments, and we don't know what the future path will be. Own infrastructure and hard assets to protect yourself. He's trimmed weighting to insurance broadly and moved into utilities, renewables, and infrastructure.