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

Markets are rallying high, but investors should be careful of being overextending. There are many drivers now. He still expects a vaccine glut in Q2. The reopening trade is led by Disney. Also, the housing boom, industrials are rising, the price of oil keeps rising, banks are enjoying a climbing yield curve. New, younger investors feel empowered. And SPACs push stocks higher. Higher, there are vulnerabilities here: Covid still needs to be tamed. Rising rates will stop the housing boom. Industrials rally only if employment pick up. Rising oil prices will lead to the Saudis pumping more oil. New stockbuyers can run out of targets to run up (i.e. GameStop). And SPAC valuations can get out of control from a low quality glut.

The real story is about the reset that everyone is talking about. We are 4 years late since Clinton would have participated if she were elected then. Those who hold gold control the system. This week, Swift announced they are signing up with the yuan to do trading on the system. This is a signal that the monetary reset is coming. The Chinese hold the most gold right now. The value of the money supply will be used to reset the system since we cannot pay for the current debt. He advises his clients to build positions in precious metals as a hedge.

Gold. Why is gold being manipulated? Because gold is being depressed, we are not questioned what is being done with the value of money. Looking at history, the net results of central bank policy has always been the same. They are losing control of the long term yield curve. Copper is breaking out because currencies are devaluing as well. There is a storm on the horizon.

ETFs. You want to make sure ETFs own the underlying stocks and they are not futures contracts. If the institution that has issued these futures contracts disappear, the ETF has no value. Instead, he prefers to own stocks directly or ETFs that own their stocks. .

Working from home has increased demand on data and telecom systems. Demand on networks has increased dramatically and not stopping any time soon. Looking out 3-4 years, we'll probably double amount of data created in all of history. Data centres, cloud computing, cell tower storage will all increase to keep up with consumption demand and bandwidth.

With equities at historically high multiples, is it hard to find value? Yes. Multiples climbed dramatically in 2020. So he wants to focus on earnings growth and dividend growth. A good place to be if there are any hiccups in the recovery, but also to gain leverage to an accelerating economy.

What about the Biden plan for infrastructure? The new stimulus package will have trouble passing. Biden has touted infrastructure spending a lot. We'll have to see how much progress is made in infrastructure. In the US, building infrastructure doesn't depend on federal intervention, as states can enter into public-private deals, and many have already done so.

A company that might benefit from EV and installing charging stations? There is ChargePoint, but you're paying 10x sales. Charging stations will be monetized eventually and very competitive. He prefers to go through the renewable energy developers, as they have estabished track records, are cashflow positive, and without astronomical valuations.

Is the Reddit episode behind us? He hasn't wasted a lot of effort on that circus sideshow. It's almost an idealogical crusade, rather than about the money. They're playing Russian roulette, but one spin away from the lights going out. Hopefully it's over, and now everyone can go back to focusing on fundamentals and macroeconomics.

Encouraging signs in the macroeconomic landscape? Not everything is sunshine and roses, as employment numbers are not that great. But personal incomes are holding up quite well. Retail sales are holding up pretty well. Ongoing, tremendous strength in housing. Economic variables are validating their expectations for a robust economic recovery in 2021. Should spill over into corporate earnings.

Favourite stock in renewable energy? They don't own any of the pure plays. Try Northland Power, wind and solar outside Canada. TransAlta Renewables is another. The whole space has the sun shining on them, with both Trudeau's carbon taxes and now the Biden administration. A lot of money flows into the sector, with government policy behind it. Also ESG is really quite a juggernaut.

Canadian big 6 banks. Hard-pressed to go too far wrong owning any of the big 6 banks. 4-5% dividend yields, which grow at high single digits most years. Credit losses are behind them. Net interest margins still under pressure, but banks earn their way through whatever the economy throws at them.

David vs. Goliath as retail investors take on big hedge funds. But you're sticking it to the man buying GameStop. Rather, you buy stocks to make money. GameStock is an ailing business. Robinhood has already delivered the revolution with its app to promote investing. Guide for new investors: choose stocks that will rise higher; don't demolish the fat cats but read annual reports; stocks do crazy things because investors have emotions and are unpredictable; the government won't ride to the rescue (they're busy with the pandemic and running the country); buyer beware when you buy any stock (there are no guarantees); don't borrow money to buy stocks, because margins enlarge losses; and keep a sound head and do the homework.