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

Right. What really took out some of the fear premium on hostilities was that, going into last weekend, the price of oil already had $10-15 of geopolitical risk baked in. But then the US waded in and dropped bombs, and the results of that are conflicting.

Latest relief rally in equity markets, especially in the US, is prompted by the very tepid, feeble, symbolic response by Iran to those strikes. Seems to have taken the worst-case scenario (strikes on oil infrastructure or closing of the Strait of Hormuz) off the table. Those events would have been very negative for the global economy and risk assets.

His firm owns 3 in their dividend-growers mandate. Canadian banks are a cornerstone of a growth and income portfolio. Secular outperformers of the TSX. Dividends typically grow 6-8% a year on an average 3-3.5% dividend yield. Over a cycle, this gives you good line of sight to low-double-digit total shareholder return; the oligopoly of the 6 makes this sustainable. Stable, well managed, well governed, diversified.

Will pull all sorts of levers to overcome economic headwinds. He expects high single-digit earnings growth this year, notwithstanding the housing market.

The Benefits of Long Term Investing: Lower costs and taxes

Long-term investors make fewer transactions, which means lower brokerage fees, bid/ask slippage and commissions. For U.S. investors, long term gains are taxed more favourably than short-term gains (not an issue for Canadian investors). Frequent buying and selling in day trading can result in substantial costs that erode profits. But it is the taxes that hurt the most. If you have a successful day trade, that’s great. But if you are in a 50 per cent tax bracket, because of capital gains taxes, you now have about 25 per ent less capital deployed in the market than a long-term investor. This reduced level of capital is a giant disadvantage to traders. Long term investors simply compound their capital and pay no taxes (other than on dividends) until their position is sold.
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Stocks and bonds move in tandem. However, the TLT bond ETF has been falling as the S&P has been rising. Over time, this divergence will change, the gap will shrink in the future. For years, the S&P and bonds were in fact moving in tandem, but around 2024 they separated (S&P up, TLT down). It's a healthy market for the two to move in synch.

The chart looks fine, just breaking its last high. A revival in gold's strength would mean Bitcoin pausing, though.

Basically, moving averages, higher highs and higher lows, sentiment and breadth. Also look at sector rotation. 

The Benefits of Long Term Investing: Compounding returns and wealth building

One of the most powerful aspects of long-term investing is the ability to benefit from compounding returns. By holding investments for years or decades and reinvesting dividends or profits, your money grows exponentially over time. Compounding is less effective in day trading because positions are rarely held long enough to accumulate significant returns from reinvested gains. Gains are typically re-deployed into new positions, which, more often than not, are not as good as the position just sold.
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The U.S. market is overcrowded. Going back to 1968 there have been 3 major peaks in the U.S. market of high household ownership of stocks. 1968 saw 28% household ownership, 2000 saw 25%. In both cases they were followed by a 50% drop. Now the household ownership is 30% compounded with foreign ownership of U.S. stocks being more than the previous two times, although this year there has been somewhat of an exodus to other markets. When the S&P 500 reaches this level the following historical return is close to 0%. However U.S. tech stocks have a greater portion of the market now so this pattern may not repeat. This all means investors should be more vigilant and make sure the fundamentals justify what they own.

Today is a sell the news event with oil down sharply. Oil in recent weeks rose because it was anticipating what would happen in the Middle East. Made sense. Today's events de-escalated the tension, but this isn't over by a long shot. Israel wants to delay Iran as much as possible Iran getting a nuclear weapon. Also, no nuclear reactors were hit to avoid spreading radiation. Don't adjust your portfolios, because the wild cards are vast. No idea what will happen.

Last week, the FOMC had an update of the dot plots (where the FOMC feels interest rates are going). A few Fed members believe the Fed won't cut any more rates this year, but the consensus remains of 2 cuts. For 2026: a few who predicted more cuts next year now feel there will be fewer, worried about inflation, stickier because of tariffs. Higher for longer. The average rate on US treasuries will rise from 3.36% now to 3.5%-3.7% to fund all that debt that Trump's bill will create when it is eventually signed in July.

Hasn't really noticed any new trends from the Iran-Israeli situation. The trade issues with the US and the rest of the world have been the biggest cause of the decline that started in February down to April. We've seen a big rebound in the markets, with a lot of money going back in. Perhaps people regretted selling.

We're at the top now, pretty close to where we were at the peak earlier in the year. Where we go from here will be determined by how some of the geopolitical and trade issues are resolved. It'll be very important to watch.

In technical analysis, there's a pattern called the double top. A chart will hit a top, pull back, and then hit another top. People are deciding whether or not they're going to buy.

People are going to be looking at earnings, rather than at geopolitical and trade events. Not known yet how those events will affect the economy. Second quarter results will be coming out in the next few weeks to a month. Those will drive markets one way or the other. If you have cash to deploy into the market, he'd wait to see if we break that 6050 or so level on the S&P.

Technical analysts don't predict. They look at the patterns and trade them. He has about 15% cash in his diversified NA portfolio. If markets maintain or break above the resistance level, he'll invest. If markets decline, he'll raise more cash.

Lots of pessimism. Beyond the markets, people are pessimistic because of what's going on in the US. People are thinking about how they don't want to go south of the border for travel. Investors are surprised to learn that their portfolios are more or less where they were at the beginning of the year. They're aware of the decline, but not of the rally.

It's interesting to see how market's have recovered. He's a bit surprised to see that last month was a very strong month, driven mainly by a lot of the tech names we see at the top of the S&P 500. 

Markets have done well, but a big decision point coming. We're now at a big resistance point. If we can break above that, we should continue on for the rest of the year.

The Benefits of Long Term Investing: Lower Risk and Greater Stability

Long-term investing allows you to ride out market fluctuations and avoid the volatility that day traders must constantly navigate. Over extended periods, markets have historically trended upward, so even if you experience temporary losses, you are more likely to recover and see growth if you invest for the long term. Day trading, by contrast, exposes you to the risk of significant losses within minutes or hours due to rapid price movements, and most retail day traders lose money. Many day traders use stop loss orders to limit their damage on bad days. This protects them, but most investors know that the very best stocks tend to have very high volatility. Selling on a downtick of course can take you out of a long-term huge winner.
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