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

Hard to spot equities at decent prices? On the contrary. The unloved stocks of the last few years have come on well. Value companies, more cyclical in nature, are overtaking growthier companies whose valuations are on the edge of becoming uncomfortable.

What sectors had investors been ignoring and now show value? Cyclicals like financials, industrials, materials, consumer discretionary. Any companies that would benefit from a dose of inflation. These will continue to respond through this rotation in the cycle.

Cheap stocks can stay cheap for quite a while? This isn't the first call toward value. We've had some false starts. Market bifurcated for almost 10 years, back to the crisis of 2008. Many of the companies that have led the S&P 500 are the mega-caps. The underlying companies will do well. A stock-pickers market, and the passive investors will be frustrated. The past few months have seen a rotation and this will continue. You don't want to buy just because it's cheap. Sometimes it's cheap for a reason. But on the other side, there are companies that are market driven. Make sure the price has some correlation to the fundamentals. There's a lot of air under negative news.

Should I stay or should I go? He hears a lot "I'm almost at break even". This can be a damaging view of what we hold. The market doesn't know or care what our break even is. Nor is there any rule that we must end the race on the same horse we started on. If you think there's a better opportunity than where you are, take it. Doesn't matter if there's a gain or a loss, as the tax issues will sort themselves out. But the investment thesis should always be that you employ your capital the best way possible.

Wall Street was negative until 2pm when Washington announced a forthcoming stimulus bill. Again, the bears were wrong. True, now is an ugly moment, but we're about to cross the Jordan to the land of milk and honey. Think of this morning's negativity as fuel for a rally. Rising unemployment and lowering retail sales were drivers for the bears. We're in a best of times/worst of times moment. Best for the wealthy, and worst for the unemployed and small businesses. Investors are actually in a perfect spot to take advantage of this situation as $900 billion in stimulus is coming.

We've had an incredible run, though some businesses are challenged, others are high-quality and doing well. He's looking at steel; Russel Metals should do really well given that the U.S. and steel demand will recover.

Gold outlook He's bullish. He's never been more exposed to gold than now, under 10% weight. He won't flock to Bitcoin, like some have. Will money managers use gold historically in gold stocks or bullion? Gold is a hard industry to do well in. The hot ESG trend will dwarf gold investing in the short term.

The markets are excited for a stimulus bill but there is wide disagreement between the Democrats and the Republicans on what it should look like. It will come down to the Georgia senate race. It could be February when we see a big stimulus bill.

US Index Rebalancing. Tesla is the biggest stock to be added to an index in terms of its influence. It means that you have to sell proportionally the other big names to allocate to Tesla. The stock is very overvalued. The indexers will get hooped here, and there will be significant selling following its index inclusion.

Federal Reserve. It is unlikely they will say they will do more. They need fiscal spending to monetize the debt. They are expected to reiterate their commitment to do more with fiscal spending. Longer-end rates are rising and they want to contain these rates.

Educational Segment. Seasonality matters some times and other times not at all. In the US, there is the presidential cycle that creates this pattern of spending. Right now, the Santa Claus rally is at its most powerful. In the first year of the presidential cycle, the pattern changes. January and February does not bode well in terms of returns. There will be a good opportunity in Q1 to put money to work.

Market. The market is focusing longer term, i.e. the vaccine, vs. the short term and regional lock-downs. Short term we could get some increased volatility but longer term it looks good. The market could be sensitive to any potential bad news like more potential lock-downs. The market is also discounting that the republicans maintain control of the senate and if the democrats get control of the senate, it could be bad for the markets. She has been out of the energy producers for a few years now. She sticks with the infrastructure names in energy.

Pipelines vs. Insurance. She has exposure to both. The pipelines are yielding in excess of 7% and they are safe dividends. She would lean towards pipelines due to this, but she owns insurance as well.

What would it take for her to reinvest in energy producers. It is driven by crude prices. You would have to have visibility of where prices are going to go. OPEC agreed to cut back production along with western producers. A lot of countries need $50 oil to balance their budget and would not be willing to cut back production. Hopefully Canada's take-away capacity increases in the future. She sees better opportunities than energy producers.