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

Will raising rates to tame rampant inflation slam the brakes on the economy to the point of negative growth? Absolutely possible, and that's what will probably happen in the next few quarters. That said, stocks have already fallen a fair bit. Time will tell what's priced in and what's not. He's finding many stocks to buy at these levels.

Copper miners. No, he wouldn't buy these right now. A year ago, everyone was talking about the copper shortage and demand from EVs. Now, copper's at multi-year lows and demand has dried up. One would have thought that inflation and the war in Europe would drive commodity prices to ultra-high levels. They did, and then they crashed. He's not interested in trading vehicles.

Strong USD affecting US services sold abroad? Yes, this does apply to large multi-nationals like GOOG. Temporary issue. Won't affect the underlying business, but could hurt earnings for the rest of the year.

Portfolio construction: percentage cap on sectors? Tries to limit each stock to 7-8%, within reason given the size of a client's portfolio and what stage of life they're at. Sectors change all the time. For example, is NFLX media or tech? Is AAPL tech or consumer products? It can get challenging. Oil was the big winner this year, but who knew what weighting you should have had? Invest according to your conviction, being diversified across all asset classes and geographies. He doesn't quantify one sector as more conservative than another, for example, telcos vs. utilities. But he sleeps at night by owning companies with beautiful balance sheets, recurring revenues, and high quality products and services. Those factors will protect your portfolio over the long run.

Where's gold going? He's as shocked as anyone that gold's not doing well in an inflationary environment. Shows how hard it is to predict which sectors will do well. He'd be interested in some of the royalty streamers like FNV, as there's less risk. He has no views on the direction of gold.

If stagflation, own high tech growth vs. value? His comfort level is to own companies that generate profits, deliver cashflows. He can't predict which will be the next AMZN or SHOP. And when the bloom comes off, you see how badly they do. He focuses on companies and businesses, not labels. His job is to buy profitable companies that will generate the most money for his clients over the long run. He doesn't know what's going to happen in the next month or beyond, so he doesn't sell in a panic. What goes down could easily pop right back up, if it's a strong business.

Averaging down. He's happy to buy businesses on sale. When good companies pull back, put your money to work.

2007-9 was much worse then the curent bear market. However, stocks are still up huge long term with even the Nasdaq up far higher than Treasury bills. Since March 2005, the top stocks are: 1) Netflix reports tomorrow. Up over 13,000% since 2005. 2) Apple up over 10,000 3) Regeneron, thanks to its various drugs. 4) Monster Beverage. 5) Booking Holdings after beating its online travel competitors. 6) Nvidia whose chips are essential to computer and high-performance computer. 7) Amazon after taking over retail and cloud computing. 8) Illumina. 9)Monolithic Power. 10) Tyler Technologies up over 4,000%. You could have made huge gains it you had stuck them out and didn't sell like many did today.

2007-9 was much worse then the curent bear market. However, stocks are still up huge long term with even the Nasdaq up far higher than Treasury bills. Since March 2005, the top stocks are: 1) Netflix reports tomorrow. Up over 13,000% since 2005. 2) Apple up over 10,000 3) Regeneron, thanks to its various drugs. 4) Monster Beverage. 5) Booking Holdings after beating its online travel competitors. 6) Nvidia whose chips are essential to computer and high-performance computer. 7) Amazon after taking over retail and cloud computing. 8) Illumina. 9)Monolithic Power. 10) Tyler Technologies

Given hot inflation and retail sales today beat, he believes the Fed will hike rates by 75 points this month and September then step back to see how the economy is doing.

Even the poorer consumer is still spending and consumers as a whole are taking on more credit card debt. These are positives. Market sentiment has been too negative, too mired. The economy is still healthy. The consumer is a giant driver of GDP group in the U.S. Coming weeks will see corporate earnings and offer more insight.

Believes interest rates will continue to rise even after 100 basis point increase from Bank of Canada. Expects inflation to remain at high levels. Not expecting a dramatic change in the markets (continued volatility). Anticipating further action from central banks across the world to battle inflation.

Expecting Canadian bank stocks to weather the economic downturn well. Recent market selloff has already been priced into Canadian bank stocks. Not expecting sharp declines. Remains supporter of the Canadian banking industry in the long term.

Markets and volatility. Expects volatility to continue. After-effects of the pandemic like supply-demand imbalances, labour shortages, supply chain disruptions that have been exacerbated by Russia's attack on Ukraine and lockdowns in China. This lethal mix has caused inflation to spike and last longer, making central banks raise rates more aggressively. Resulting volatility in both stocks and bonds. Rising rates and high inflation will slow down the economy, some parts more than others, such as real estate and consumer discretionary spending. He's in the camp of a soft landing. Both Canada and the US have low unemployment, high personal savings, historically low interest rates, and strong currencies. Core inflation numbers are starting to roll over. Don't get too spooked by the headline numbers, but stay diversified in recession-resistant businesses in case things get ugly.