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

Encouraging signs in the macroeconomic landscape? Not everything is sunshine and roses, as employment numbers are not that great. But personal incomes are holding up quite well. Retail sales are holding up pretty well. Ongoing, tremendous strength in housing. Economic variables are validating their expectations for a robust economic recovery in 2021. Should spill over into corporate earnings.

Favourite stock in renewable energy? They don't own any of the pure plays. Try Northland Power, wind and solar outside Canada. TransAlta Renewables is another. The whole space has the sun shining on them, with both Trudeau's carbon taxes and now the Biden administration. A lot of money flows into the sector, with government policy behind it. Also ESG is really quite a juggernaut.

Canadian big 6 banks. Hard-pressed to go too far wrong owning any of the big 6 banks. 4-5% dividend yields, which grow at high single digits most years. Credit losses are behind them. Net interest margins still under pressure, but banks earn their way through whatever the economy throws at them.

David vs. Goliath as retail investors take on big hedge funds. But you're sticking it to the man buying GameStop. Rather, you buy stocks to make money. GameStock is an ailing business. Robinhood has already delivered the revolution with its app to promote investing. Guide for new investors: choose stocks that will rise higher; don't demolish the fat cats but read annual reports; stocks do crazy things because investors have emotions and are unpredictable; the government won't ride to the rescue (they're busy with the pandemic and running the country); buyer beware when you buy any stock (there are no guarantees); don't borrow money to buy stocks, because margins enlarge losses; and keep a sound head and do the homework.

The Reddit short squeeze: with markets you always see new things. Unpredictable. After a week, the element of surprise is gone, but it's possible this could happen later to other stocks though the effect will be weaker. People who bought may be in a losing position now. Wider markets could be choppy this month, given investor sentiment being overblow in January. Now, that sentiment is peeling back. Also, February tends to be seasonally weaker. So, he's raised some cash and is putting it to work on down days.

Market. He is worried things are looking toppy and we are in a bubble of some sort. After stocks go public, the stock goes way up before the money is even spent. When you look back to 2001, not all stocks got hit. A lot of the rest of the area other than Nortel was not hit that hard. There are pockets of the market where you will be okay. He is optimistic that the vaccines will come into greater use and the pandemic will come under control. The trajectory for stocks over the next few years will be higher. There are going to be corrections along the way, but you have to stay invested in stocks.

Silver. It is still trading at a discount to gold, relatively. There is still industrial applications. He would hang on even though we had a big move up. He would take silver over gold at this point.

Rising margin debt. Every major market peak we have had, there is an element of speculation. You can't time these things however. You are seeing the froth and the leverage coming through margin accounts. It speaks to the expansion of credit margins and the quality of the value is entirely speculative. The rally we are seeing is not on fundamentals.

Silver. There was a natural opportunity in the short for GME and other stocks like this. However for silver, the market is massive so the dynamics are very different. Redditors will have a difficult time pushing this higher probably.

The caller asked whether money managers can use ETFs to beat indexes. There is always the option to go with actively managed ETFs that try to beat the index. The other aspect is asset allocation. ETFs allow money managers to move easily between stocks and bonds instead of liquidating and buying numerous equities. This makes it easier to change allocations and maximize returns.

Canadian dollar. If the constraint of oil supply gets squeezed, we can see the Canadian dollar higher. Fair value is around 75 cents but it is obviously higher right now.

Educational Segment. Looking at moving averages and market breadth. It's important to look at how many stocks are participating in the rally. Market breadth is telling us what the current quality is like. Looking at the moving averages within the S&P 500, we are seeing a pullback coming soon. However, when is the important question. We are seeing market breadth lessening and so this indicates retracement. This week, if the S&P 500 does not close above the 50 day moving average, then it will be closer to the 200 day average. Don't chase the bounce today.

Risk vs. reward during Covid short-selling craze: does this mean a new risk to markets? Ask, is it systemic risk or any other risk? He isn't worried; we can handle with this rationally.... Semiconductor shortage: he had no idea it was coming. A buy during volatile times....Other opportunities lie in tech like Facebook and Etsy...The reopening trade: Disney and Boeing. The latter didn't go down despite a bad quarter....Other bullish themes during volatility: cybersecurity, 5G (Qualcomm), China (don't play it through commodities, but buy Apple, Nike), healthcare (Eli Lilly, Teledoc), e-cars (GM on weakness), housing (Home Depot), clean energy (Plug).