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

Very cheap at these levels.

The really big drugs do not actually solve a health problem; you may have to take them for the rest of your life. In general, healthcare companies are defensive with decent dividend yields. They'll protect you in the market.

It's really about what kind of pipeline they have, and what the value of the pipeline is for a particular drug. For example, the weight-loss drugs could have a massive opportunity, but a cancer drug may only be worth $750M because it affects so few people. Look at what drugs they have and what markets they're working in.

Up till the end of June, the narrow focus of the Magnificent 7 companies accounted for almost all of the gains in the year. Since then and into July the breadth has broadened, which is healthy for markets. We're going to see more of what we've seen this week in big up days, big down days, and lots of volatility due to uncertainty and lots of news stories.

Expanding breadth shows more confidence in the markets, the tech sector, and those 7 companies. Inflation numbers coming down a bit helps confidence levels. When you see investors going into shares of all companies, it signals a stronger conviction. Still, the volatility will continue.

He agrees that the majority of rate hikes have taken place. The bigger question is how long inflation stays high. It's generally perceived that rate hikes are coming to an end next year. That might not be the case if inflation stays above the Fed target of 1-3%. In that case, rates will stay higher for longer, causing markets to lean off a bit of the confidence they've had lately.

He sticks to a diversified portfolio, so if he had to lean, it would be a little more defensive. He has a few of the Magnificent 7 stocks, but the key is diversity. To manage the volatility be exposed to all sectors, some defensive and some growth.

You'll have great up days and then down days. Over time in the markets, the up days are better, but you have to position for those down days. A portion of his portfolios is in cash, which he looks to deploy to his advantage on down days.

He'd agree 100% that investors should not be looking to buy and sell within a year. If you need the money within a year, keep it out of the stock market. The longer time horizon lets you weather the volatility better. Companies themselves don't look just a year ahead, their timeframe is much longer. The longer you can go, the better off you'll be.

The dividend growth metrics are high for all of these companies. If rates stay the same, high dividends are better than what the market's providing, but it might not be substantially higher to justify the additional risk. So you want to keep your eye on it. What you're looking for is if they can grow the dividend as well as assets and volumes going through those assets.

What does negative working capital mean?

Negative working capital means a company’s short-term assets are less than its short-term liabilities. What this financial metric indicates is that the company collects cash from customers in advance before it needs to deliver any of its goods or services or pay suppliers. Of course, negative working capital could be a sign of financial difficulty if the company’s fundamentals are deteriorating. For example, if sales and earnings decline year after year, the company struggles to generate cash flow, and the company also has a high leverage profile, then negative working capital could signal near-term trouble for the company.

However, there is a small group of businesses that have a superior business model or strong competitive position in the value chain, which helps them negotiate better payment terms.
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He expects oil prices to keep climbing. Much of the reason is psychological, driven by a subtle backlash in EVs. Unlimited demand for EVs is over. Maybe that's due to a lack of charging stations, higher prices for EVs, or maybe the novelty has worn out. Also, hydrogen fuels are too early for mass adoption. Better to invest in pipeline stocks (and their rich dividends) than charging stations.

He sees short-term gains in the market. Inflation data is encouraging a continuing rally. Maybe the worst is over. One of the Fed chairs made encouraging comments today. The chart of US inflation shows inflation falling back to the traditional top end of inflation. Energy and transportation costs have declined, though food and mortgage costs remain robust. The signs are encouraging, but we're not there yet. The US 10-year yield chart is starting to break out now (above 4%). The bond market is telling us something, and rising yield are the fly in the ointment. The S&P has seen an uptrend since last September; he sees more strength.

Any government or regulator influence cans turn an investment into a wild card -- that is the biggest factor. You need to find clarity from governments around the world about Bitcoin. He owns no Bitcoin.

The bears who get airtime are wrong. They were calling for Schwab to go under during the regional bank crisis. Did Schwab go under?? During pullbacks like this, buy, but don't worry if you missed it today. There will be more opportunities to buy because the bears will keep speaking doom and gloom.

One problem of only looking at share price:

Most beginner investors tend to avoid stocks that have a share price above $100, and they often lean towards stocks priced below $100. This is because intrinsically, without having any further information, we would be led to believe that a $10 stock is “cheaper” than a $1,000 stock. Investing in such a way is misleading though, as what is most important for the relative “expensiveness” of a stock is its market capitalization. Market capitalization, or often referred to as market cap, is the total value of a company, and it is calculated as price per share times the number of shares. Naturally, we might think of the $6 Sirius XM stock as being “cheaper” than Markel, however, its market cap of $25.9 billion is larger than that of Markel’s at $18.2 billion. The reason for this is that Sirius XM has 4 billion shares outstanding, whereas, Markel has only 13.8 million shares outstanding. Sirius XM is also more expensive on a valuation basis than Markel, with a P/E of 21.5X against 18.3X, respectively. This leads us to the conclusion that looking at share price independent of any other factor is misleading, and it should not really be factored into our investing decisions.
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Possible 1 - 2 more interest rate hikes, but majority of rate hikes have occurred. 
Inflation trending lower - good for US Fed.
Good year for stock market & corporate earnings despite global political issues.
Seeing value in financial & healthcare stocks.
Most of investor money flowing into tech creating opportunities in other sectors.