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

Index ETFs. He would never recommend an index ETF, because you have to take the good with the bad. So you get a company like Intel, that keeps surrendering market share. He'd rather own companies that are taking market share or pick and shovel companies that help others take market share.

Will there be a recovery in the economy? It's going to be a bumpy ride. Covid is in control socially and economically right now. Markets always look forward 6-9 months, so he's optimistic of a path towards good returns for equities, despite bouts of volatility.

Interested in retail or travel? Some of the cyclicals, including retailers, consumer discretionary, travel, leisure. They've moved higher since the vaccine announcements. Going forward 12 months out, they'll be positive.

Are dividend stocks vulnerable with the bond yields moving up? He likes dividend growers over dividend payers. As interest rates move up at the long end of the curve, that can affect some of the flat dividend payers.

The market is hostage to the Covid vaccines--Trump has made too many steps to distribute vaccines from the manufacturers into people's arms. The Feds have no real plan. (He just got his shot today.) Biden could deploy the army to help vaccine. We have enough vaccines, but a poor supply chain.

Take profits Millions of young investors have started buying stocks, not just because of zero-fee Robin Hood, but these folks are having fun buying tech like Shopify. He's been waiting 20 years for retail investors to return, but he's torn seeing these young investors embrace stocks. The last 9 months have seen a strong bull market, but remember that things can't always stay this good. Are we seeing mania in investing? A bubble? King Midas in Reverse. For instance, EV stocks will get too big and run out of juice. Discipline trumps conviction. Discipline means taking some profits off the table instead of letting it all ride. No, don't dump your entire position, but don't be greedy. No one ever got hurt taking a profit.

Markets started the year euphoric and he sees 10% upside to spring and summer. The election and vaccines mark good news, bad news out of the way. In US, retail investors are throwing money at momentum stories, which is a big vulnerability. He wouldn't be surprised with a pullback. Bond yields increasing: he sees the yield curve climbing steeply. Doesn't see negative rates. After Covid, this economy will be incredibly strong driven by pent-up spending (savings rates are up). This leads to inflation and reflation which he hasn't seen in years. He sees a risk to bond prices as rates climb--the short end will be low while mid- and late-term will be higher. This could lead to inflation that we haven't seen for decades.

Real return bonds Inflation will go higher, so bonds are a great way to participate in this. Remember that when you buy this, you buy a negative yield which offsets inflation; if inflation returns, these bonds will rally. It's complex.

For 2020, the market was expecting $170 in earnings. We got $125 because of covid. Looking at 2021 and recovery, the estimate is around $166-$175 for the S&P500. The multiple is at 23x - 24x, which is quite expensive. Earnings will need to deliver to justify these multiples. Interest rates have also been a justification for the multiple. However, interest rates are creeping up. It should add volatility in the first quarter.

Stimulus will happen regardless. However, it may be a little ways away. He expects to see more stimulus in February and March. The Trump impeachment process should not bother the markets too much.

Gold and bitcoins. Still bullish on gold. People who would buy gold as a hedge for fiat devaluation is now buying Bitcoin. However, Bitcoin is incredibly volatile. Gold has thousands of years of history as a store of currency. Bitcoin is taking money flow from gold however.

Educational Segment. There has been a spike in call volume in the last weeks. The more people speculate with calls, there is more leverage that pushes the market higher. There is more hedging that is required due to this. The indicator shows that the S&P500 are in the cautionary area. The market has nonetheless gone higher due to the leverage coming in. Once the options expire, the hedger needs to sell the hedge. Friday's option expiry will be interesting. He expects some market impact. There is a lot of speculative money which does not make it high quality.

Market. Market. The S&P has made a technical break out that could lift it another 25%, regardless of supporting values. We need to wait a couple of days for confirmation. When you combine all the stimulus that has already been put in, and Biden coming into office, where is all the money going to go. He does detect a sense of un-reality. He lived through the 1972 bubble and the .com bubble. The market will keep going up until it stops. The bond market is breaking out over 1% and although not sounding serious, imagine if it moved to 2%? It would have a profound impact on the markets. He feels value stocks could have a way to run.

Gold Stocks. They are cheap in general, especially the more junior ones. 10 years ago you saw strength and a move, then another move in the gold stocks in the middle of the decade, but in both cases they had big setbacks. This time around the stocks are acting very, very cautious. He feels this is a value group that has yet to participate in the market and that they will.