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

Impact of Higher Oil Price

Geopolitical events like this are short-lived, and you never know when they're going to change. Markets have been trading red for most of the day; a headline just crossed the tape where Trump says the conflict won't last even 4-5 weeks, and now markets are green.

You need to look for areas of dislocation. In this case, it's which sectors is oil a big input cost? Airlines and cruise ships. It will also impact consumer discretionary like clothing, and areas sensitive to inflation. Not consumer staples.

Don't run out and buy everything today. He hasn't bought yet, but is writing options to generate income. In a couple of weeks, these stocks might get a bit cheaper, and that's when you want to be accumulating.

It won't be safe to buy stocks until the Strait of Hormuz is open to traffic. Once this happens, the market will go higher. We're not out of the woods. During war, oil goes up, stocks go down.

When there's chaos like this, there are always opportunities. If you like a certain company, these are opportunities to buy cheaply (on price or valuation). You may, for example, think that its earnings won't be impacted negatively by what's going on.

It's hard to do when stocks are falling precipitously. But if you've done your homework, here's your chance to buy at prices you may not see again for a while. That said, you may have to suffer them going down even more from where they are now.

One reason is that the TSX was up a lot last year and this. A lot of the valuations were very high, so that creates some volatility. Gold and resource stocks are slowly getting beaten down.

It's a weird time. Usually with these events the USD strengthens, which is not really happening. And interest rates go down a lot, but that's not happening either.

We also need to look at the VIX, which is only at 25. Needs to be much higher for people to say "I'm out of the stock market". 

No. Once things start to settle down, you'll see oil start to fall back very quickly. Oil may be stuck here, as the conflict looks as though it may go on for longer. But it's dangerous to buy oil stocks now.

In reality there's lots of oil around, and that's what's been keeping the price lower. Recent spike is simply due to what's going on in the Middle East.

Even in 2025 they were bad. Job growth has been negative, which people have been dismissing. They (Fed included) have been saying the job market is stabilizing, but it's not. It's gotten worse. Bond market's doing a bit better today, as people feel that rates may come down because of that. 

Losses were broad-based -- banks, construction, manufacturing, leisure/hospitality. Productivity numbers, though, are better. This may be the nascent beginning of what AI is doing to the job market.

With US deregulation, he sees consolidation in the industry over the next couple of years. So, if you're so inclined, you could buy a regional bank or its index.

Looking pretty good so far. In US, pretty much through earnings season; in Canada, we're about halfway. This quarter's been coming in line, maybe a bit better. 

Though always cautious, management outlooks have also been pretty positive. Usually Q1 guidance tends to be a bit more conservative, as management doesn't know how the rest of the year is going to unfold.

The changes add to volatility. By now, everyone had accepted the tariffs and made adjustments. But then recent changes add to uncertainty. Probably still net-better for companies and markets with recent tariff formats that are being rolled out.

Over time, will support earnings more than the initial framework suggested.

Even with the selloff, US markets are still hanging around their highs. The TSX has been weaker, but a lot has been driven by materials.

Investors are probably a little antsy due to volatility, but in a diversified portfolio you're probably doing OK overall.

Software's seen a drawdown of 40% peak to trough in a lot of names. AI trend is still really interesting -- markets are so skittish on any headline that individual names can be quite volatile, which can present opportunities for nimble investors. You have to pick your spots.

With social media, it's become a lot easier to build a niche product. So big brands like Nike, which previously had customer loyalty, can find segments of their product line effectively targeted by upstarts. It's almost a "death by 1000 cuts" scenario.

A re-rating has been justified. But for the last 3 years it seems as though everyone heads to one side of the ship, and then they all head to the other side. Selling seems a bit overblown.

People worry about AI making things more competitive, but software's always been competitive. A low-moat business, easy for startups. Which has made it important for software companies to grow quickly and build scale.

It's more than just creating software. You need a business model, sales pipeline, deals, contracts, accounting support.

Software has experienced a baby-out-with-the-bathwater scenario. Things are bottoming, and people are sorting the wheat from the chaff.

He'd be reluctant to get involved in consumer-facing software products. They're easier to spin up quickly, compete, and buyers are less loyal. 

But commercial-grade, large company software needs security, regulatory conformity, access to other systems. When something breaks, you need someone you can call and yell at to get it fixed. So focus more on the institutional-style software names.

A big theme in the near-ish future. It'll happen sooner than people think, as AI will enable the process. Something will come out to blow people's minds and kickstart a new investment cycle.

Doesn't necessarily mean a humanoid will be doing your dishes, but perhaps a lawnmower bot or a snow shovel bot will be engaged by hitting a button on your phone.