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

Volatility within the banks is across the whole sector. US banking crisis in Q1. Valuations have come down, so the sector is very attractive and offers lots of value. See his Top Picks.

Because governments in NA and Europe have such aggressive EV goals and timelines. If you flip it and look at EV commodity prices and shortages, at some point things aren't going to line up well. Either the EV car prices will be so high that people won't buy them, or they're going to have to stretch those goals out because it's not economically feasible. That's what worries him about the auto space in general.

The first thing you want to look at is business economics, which includes profit margins and free cashflow. Other things to look at are the balance sheet, management team, growth platform, and valuation. Ticking all 5 boxes gives you a candidate for your portfolio.

Textbook good governance principles say that multi-vote shares are not good. Which isn't to say that there aren't some great companies that have adopted these structures. The founders get the upside of the public markets, but still retain control. In Canada, they were more prevalent, but this was due to regulatory artifact. 

No. The big 3 in the US are RCL, CCL, and NCLH. Terrible charts, with NCLH and CCL almost back to Covid lows. Highly leveraged balance sheets, 10s of billions of dollars in debt. Betas of 1.6-1.7. Spending is highly discretionary, and the economy is slowing. Pent-up post-Covid travel demand has been satisfied.

Valuation is never really a good timing tool. Sometimes things trade higher because they're becoming better businesses.

The sector is only a 4% average weighting across his portfolios. The price chart is telling you what the cycle is doing. We can play all these games about "better than expected earnings", which will create a lot of ink and headlines in the next few weeks. But the mathematics of the cycle are cold and unemotional and brutal. Earnings growth and the economy are slowing. Oil is telling you that, with the price down from over $130 and now struggling to stay above $80. Steer clear of most of the oil patch right now.

Copper is highly cyclical. He doesn't own any copper producers and wouldn't be buying any right now. Economy is slowing down, and is likely to go into an outright downturn later this year. This will affect copper demand. 

Long-term, the demand is there for all the traditional uses like plumbing. And the sexier part of it is EVs and greening the economy, which is all legit. But right here right now, there's no avoiding the cycle. There will be better entry points.

In his equity portfolios, he doesn't try to time markets by whipping cash balances up and down dramatically. Right now, they have about 5% cash across their 3 portfolios. They moderate market and cycle risk in the composition of their portfolios. 

For more defensive, they'll go with lower beta, and more telcos and utilities. When they're being more aggressive, they'll lean towards financials, industrials, and tech. They have a parallel workflow called a bull market game plan, preparing for the time to be aggressive.

Questionable Investment Advice: New Highs Are the Best Indicator for New Investment Ideas. I scan the new high list every single day without fail. Why? Well, simply, there are way too many stocks in North America to follow. Of course, I have my list of favourites. But in the small- and mid-cap sectors, there are still hundreds of companies I have never even heard of. This is where the new highs come in. A stock that hits a new 52-week high — or, better yet, an all-time high — tells me someone, somewhere likes the company. My job now is to find out why.  Think about it: an investor who pays more for a stock than anyone else in the world ever has must really like it. That doesn’t automatically mean it is a good investment. It just means someone else thinks it is. But as a single source of new ideas, I have found it very useful over the decades.
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After SVB, regulations will get tighter on the U.S. regional banks which will be more hesitant to lend and keep more cash on their balance sheets. Leading indicators point to a macro downturn, but some data has also been stronger than expected. So, the recession we're talking about will be pushed later. Q1 GDP will be positive, stronger then expected. Also, the Canadian and US banks all forecast a mild recession. It's unusual now, because high inflation now us being offset by consumer who accumulated a lot of cash and savings during the pandemic. Meanwhile, goods inflation is declining, lower than last year. See the March numbers. Unemployment remains at historic lows.

Prefers stocks. Remember that you pay an MER fee for the ETF. Stocks perform better. But if you've done well with a basket of Canadian bank stocks, sure hold on and collect that yield. Over time, Canadian banks outperform the general market. Pay good dividends, especially beneficial in a TFSA.

Expecting one more interest rate hike from US Federal Reserve.
Believes larger banks will continue to see inflows of capital with recent banking concerns. 
Performance of larger banks should continue.
Worry of recession creating demand for certainty in large banks.
Excellent results of banks like JP Morgan proving this hypothesis.
Slowing labor markets supporting idea of looming recession.

Nothing to suggest that markets will continue to rally.
Waiting for markets to fall in order to invest.
Expecting a flat market at best. 
Labor market weakness suggesting recession looming. 
Question is how far corporate earnings will fall.

Questionable Investment Strategies: After a Big Stock Surge, Buy on The Second Day. The stock of a company that reports surprisingly good results will typically surge on the day of the announcement. Investors closely watching the stock love the news and add to their positions. But what about investors who are not watching so closely? They check in at the end of the day and see the stock is up 30 per cent. “Wow, that’s awesome,” they say, “it’s time to take some profit.” The next day, they, and anyone adjusting their position size, become a seller of the stock, and the price may check back five per cent or even more. But the thesis here says that’s a buying opportunity. Business at the company has clearly changed for the better, and these sellers are just taking easy profits without regard to what’s changed at the company. Many investors see a stock move 30 per cent and think it’s overdone. But more often than not, it isn’t. 
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