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

Market. Inflation is here. Last year when the market was in a free-fall, he found that the recession was a 'shock-to-the-system type of recession. It is short lived and then there is a bounce back of pent up demand. Now it is supercharged because of subsidies from central governments. Total net income is up. People paid down debt when they could not shop. Now there is a surge of people flush with cash and this has pushed up demand across the board. You want companies with strong pricing power. They need to have superior business models. Oligopolies, duopolies and monopolies are good choices. We have been in an eleven year bull market. S&P valuations are at historic highs. It is harder to find those opportunities.

CDRs. These are ADRs but in Canada. He believes they are an option but US shares are easy for Canadians to buy so he would prefer them, They may be preferable if you are purchasing odd lots.

US-China Summit. Tensions between China and the US has ramped up for a number of years. There is no shortage of Chinese policy criticism. China is determined to put it in a place of equality with the US. Taiwan is a big part of the geopolitical tension. He fears we will see escalation in Ukraine but Taiwan will probably be handled differently.

Russia's escalating pressure on Ukraine matters for Europe and their energy market. For the US, it matters less for their stock market. Most market players will take a similar path to when they annexed Crimea. This is not yet priced in.

Feds. There are some moves to replace the chair. Thinks Powell will keep his job. It depends on what kind of bills get done, and the relation with the more progressive part of the party. There will be some horse trading. We should find out in the next couple weeks who will get the Fed Chair position.

Tech stock bubble. Central bank policy has caused asset price inflation. Long duration assets are the biggest beneficiaries. New tech falls into this category. When looking at the names in these indexes, some might not be here in a few years, but many probably will. It is different from the tech bubble in the 90s. There are many people in disruptive tech and many won't make it. However, the sector ETFs look at companies that have somewhat made it.

Market timing. The S&P 500 will be there for the foreseeable future. The quality of what is in this index is reliable. Is it overvalued? Absolutely. However, everybody should have a component of their portfolio with exposure to the S&P500.

Educational Segment. Everyone is looking for enhanced yield in their portfolio. People are looking at covered calls so their safe money is protected from inflation. The covered call strategy is a buy low, sell high strategy.

US Inflation. Have to look outside of the current period that we are reporting for. Some activities suggest it could get better in the future. Looking at inflation and central banks, he does not think the magnitude of inflation priced into the market will be realized. If supply chain issues are resolved, inflation should be modulated. For example, there is pressure being lifted from the auto industry with semi conductors.

Generally, the higher quality companies tend to check back when materials and energies perform. This is a good entry point for good companies. There are pockets of the market where there is good value. Valuation disconnect in Canada is quite wide compared to the US. Both are good markets.

Value in the markets? Finding a lot of things off the beaten track. Getting tougher to find value. What's scaring him is that for the last 5 years, the forward PE for the S&P has averaged around 18. Today it's 21. Metrics keep expanding, and that's what's driving this market.

Is there too much cash looking for a home? A combination of tons of cash, investors desperate for yield, with low interest rates making investors more confident that rates will remain low. If people think that the 10-year bond yield will be less than 2% five years from now, and that stocks look cheap, that's a pretty risky bet.

Unloved areas of the market. Financials, even though they've participated in the run up. Banks, insurance companies will be huge beneficiaries if interest rates go up, especially if the yield curve steepens. There are still some companies that offer great long-term growth and there's still value, but they're getting tougher to find, and one has to tread carefully. You don't want to buy into a stock whose PE used to be 30 and now it's 50.