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

Picture is a little cloudy. Looking forward 5-7 years, no doubt that decades of underinvestment will come home to roost. So there will be supply shortages. At the same time, copper developers are running into vicious inflation in the supply chain from wage spirals and tax spirals. 

Constrained demand for copper equities is driven by a fear of recession. He remains bullish on individual copper issues. He takes a 5-6 year timeframe on his investments. If he had a shorter time horizon, his outlook would be more cautious.

He's a gold bug. Gold does well when people are concerned about the purchasing power of their savings and investments. 

For many reasons, people need to be concerned about conventionally denominated savings products. Real inflation (not the CPI) of the cost of living impacts both Canadians and Americans, including the rise of taxation. Also increasing amounts of debt and deficits. People worried about fiscal leadership in Canada and the US should be considering gold. People who aren't worried about the fiscal leadership are innumerate.

Jury's out. Political reality is that you have to posture around it. For many companies, CO2 injection is a method of pressure maintenance and enhanced production.

Not yet. In his experience, silver outperforms gold in the middle-end of a precious metals bull market, and we're now just in the early stages. He'd expect the gold (fear) buyer to outpace the silver (greed) buyer in the relatively near term.

In a precious metals bull market, the most volatile assets of all to the upside are silver stocks.

An argument is that drilling companies benefit disproportionately. In playing that game, it introduces a different level of risk. You need to understand the operating parameters of the drilling business, not just the mining business, and that's proven to him over 40 years to be a step too far. He's worked hard enough to understand primary production in mining and energy, and he decided not to pursue the service industry.

Almost surprising that equity markets have held up this well with rates going up and all that's happening in the background. Everybody's focused on the Fed and interest rates. We heard from the BOC today.

The market's been pretty narrow on the upside with large-cap technology and communications stocks carrying the day. Interest-rate sensitives like consumer, utilities, and banks have lagged, and they can offer some value.

Embracing banks. If you wait until everything starts looking good again, the stocks will already have moved. Great dividend yields, so even if stocks don't go up for a while, you're still getting a decent return. The dividend's giving you so much advantage, you don't need much to go right with these stocks for the next number of years.

Registered Retirement Savings Plan (RRSP):

The RRSP is a cornerstone of retirement planning in Canada. It allows individuals to contribute a portion of their income on a pre-tax basis, reducing their taxable income for the year. The funds within the RRSP grow tax-free until withdrawal. However, withdrawals are taxed at the individual's marginal tax rate at the time of withdrawal. RRSPs are particularly advantageous for individuals in higher tax brackets who anticipate being in a lower tax bracket during retirement.
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Governments have been pumping money into the system, but the problem is we have the same amount of goods and services. Also, people are holding onto jobs, immigration is rising and unions are demanding more money because of inflation. All this creates a cycle of inflation--stagflation. So, he is favouring materials, metals and oil. Inflation is here to stay, not 8%, but 3-4% for a while. Commodities are due their turn, so he's getting back into them.

Sector Impact on Investment Strategy:

Understanding sectors is not just about classification; it has a direct impact on investment strategies. Diversification, a cornerstone of smart investing, involves spreading investments across different sectors to minimize risk. By holding a mix of stocks from various sectors, investors can cushion their portfolios against a downturn affecting a single industry.

Moreover, sector analysis helps investors align their portfolio with market trends. For instance, if technology companies are thriving due to innovations, an investor might consider allocating more funds to the Information Technology sector.
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Today's data shows an easing in the labour market. We are a far cry from a recessionary level. Core PC was up 4.2%. The Fed may be done raising rates, but they won't ease, because their inflation target remains 2%. She's encouraged that the rally has broadened out recently, like energy beating tech. This reflects earnings coming in better than expected. Earnings have troughed. You still want to own tech and comm services, but don't make it 35% of a portfolio. That's too risky.

The unemployment rate rose today, largely because participation increased. Good news in terms of the Fed's rate hikes, but you also don't want this trend to continue. The market is focusing on 2024 earnings. We are set up for a huge Q4 rally after September seasonality. He's position for the market to rip after that. When a market has rallied like this has this year, it crescendos positively in Q4--people chase performance, Many felt when this year started that there will be a recession, and that hasn't happened. He likes the market broadening, though tech won't collapsed. 

The rally will depend on earnings. Doesn't know what will happen in the rest of the year, but a recession in unlikely, more likely in 2024. Valuations are high. He expects a period of choppiness, but he is invested and not negative. He's been trimming tech modestly like Apple, because the PE rose. He loves energy and healthcare.

Recent GDP data lower than expected.
Believes higher interest rates are starting to take their toll on the economy.
Doesn't expect any major interest rate hikes going forward.
Optimistic about financial markets heading in Q4.
Non-tech sectors will start to catch up in valuations (healthcare, energy etc.)
Is a good time to be investing in dividend stocks(flat to lower interest rate environment).