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

Energy infrastructure names. Likes energy infrastructure names. Commodity prices are the wind at their backs. PPL is a buy, as are ALA, ENB, KEY, and TRP.

Stock splits. He doesn't pay much attention. Once a stock splits, people do end up buying more. It is a bit of a wind at your back. But from a financial management perspective, it doesn't move the needle.

2022 outlook. Pretty constructive on equities for 2022 with positive, though more moderate, returns than 2021. Another challenging year for bond investment. Though Omicron may delay economic activity, it won't derail the overall global economy. Start to see higher interest rates and tapering, but they'll do it in a subdued manner because the inflation is supply driven, and some of the bottlenecks will start to ease. We'll see inflation above pre-pandemic levels, but not hyper-inflation. We'll see new targeted vaccines and anti-viral pills, and these should help ease restrictions on business.

Sectors to avoid. Broadly, a lot of indices look full in terms of valuation. Stock and sector selection is very important going forward. Be careful of richly valued, high growth tech and other stocks. Rising bond yields will continue to weigh on high growth, long duration stocks, and a lot of these are in tech. Those companies have low or negative margins. Higher rates make the promise of future profits less valuable in present terms. Likes cyclical areas, and value stocks like financials, energy, and healthcare. It's not that he's not in tech at all right now, but don't add too much to tech at this stage of the game.

Bank stocks. Broadly speaking, financials make a lot of sense with the steepening yield curve. Economy continues to recover around the world. These are good things for financials and bank stocks.

Crypto. Looks at these strategies akin to higher growth, higher momentum, higher beta areas. Doesn't see a lot of intrinsic value. For investors who want to put in a small allocation just to participate, that makes sense. But you don't want to make it a large part of your retirement portfolio. If governments get involved, crypto might have more downside.

Copper names. Likes commodities and the cyclical space. Lots of analysts and firms are ratcheting up expectations of a decade or more of commodity firmness. An ETF would make sense, like COPX. Includes BHP, FCX, TECK.B, and Glencore. Geographic allocation is 30% Canada, 8% Japan, remaining in the rest of the world. Levered to expanding global economy. 65 bps MER. From a technical perspective, likes FCX.

Dipping an investing toe outside Canada and US. A lot of investors are heavily weighted in Canada and the US, without looking beyond those borders. Europe offers a lot of value now, and the EMs offer quite a bit of growth. EEM will get you into China and Hong Kong, etc, with some tech names. Concern about EMs is whether vaccines are flowing as quickly as in developed markets. Looking at Europe, try FEZ, a very simple ETF that holds 50 of the largest names, all blue chip, lots of value compared to the US, yield is about 3-4%.

REIT space. He doesn't own a lot of REITs, other than SPG. But in the warehousing space, the first name that comes to mind is PLD, in industrial storage space. He doesn't own it, but would consider it more for growth instead of yield.

Pace of price increases uncomfortably high for a while? Yes, but he's also in the camp that thinks inflation will be transitory, as in "non permanent". Inflation will be meaningfully above-target until the back half of this year. See his firm's article "Death, taxes, and inflation". At the end of the day, Fed will fulfill its mandate. He's positioning for some interest rate increases this year, though not enough to take us to a restrictive stance on monetary policy.

Promising sectors. Cyclicals poised to continue to perform well, and that means banks, insurance, energy, basic materials, but not to the exclusion of the secular growth areas like his core holdings in technology and emerging growth. Energy and financials should continue to show leadership in the market and above-trend growth in earnings. Starting to see emergence of value over growth, but not enough yet to put an all-in bet on one or the other. His strategy is to own the best in each category of growth and value.

Add a 4th Canadian bank? If you have 3 banks already, you probably have enough exposure to the sector, depending what the weights are. In some industries, the idiosyncratic differences between companies is dominant. In others, the broad macro story drives the returns through the whole sector, and this applies to banking. The core weighting will drive your results more than which one you pick. Which isn't to say that you shouldn't pick the best.

Utilities. Long-term, bright future for power producers. We're going to have a greener electric grid and vehicle fleet, and we're going to need clean power to support that transition. Lots of capital will be deployed. Most utilities are regulated, which adds up to earnings growth for the sector and, by extension, dividend growth. Short-term, rising interest rates are a mild negative. Thinking of utilities as bond proxies is outdated. Multiple compression represents a buying opportunity for the decade of growth ahead of them.