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

Right now, markets are moving between growth and value depending on inflation. Must be more nimble on individual names or using ETFs. These are strategies that work and you must be ready to pivot. Policy mistakes could have consequences in the market too.

He likes U.S. banks, but more so the European banks. Yes, the Euro banks had a good run so far this year, but they have even more room in the second half of 2021.

The USD is at 9-month highs and there are fears of a housing bubble in China. The news in China is a big deal; she's been short China where the GDP has been decelerating and is effecting the US dollar, which in turn effects China's deflation. Material prices have come off hard this week, because of China's deceleration. Until China accelerates growth, EM won't pop up. Rather, she's a big buyer of Europe, though.

Is the USD still a safe haven? It's trading because of China's deflation. The USD could continue to strengthen; it's at the top of her trading range. There could be a bounce and you could short the dollar. Go long India, short China and short a broad EM index, because China is a large part of those indices, yet avoids the risks of China like headline risk.

The USD is at 9-month highs and there are fears of a housing bubble in China. If the USD keeps getting stronger for 3 weeks-3 months, it won't be good for the world economy or emerging markets. The USD is the new VIX. Don't buy foreign stocks at all. He's surprised that risk assets aren't pricing in the popping of China's housing bubble--and they should.

Emerging markets pick India by far would be his top choice in emerging markets or Asia, driven by fintech and digital technology.

Markets. Reflationary environment since last October/November. There will be fits and starts, but we'll work our way through. Financials, industrials, and basic materials are still underowned, especially in the US. Ultimately, good opportunities there. The tech-driven spaces are very expensive and seen as a source of cash for people to redeploy as we go through the reopening.

Commodities hit today. Fairly bullish still. Saw good consolidation from May-July, and we're retesting areas of support right now. Pretty underowned. Copper is pulling back, as well as zinc. Agricultural commodities are strong, and the main agriculture ETF made a new high. Aluminum and nickel have been strong. Basic materials, including chemicals, is an area you want to watch through this pullback and maybe accumulate.

Dividends and share buybacks. Generational low in interest rates. We're going the other way, though it takes time to put in a bottom. One of the most important areas is dividend growth. During falling rates, you want a stable dividend, such as utilities. But if we end up in a reflationary period, dividend growth is more important than a high dividend. So financials, industrials, and basic materials have lots of scope to raise dividends and return capital to shareholders. This will be a very important theme, much like the 1960s and 70s with the Nifty 50 and dividend growth.

Semiconductors. TSM started to consolidate after a tremendous run. Leader is AMD. He owns NVDA and SITM. TSM is a dynamite company, but technically has been in a range for 4 months. Key support is around $107. Buy it today with that stop, as a great long-term hold. Semis are today's copper, and this a great way to play. TSM has geopolitical risk, as may see a challenge to its independence from China over the next few months.

Profits are what matters. Exactly. There's always something happening in the world: the Fed, Afghanistan, the Delta variant. Ultimately, if a business increases its earnings and cashflow, it's going to be worth more. If you distill it to that level, eliminates the noise that can throw you off track. Buy good companies that have a better advantage against their own history, their peer group, and the market in general, and you'll do well over time.

Is the rebound artificial? In March 2020, he wrote about the 3 types of recession: event-driven, cyclical, or structural. The pandemic was event-driven. It was deep and sharp, and we came out of it quickly. In the end, make sure you're paying a fair price for what you're getting. If you compare to the end of 2019, the market is up about 30%, and corporate profits are up about 22%. Modest multiple expansion, but not wild. Now in 2021, we have more of the telltale signs of an early cycle environment than in 2019. Companies are restocking, inventory expansion, consumer never in better shape, rate of saving is high, corporate profits are booming, corporate margins are the highest ever at just over 13%, low interest rates. A lot of good things happening. A correction can happen any time, but long-term investors are in a good spot here.

Dollar cost averaging. Dollar cost averaging is fine, but always be aware what percentage a stock is in your portfolio. Always set high and low constraints on a stock's percentage of your holdings. Keep a properly diversified portfolio.