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

High Yield Bonds. It is a tricky place to be. The credit spreads are pretty low, which means the prices are high. Going through hundreds of bonds to balance risk with returns. Does not look at junk since risks are too high. 4-6% is possible, but you must do deep research in order to find good high yield bonds.

Active versus ETFs. When you own ETFs or index funds, your money is concentrated in high multiple plays. For example, investing in the S&P500, the top 5-6 stocks accounts for 25% of the market. Risks of higher inflation and interest rates means you have to be concerned about high multiple stocks. Companies that rely on higher future earnings will be worth less due to discounting the future more.

Portfolio in retirement. The intermediate solution is to create portfolios that have different target yields on the equity side. You give up a bit of appreciation but you can sleep better knowing you get the dividends. On the other hand, putting together investment grade and barely high interest bonds to get 3-4% yield on the fixed side. Banks are great places to put money in since they pay a dividend, tend to do better in higher interest environments, and it's a reopening play. Energy and industrials are similar.

Currencies. The exchange rate of USD and other currencies are hard to predict. Right now, the dollar is unusually strong due to the stimulus we have seen in the US economy and reopening sooner than other countries. CAD can continue to strengthen relative to the USD but wouldn't make a bet on it. International diversification is important since there will be a global recovery and you can diversify currency risk.

This is JoAnne Feeney's first show so there were no Past Picks .

This week proved that investors can get too negative and miss out on stock performance. There was panic over inflation fears based on rising inflation data, but the last two days stocks, especially tech, bounced back sharply. Also, reopening stocks have run up hard, perhaps too far, lately, so they haven't maintained that pace. Doordash and Airbnb, for instance, delivered good quarterly reports this week and they bounced back strongly. The lesson: Stay the course. When things look ugly, they often snap back. You can buy when they pull back.

Stocks at great value? From a technical perspective, some analysts are cautious. US growth stocks have pulled back. Will there be a rebound, or will the correction be 15-20%? Overall, high price earnings growth stocks will have the largest impact. Wednesday's inflation data was higher than expected. Is this transitory, or will it lead to tighter monetary policy? If the outlook continues to be cautious, gold and gold stocks may benefit. This is a correction, though significant, in the secular bull market that started in 2008 and will continue well into 2030.

Interest rates. Rates will have to get to around 3% before it's a headwind to stocks. Inflation will rise, but it won't be a lot higher than expected, as there is too much production capacity and too many supply chain bottlenecks. The question is will there be an equity correction before the end of the year.

Oil vs. gas. Doesn't have a preference. Oil is headed toward mid-70s. Not enough gas storage in Europe, so this will increase price of gas around the world, and this will benefit Canada.

Markets, especially technology. Issue for tech is they had high multiples, so high expectations. Earnings beat by incredible amounts, but people are worried. Stocks that underperformed during Covid are doing better as we return to some sort of normalcy. The uptick in commodities is helping Canadian stocks and the CAD. Pullback today may be a buying opportunity.

Damage from pandemic creating a broad selloff later? Every year, there's a 5-10% pullback, which is a terrific buying opportunity. A stew of factors such as stimulus and interest rates are being distorted, and we won't see until later in the year how they affect the stock market and the economy. Clarity will come. If you can be patient, buy what you really like at the right time. Inflation numbers were up today and, though expected, are creating an unpleasant situation in the market.

Will portfolio managers avoid pipelines to be seen as "green"? A possibility. But these companies are working to get to a level where they are more environmentally friendly. They can always get capital from somewhere. If you're interested in the environment, engagement is the most important factor, instead of just refusing to own a stock. Engage, and encourage companies to do better.

Favourite telecom? He owns BCE in his equity portfolio, owns BCE and Telus in his dividend portfolio. These two are in the best position to do well over the long term, growing their dividends and business. Rogers has had some issues the last little while.

Utilities. Interest rates affect utilities, and people are worried. With the volatility comes an opportunity to buy them at the right price. He owns a lot of them in his dividend portfolio. Consistent dividend growers, and they will continue to be.