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

Importance of Fundamentals: The best approach for long-term investors amid uncertainties is “worry about the macro, focus on the micro”. As there is a small sub-segment of the market that regardless of what happens with the macro picture, the business will continue to do well (or are only mildly affected), due to such a strong secular tailwind in the business models. Some of the prominent transitions include brick-and-mortar retail to e-commerce, software licensing to software subscriptions (SaaS), programmatic TV to streaming and cash to electronic as a payment method, etc. As long-term investors, these are the opportune times to establish or add to positions that not only persist through the downturn but also come out much stronger when the economy recovers. Therefore, we think the current drawdown could offer opportunities for attractive entry points into these names. 

Not really. They've made it very clear what they're doing. Issue is the notion out there that once the Fed stopped raising rates, it would start to lower rates very quickly, and that's not the case especially with what happened with US financials. 

Real issue is that they have to keep rates higher for longer. Inflation remains an issue, and they need to bring it down. YOY numbers have come down. They really need to keep rates up until they see inflation come down to a reasonable level. Whether that's 2% or not, he's not sure. Probably won't see rate decreases until next year.

90% of the gains in the S&P came from 7 companies, tech companies really. April was a good month. But if you were in consumer discretionary and staples, basic materials or regional banks, you didn't do very well. It's a very narrow market, which worries people, as the breadth of the market is not very strong. Something will have to give.

The other issue is there's also a lot of complacency because the VIX is down around 16. You'd think it would be higher given interest rates, the debt ceiling issue in the States, and the narrow market. You may see more volatility in the stock market, but that's not a bad thing for long-term investors, as it gives them a chance to buy companies they really like at reasonable valuations.

Think about which companies you want to own, and get ready to buy when you see the volatility.

It's a really positive sign. S&P and the TSX are still to clear their February and April highs. His view is that it will hit its highs of August 2022 in the next 2-4 weeks. This is a big deal. If we get above the August highs, it means something's changed in the tone of the market.

For the bulk of 2022, the path of least resistance was down. Whereas now, the path of least resistance is up. 

Exactly. Resistance in February and April, and he's anticipating a push higher toward those levels. There's going to be a short-term pause or consolidation, but ultimately this will lead to a rally that will take us to the 4300 level. 

The chart through October and December 2022, and March 2023, we had a series of higher lows. February highs were above the December highs, so especially if we take out the August 2022 highs, you'll see higher highs and higher lows, and that's the definition of an uptrend.

Under pressure with commodities being pressured. TSX has already moved above its August 2022 highs. If we can take out the June 2022 highs, that would be positive.

The technical pattern that's trying to form is an ascending triangle pattern. The flatline is at the top of the triangle, and the higher lows form a line to meet it. In technicals, this is one of the most positive patterns out there. If we can clear the February and April highs of this year, that's very bullish.

His thesis is that we're starting a new bull market. As we get closer to the August 2022 highs, lots of people who've shifted to a more bullish stance are going to take some profits. If we clear those August highs, that could be an intermediate peak, and the first decent 5-10% correction in this market.

When all the naysayers change their view and put their money to work, that will be a really powerful tailwind for markets next year.

Historically, strong seasonality from March-April-into May. Slowly showing signs of improvement, but it will be choppy. Use tight stops, using previous day's lows. Remains quite volatile. Tailwind of positive seasonality.

Very cyclical. Chart shows that we're seeing a similar slowdown as we saw in 2019-20. He likes accumulating lumber names at these levels, as they look quite attractive.

Investors do the exact opposite of what they're supposed to do. You're supposed to sell your losers and let your winners run. Human psychology makes us repeat the same mistakes. They get the adrenaline rush of cashing in on a gain. Then they hope and pray that a 10% loss becomes a 0% loss. Every 90% loss starts off as a 10% loss.

The biggest enemy for every investor is themselves.

Warning: viewers out West may not like this opinion. Energy is a late-cycle play. When the economy is running on all cylinders, that's when energy starts to run hot. Pandemic was a black swan event that forced a spike in the chart.

His view is that oil will be in a choppy, sideways trading range between $60-85 over the next 2 years until 2025-late 2026. Energy probably won't have negative performance, but it could be challenged in terms of performance relative to the TSX. Right now, we're 7 months into the cycle.

Basic Investing Metrics: Financial Notes. It is surprising how few investors read the notes in a financial statement. Sure, they can be boring and confusing, but they really do contain the best information and sometimes even hidden messages, either good or bad. We are reading the notes very carefully these days, looking for a company’s exposure to higher interest rates, rising costs and potential other bombs if we enter a recession. 

The notes will also provide further details on all the points we’ve noted above, and go into more details on line items. The notes are likely more important than the rest of the financial report, so we often start with the notes first when examining a company for investment.
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U.S. Large Cap Health Care Stocks include Manged Care, Pharma, Bio Tech, Medical Device makers. Health care is a huge chunk of the U.S. market. A lot of the big innovations and R&D happen in the U.S. Obesity drugs have been one of the hottest areas and a big drug development for Eli Lilly. Lots of exciting possibilities are in the pipeline.

Speaking in terms of health care generally, the managed care component may have more growth than the overall economy. There is a transition to more value based care which results in more efficient patient turn-around.

Believes pause in interest rate hikes will be good for gold prices (less interest rate yield is more reason to own gold).
Gold is protection against inflation for long term investors (US Dollar losing purchasing power). 
Expecting demand for commodities to continue to rise.  
Planning for gold prices to appreciate.