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

Stocks keep edging up. Some say it's the calm before the storm, but he's learned not to short a hot market. People are buying growth vs. value. Forget Wall Street gibberish. Buy quality stocks cheaply. If we see red-hot inflation numbers, Fed Chair Powell may have to raise interest rates. We'll see if he mentions "transitory inflation" or not in Wednesday's Fed minutes. He expects Powell to stay on course and not surprise.

Bitcoin - calling a bottom Bitcoin has no fundamentals, no earnings, no business to analyze. This trade is based on emotions and headlines. Tech analyst Tom DeMark is looking for a bottom in Bitcoin. It peaked on April 14. He expects intraday dips below the $24,705 bottom of May 19; will trade sideways for the next 3-4 weeks, then making a new low after that. DeMark compares the market patterns of 1987 including that crash. Also, DeMark thinks the S&P will peak very soon, maybe next week.

Picking stocks. When so many people are focused on so many extraneous events such as Bitcoin, meme stocks, Covid, and the Fed, great companies continue to be great companies. They'll trade at reasonable valuations. Trading around is a risky proposition, expensive, and at the end of the day the conclusion is to just own great companies. His firm focuses on industry-leading companies that produce good products or services, run by strong management.

Ignore the noise. In the end, the businesses he invests in are just focused on building their products and services. If interest rates go from 0.25 to 0.5, that's not going to upset the apple cart. When people said you have to sell growth when interest rates rise, he says for a company flush with cash, higher rates are not a negative. Higher rates won't stop people from buying MSFT or AAPL products, or from using FB or GOOG. Focus on the fundamentals, and ask yourself why you own a company and if anything's really changed. Ignore the talking heads on TV trying to convince you they have a better formula than owning good quality companies.

When to sell? Sell decisions are always difficult. If it becomes an outsize percentage of your portfolio, that's a driving force for you to sell.

Top dividend-yielding companies. Canadian bank stocks have great dividends. If you want dividend growth plus earnings growth, look to US bank stocks for the next 2-3 years. With the strength of the CAD, those stocks are on sale for Canadians. Look at BAC, JPM, PNC, or Citi. In Canada, try KEY. Also APR.UN, a bit less liquid but with a yield of around 6.6%, good growth opportunities, very well managed, and a slow and steady player.

New twists to the markets. When you throw liquidity at the market, interesting aspects emerge. Enticing to follow, but a lot of this is just noise. The types of names he looks at are not too impacted.

Cyclicals still relevant? Estimates for inflation print tomorrow are ratcheting up. Cyclicals are still a big part of the recovery story. Commodities to industrials. Not too late to add some exposure to your portfolio, at least for the short term. Record commodity prices should flow through to corporate earnings. Some more secular, high growth names have sold off as a result, so he's been picking away at opportunities there. It's a barbell approach, getting into position for when there's a switch back to growth.

US tech stocks vs. value and yield stocks. You have to own the FANGs, as they generate so much cash. He'd absolutely choose a basket of those, which will generate returns in excess of GDP, rather than value names that are playing catch-up and likely won't exceed the expectations of the FANGs.

The CAD. CAD has been on a tear. Not inconceivable that oil and commodities will continue to rally, as inflation has been persistent. In that environment, the CAD will continue to outperform. If we get a miss on inflation, things could move the other way quite dramatically on both commodity prices and the CAD.

Utilities. Be cautious putting money into utilities right now, unless you need the income. As rates move higher, typically those stocks sell off. With the call on cyclicals, you might get some better opportunities to add to those names.

Prudence is a virtue--with your money. It never hurts to take a profit. Bulls and bears make money, but hogs (pigs) get slaughtered. That old saying may surprise some young investors. These are core beliefs.

The weakness of Tether and cryptocurrencies Many smart people point to a weakness in the crypto ecosystem: Tether. Tether has grown to become the third-biggest crypto. It's a key source of liquidity for the entire crypto ecosystem. It's pegged to the US dollar, accounting to 14% of all crypto trades in the past 24 hours. However, Tether's parent company has been banned to do business in New York state (where the NYSE is). Now, he is a huge believer in cryptos and he advises investing 5% of your portfolio in cryptos. He owns them. However, Tether claims to be backed by real assets--real currencies held in their reserves, according to their literature a few years ago, but more recently they changed that to include third-party sources. Meanwhile, they were investigated by the New York Attorney General in connection with their sister company, the Bitfinex trading platform. They settled this suit last February, and Tether has since explained (minimally) their sources of reserves. Only 3.87% of their reserves are cash, based on their recent one-page disclosure. He urges Tether to give investors more details behind this reserve breakdown. If there's ever a problem with their reserves, Tether can unravel quickly or if China shuts down their shadow crypto economy, or if the US authorities uncover further issues.