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

Recovery stocks. Airlines, cruise lines, and hotels are very cyclical, have already done very well, and have a lot of debt. He'd rather own other companies that are cyclical but still have great value.

Chip cycle. Good times are not coming to an end, but we're closer to the end than the beginning. Earnings will probably rise this year and next, but then there will be a big drop in pricing, which will kill earnings. It happens every single cycle.

Canadian banks. His dividend fund has a large weighting in Canadian bank stocks. They make money in good times and bad. Benefit from a rising interest rate environment. Very well capitalized, solidly profitable, not that expensive. 20% of a portfolio just in the Canadian banks is probably too much, so diversify outside Canada. During the financial crisis, value of Canadian banks dropped 50%. Don't expect to see a lot of loan losses and they should, in fact, improve. Nice fat dividend yields.

Bullet-proof investments. Nothing is safer than a government of Canada security. Keep your money short-term, and then when rates rise you can lock it in. Don't buy a 20-year government bond at a very low interest rate.

Short-term bonds. In a rising rate environment, you don't want to own long-term bonds, as they'll get hit hard. You want to be on the short end, earning maybe 1.5-2%. Less volatile. You'll be protected if and when yields rise.

Markets. Tech looks overvalued. He doesn't try to guess where we are in the economic cycle. Where to find value depends on how you define it. It's a bit of an arbitrary concept to make the divide between growth and value. Those in the growth camp tend to favour steady, reliable growth year over year, with less focus on price. Whereas value investors calculate intrinsic value and look for deals. Looking at the Russell 1000, we find almost a 10x excess PE ratio on that growth basket. Large cap tech faired well through the pandemic, and now there might be an opportunity for value.

Inflation. Inflation really changes the conversation. New US president, and the world is reopening. A lot of uncertainty around medium-term impact of interest rate decisions. If Canada's CPI accelerates, he expects the trend will continue of value outperforming growth.

REITs. Likes retail exposure in favourable categories such as groceries, medical, department stores. Prefers industrial, commerical. Worries about residential, as the rents get capped.

Gold. A great place to leave money in all but the most pressured markets. Gold has lost its lustre in favour of crypto, so that might be an opportunity. Not keen on gold companies, as they're perpetually expensive. To justify the price, you have to be really optimistic on the price of gold. Owning the physical commodity may be a better bet. Stays away from heavily promoted mid-caps. When gold prices move higher, so do costs. Likes the streamers such as FNV and WPM, and you don't have to worry about cost inflation. WPM has a narrower basket and is easier to understand. Not positive on gold in anything but short-term cases.

There are some brain-dead sellers out there, sellers of AMC, etc, stocks too expensive in valuation to the Reddit short-sellers. Who will return to theatres? If you want to see the next James Bond, you new Amazon Prime. These are sellers who don't care about metrics or balance sheets. If you short AMC, you're an idiot. Look at what happened last winter. AMC was up today 19% in the latest short squeeze. As for GameStop, well it could turn itself around (or not).

It's trickier to find US stocks at decent valuations. There will be winners and losers. Momentum stocks have had some success coming off the pandemic, but they're not getting stretched. Meanwhile, commodities, cyclicals, social-driven tech like Facebook, and banks are gaining. The falling US dollar: sometimes currency moves are your friend or foe. The riding CAD is good for Canada, though weakens his U.S. stocks. Then again, his cyclicals which operate in the U.S. are doing fine.

Lumber prices These prices are volatile. He expects lumber prices to fall back to $300-500 from the recent peak of $1,600 after this supply chain disruption. It doesn't take long to have another mill operate at double or triple shifts to process lumber. Lumber is a renewable resource.

Today, where did the sellers go as the markets rallied. What drove today's move was the lack of sellers (supply vs. demand). Breaking down this lack into these factors: the absence of IPOs, he demise of once-hot SPACs, the surge in pandemic savings, more share buybacks, money flowing into index funds, cryptocurrency turmoil pausing and worries over higher capital gains taxes subsiding.

By the fall, the US markets will enjoy a soft landing. No, inflation fears are overblown and foolish. No, this is not the historic Weimar Republic. The state of the consumer is healthy. Workers are making more money and no, this won't create runaway inflation. The extra unemployment insurance will end in September and more folks will return to work, which will benefit unemployment numbers. As for the semi shortage, there are signs from companies like Cisco that production is rising, and this shortage will end sooner than later.