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

Stocks plunged today, lower than in many weeks. But this isn't enough of a reason to buy...yet. Stocks can still decline more. He needs another reason to buy. Reasons not to buy yet: Evergrande's implosion needs to play itself out more, Washington is facing a debt ceiling yet again, but will find a solution, uncertainty of the US infrastructure bill, ongoing Covid crisis, taper tantrum talk, there's likely more seasonal weakness to come, an endless supply of new stocks that he mostly doesn't want, and the rookie investor's overconfident buy mindset.

The collapse of China's #2 real estate developer, Evergrande, will harm American companies with substantial business in China, like Starbucks, but he predicts it won't effect the American economy. The crisis is giving investors an excuse to sell. He advises to it it out for a couple weeks before buying stocks in this market.

The Liberals won another minority government. It's going to take a lot of work to climb out of the financial hole that Ottawa dug to cope with Covid, starting with balancing the national budget. The Liberals will raise taxes on the wealthy, but this will discourage investment--we don't need this. The election was unecessary and costly. A pity. Let's hope we can get things going again and pray we don't see a fourth wave. Let's hope businesses continue to open up as consumer spend and travel again. We will get through this, but it will take time. In the past 18 months, he's been selling and holds a lot of cash now. He's waiting for a bigger sell-off than yesterday. He's looking for high dividend payers that don't stretch valuations. Be defensive in staples, financials and utilities.

Market outlook. There was a survey that showed a rapidly growing bearishness among individual investors. This gives some confidence that if there is a correction, it will be relatively short and sharp. Seeing a script we thought we might. With the delta variant pushing hospitals and us mentally, this could be the last wave before we can recover for good.

Knew that the market was going to react to the news of the day. There has been a risk on, risk off attitude. Has worked out according to the playbook. Expects a fairly positive close to the year.

He's been saying that the seasonal period starting today will be a rocky one. It was as stocks sank today. Also, bearish sentiment hasn't peaked since the Dotcom period. Also stocks pull back, you may need to buy into that decline. September/October seasonality is consistent. This year, supply chain constraints, the Delta effect and other worries are factors.

Markets and leveraged Chinese real estate. Across an economy the size of China, it's just a drop in the ocean. Will it create moral hazards or underlying problems for Chinese investors? A major form of investment has been real estate, so the issue is will there be a contagion effect? The Chinese government seems to be fairly on top of it. It won't be a Lehman Brothers event, though others are classifying it that way.

Market opportunities. Sometimes you get lucky, and a stock that you've held forever gets recognized by the market and gets a leg up. Also renewables, either directly or via first or second derivatives, where products and then consumers benefit. These derivatives often have the greater upside. Be wary of putting new money into sectors that have had a significant run. It may be time to trim those. You make money when you buy, not when you sell.

Reopening trades will be somewhat lumpy recovery stories. Watch the level of vaccinations. We're starting to think seriously about moving towards a recovery and what will benefit. Companies that have suffered from, but not been killed by, the pandemic offer the greatest upside. Think aviation, airports, cross-border, restaurants. You want exposure to those, but it's going to be a longer term story. Not 6 months, more like a 1-2 year trade.

Car companies and EVs. All of the major car companies are heavily discounted, but they're all transitioning into EVs. Tesla won't be the only game in town. Do your own research on names. On the fundamentals, you have to seriously take a look at the category, which is deeply discounted. Investors should consider whether there's multi-year upside from the EV renewables cycle. He thinks there is.

Buying global stocks. When you're looking to buy international stories, you want to buy the common shares, and if they're listed in the US, do that. That's the inexpensive way. If your broker can buy on the underlying market, that's good also.

Markets. Up seven consecutive months. September is historically a seasonally down month. Delta and other variants, looming Fed tapering. Not surprising to see a bit of a pullback. S&P is already down 1.5% this month, and hard to tell if it'll go down 3-5%. His cash levels are higher, above 10%, to take advantage of any potential weakness. We've already seen weakness, and perhaps there's more to come.

Not hiding in defensive stocks? He prefers cyclical over defensive. Delta, inflation, or supply chain constraints may delay recovery, but not derail it. Vaccinations are progressing, and it will take another few months to get to herd immunity of 75%. Looking out 12-18-24 months, you want to be in financials, industrials, and energy.