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

Today, the weekly US jobless report disappointed The market lately has really been performing well. The US 10-year yield is trading between 1.55% and 1.74%. If that breaks down, we lose value. If that breaks above, we lose tech. If you're a market index investor, you hope we break down. As long as stay right, it's perfect for all investors.

Social media frenzied stocks. A sideshow circus. He doesn't waste time thinking about what speculators are doing. There's always some new shiny object to look at. Who needs dividends and pesky taxes when you get free popcorn for buying shares of AMC?

TSX hitting 20,000. He scored metrics on all of the major developed market global equity indices, and the TSX edges out all others on valuation. It's all the more compelling given that Canada's poised to post its strongest economic growth in 35 years, where GDP forecasts are estimated at north of 6%, which is triple the long-term average growth rate. Corporate earnings have roared back. Index earnings for 2021 are forecast to eclipse the former all-time high by over 10%. Tailwinds include a rip-roaring bull market in commodities, and the Canadian index has 73% of its companies in cyclically sensitive sectors like financials, consumer discretionary, materials, industrials. He upweighted Canadian equities at the beginning of the year.

Economic strength merely a bounceback from the pandemic? It is, but the real tell is that corporate earnings are forecast to hit an all-time high. The Y/Y comparisons from 2020 are going to be sensational. But if you compare 2021 to 2019, we're going to be at a new peak. Over the long haul, stock prices follow corporate earnings.

Canadian banks. He'd buy the Canadian banks now. He owns 3 of them. Good companies. Core holdings. Maximum pressure on net interest margins should start to ease in the back half of the year. We're at the maximum trough point for reversing credit losses. Later this year, investors should get good news on dividend increases and share buybacks. They've never been this well capitalized. If you wait for a pullback, you miss the forest for the trees. Don't do that.

Canadian lumber stocks. Excellent example of the market being a forward-looking, discounting mechanism. BAM has disposed of all of their WFG shares, a noteworthy sale. Indicates the top of the cycle. None of the producers are timely right now.

Finding good buys. There's always something to buy. Broad indices have done really well this year, so it's trickier on a whole to find opportunities. Broad indices have masked tumult under the surface. Pain in tech and tech-enabled, such as clean tech and renewable power. He's finding opportunities in higher growth names that he thinks have sold off too much.

Sectors in focus. Tech, renewable energy, food and agriculture. When people talk about sustainability, the conversation usually centres on energy and utilities. But the food industry is responsible for over 25% of GHG emissions. He's looking for companies using tech to feed the world as well as reduce emissions. People will look at the world more and more through this lens.

Geography for renewables. Canadian and the US have great renewable companies. On sustainability, Europe has been a leader in clean power and in food. Overseas, they've seen severe weakness in certain names. Some of his favourite stocks are still overseas.

Growth of e-commerce. Packages from the likes of Amazon never stop arriving, and this won't abate anytime soon. People will go back to stores, but online shopping is so very convenient. With the AMZN membership, you're subsidizing your shipping costs. We don't want to see ourselves paying for shipping, so the free shipping incentivizes us to keep buying and buying. As people learn how efficient it is to order things online, the more they will. AMZN has no competition on logistics.

Investing thoughts. Common misconception that you have to have a contrarian view to make a lot of money. This is just plain false in a lot of cases. FANG stocks are a good example. He likes them, as they're extremely profitable, great businesses, and have great ecosystems. People may look at them and say it's too easy, too many people like them. At the end of the day, it's about growth, earnings and delivering. Sometimes, investing can be this simple.

He prefers asset-light companies. We're seeing inflationary pressures, perhaps long-term or short. Real estate and commodity companies don't perform as well as asset-light during inflationary times. Both kinds of companies can raise prices, but the asset-lights have much lower input costs, so that's the advantage. Example: Google is lighter than Amazon, because the latter has a cloud operation in addition to their retail.

Uranium as an investment He used to own uranium until Fukushima happened, and the industry has tanked since then. He's of two minds about uranium: it's clean and readily available, but there is a lot of risk (i.e. Fukushima, Chernobyl disasters). He prefers quality, STABLE companies. Uranium companies are all over the map, unpredictable. So, he doesn't invest in uranium.

The best three Canadian banks The banks are stable and predictable. They pay moderate returns, albeit a little below what he prefers. His top 3: RY, TD and BNS though National Bank is close. The banks are at the mercy of interest rates, and he expects rates to go down, and this will pressure bank stocks. For the banks, have a 5-10-year horizon.