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

Characteristics for metal producers. Good quality management. Low cost of production. Resources on the ground. Where are they geopolitically. Geopolitics are going to get worse going forward, and investors really need to pay attention to where they're going to put their money. For example, he's worried about Mexico right now. He's not taking money out, but he's not putting new money in either.

Value in producers. These are value plays right now. Signals a massive opportunity with solid earnings upside and solid leverage to the price of gold and silver at cheap prices. No need to take risk with the explorers yet, if you haven't built a solid foundation with the producers. He thinks gold is going north of $3000. These companies are going to have an earnings leverage of 1500-2000%, never mind the dividend and reserves on the ground. The most amazing financial lifeboats you can buy. Money isn't coming in just yet, but eventually the light will come on. He'd rather buy now, when no one is buying them. Look not at where the puck is, but where it's going.

Market focus. He's staying put with stable companies not too much affected by the pandemic. Very little exposure to the reopening trade like banks and commodities. May lag the markets a bit, but still hanging in pretty well. Playing it really safe with companies that are still growing and making lots of money, with or without the pandemic.

Sector focus. As a rule, he doesn't invest in resource businesses. Energy infrastructure is still one of the undervalued areas. Companies like TC Energy, Keyera, ENB. Lots of bubbles out there like crypto and housing. Renewable energy has come way down, so it's a great entry point for the likes of AQN, Boralex, Innergex. Asset managers are really cheap, such as AGF, CI, Guardian. BCE and Telus are very reasonably valued. Industrials such as AGF and KBL, which just announced a big contract. Consumer staples like Loblaw. He's a value investor, doesn't chase momentum. Too many unknowns, and he'd rather play it safe. We really don't know when the Covid situation will end.

Canadian banks 12 years from now. Fully expects them to be higher than today. Dividends will be growing. Wouldn't hesitate to buy and hold. Right now, not a bargain, probably fairly valued. Pick one or buy a basket.

US President Biden's US$2.3 trillion infrastructure bill touches on many areas of infrastructure, including grid modernization, renewables and water treatment. (His definition of infrastructure is broad. It even includes Visa, for example, as digital infrastructure as we move to digital payments and less physical cash payments.) Biden's bill is good, because it will offer a fiscal boast as the US economy expands for years and replaces further stimulus which seems less likely. In Canada, we have fewer infrastructure subsectors, but we do have energy midstream companies, renewables and regulated utilities, though we lack sector such as towers (like American Tower).

Market Outlook. Believes we are in a speculative bubble due to cheap money. From the Fed's perspective, it is important for them to reiterate that there is no plan on taking away the stimulus. The economic data will be unreliable for the next year until things smooth out. Hard to make accurate forecasts.

Earnings. Should be good and better. There is lots of money coming into the system, economies are reopening, and companies are mostly beating numbers. Good for now but there may be higher taxes down the road, which upset markets last week. We will hear more about how the US treasury plans on selling the 2 trillion dollars of new bonds. This will suck a lot of money out of the system.

Educational Segment. Big tech is reporting this week. Looking at the earnings in the tech sector today. Factor investing is when you look for an investment factor that will drive excess returns. If we look at sub-industry sectors and weighing earnings by market caps, tech, hardware, storage as well as system software accounts for a massive amount of earnings. The top 10 stocks in tech drive 70% of earnings. When the markets are strong or weak, the equal weight exposure does better than market cap exposure. Looking at momentum and quality factor is another way to look at it. Tends to overweight tech as well at 42% for momentum and 20% for quality. Likes factor investing.

Market. He remains constructive on the stock markets. Technology is a sector he continues to like. It seems the vaccinations are working according to the numbers. We will probably see a shift fro spending away for home and spending for experiences. We saw a big run up in special purpose acquisition companies like crypto-companies. We saw some deflation in those markets recently. Special media names have held in well. We've seen higher quality larger growth companies have had multiples expand whereas commodities and banks' multiples are very low. Some of the higher quality growth companies may see growth slow soon. Banks would benefit from rates potentially moving higher in the future.

Semiconductor companies. They a had a great run over the last decade. He prefers Broadcom. It is one of his largest holdings. He would be buying it here. He sees 3-5 years growth.

It's driving him nuts that people keep calling a peak. Peak is a curse word on Wall Street--it means "done." The peak means stocks stop going higher. Cyclical stocks right now can make fortunes as we reopen. Some feel that this recovery will be gigantic (stimulus money, businesses reopening, jobs). He's confident the U.S. economy will have real momentum this year and even into next year. It's been decades since we've seen a strong economy and maybe we don't see it now. Then again, others see a peak now. Some money managers are getting out now, but it's absurd. We haven't yet seen Americans truly spend money after a year of not being allowed to spend on entertainment, travel, restaraunts. A peak is absurd.

Market outlook. As a general rule, buy quality at a good price and hold it for the longer term. Take advantage of the opportunities that are ahead. Cyclicals are a theme in the next little while. There will be a need for balance with cyclicals and growth.