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

A big theme next year will be that shale production is close to a peak now and will fall off. Next year's production will be half of this year's. People will realize that shale companies have an inventory problem -- they have less than people thought, and the quality is eroding. As people get more bullish on oil (not today, but it's going to happen), value placed on long-dated reserves will go up.

Outside of Saudi Arabia and Venezuela, Canada is blessed with the longest-dated reserves in the world. TMX is coming online Q1-ish of next year, so the era of super-high differentials will finally be over. These names will spew free cashflow, and we're going to get it all.

Based on the price action of recent days, the setup is for the S&P to hit 4,600, back to July's highs. The Nasdaq has already made a new high for the year. The Magnificent 7 has seen strong performance from Microsoft and Apple.

Inventories will build as demand weakens. China's refinery runs are down. Remember that oil stocks are not declining as much as the spot price of oil. He isn't worried about the meeting postponing. But Monday will see alot of options expiring, and they now need to be quickly unwound. Will Saudi Arabia push back against speculators?

Gold has bottomed. Gold works best during deflation and we're hearing that word now. He likes gold as well as silver now.

He's very bullish oil. The strategic petroleum reserve is very low and the US said it will fill it below $79 WTI, which is up from $72. This will drive demand and prices.

It's not his thing, but there's a lot of support for gold heading into year's end, because real interest rates are declining. 2013 and 2017-2018 saw good returns for gold. It's viewed as a hedge against geopolitical risk and inflation.

Driving the market to new highs near-term: interest rates are coming in, investors including himself are not taking gains including in the Magnificent 7. True, markets are overbought in the near-term, but he doesn't see a catalyst for a sell-off. Next year is a different story.

“Stocks go down faster than they go up, but go up more often than they go down.”

David Gardner is the co-founder of Motley Fool, an investment service that likes to stress the common-sense aspects of investing. Any investor knows that fear is a more powerful emotion than greed, and that stocks tend to plummet far faster than they rise. No one typically panic buys, but every so often, millions of investors panic sell. Yet, over time, stocks have been one of the great wealth creators.

Yes, markets have bad years. Sometimes, they have two bad years in a row. Three bad years in a row is very rare. In the other years, equities go up, maybe not dramatically, but often steadily. 

Anyone entering the market needs to know that they could immediately lose money. But they also need to know that if they stick with stocks long enough, they will likely end up ahead. Gardner’s quote nicely sums that up.
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After three months of loses, the market has definitely changed direction this month. The reason is that investors are confident that the US Fed and Bank of Canada have stopped raising interest rates. The Nasdaq continues to lead, driven by chatGPT a year ago kicking off. In Canada, he's picking his spots given this technical recession.

Open AI headlines very surprising. Will be interesting to see how impacts Microsoft(positively). Learning models and AI will be very important part of life in the coming decades. Question is how much investors should pay for future earnings in tech names. Fundamentals often disconnected from tech names. Impact of A.I. on day to day user cases also difficult to predict. Historically, markets trend positive in the final months of the year.  Believes market is over valued and due for a hard landing. 

Argentina election results a shock. Libertarian leadership being rewarded as Argentina stock market trends upwards. Opportunity for investors to be rewarded, but would advise caution. ARGT (Argentina Index) a good way to get exposure to country as a whole. If Argentina economy recovers, could be very good for investors in energy, consumer goods, materials and various exports. Currency risk is major concern as promise of move to USD might cause turmoil. 

“Good investing is not necessarily about making good decisions, it’s about consistently not screwing up.”

Morgan Housel, the author of The Psychology of Money, is certainly not as famous as some of the other investors quoted here. But maybe he should be. His book has sold four million copies and has been translated into 53 languages. We really like his style.

His quote above summarizes parts of his book: Essentially, he outlines how you don’t need to be a genius in the stock market, you only have to not mess up over a long period of time.

Compounding even mediocre returns can result in huge wealth if you can manage to avoid the screw-ups and bombs that can destroy a portfolio. We like to say, “Water your flowers (winners) and pull your weeds (losers).” If you can eliminate big problems, your portfolio will do well, since even the small winners, over time, will compound into big winners.
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The normalization of interest rates is important for investors since they have more choices in making asset allocations according to their risk profile than they did when rates were very low. This includes bonds, GIC's, stocks, etc. People are no longer being forced into the stock market to get better returns so the stock market can't trade at massive valuations. Valuations have come down which allows us to re-assess what we want to buy. Interest rates are not that far off the average so they may stay at these levels.

The question was on preferred shares as a substitute for bonds. This would be a mistake since preferred shares can be volatile and have equity risk. Bonds have much less risk and therefore are the better choice for fixed income type investments.

The question was on cyclical stocks. These are generally resource based and he doesn't like to buy this type of stock. If you want to buy, wait for an improving economy.