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

Doesn't own any Canadian banks. Banks and financials aren't what he wants to include in his stable. Banks don't really have a lot of opportunities for excess capital. Some have done acquisitions with varying degrees of success, but mostly just pay out a large chunk of earnings in dividends. Scale advantage, favourable regulatory environment. Further competition in the space erodes their moat. If he were to own any banks, the two that stood out when he reviewed them 3 years ago were TD and RY.

The world is in more debt than ever. As you increase debt, you're borrowing from future consumption, and recent growth rates start to drop. A famous study shows that once debt to GDP gets greater than 90%, adding more debt starts to inhibit growth. Debt is worse than before the pandemic. Demographics aren't favourable for growth going forward, nor is productivity. His best guess is that we'll be in a fairly low interest rate environment for quite some time. If you feel that interest rates and inflation are likely to stay low for the next 5-10-15 years, absolutely long-dated government debt will provide you with the best bang for your buck. 

What’s the difference between Mutual funds and ETFs? The most distinctive difference is that most mutual funds are actively managed whereas most ETFs are passively managed. This results in a simpler structure for ETFs and in turn, lower overall fees. Fewer internal transactions, less management and the lack trailing and commission fees all contribute to making ETFs a very low-cost way of getting specific investment exposures. It is not uncommon to find mutual funds with fees over 2% of assets, while the majority of ETFs are below 0.5% on fees. That difference can really add up a lot over time! 
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He's watching inflation and interest rates like everyone else. Maybe we're moving toward a more normalized world. Rates are doing their best to stem inflation, which is not demand-led by a supply-shortage-driven inflation. This will take time. Rates won't go down quickly and would be surprised there are any cuts by year's end. Fundamentals will remain very important--good earnings and balance sheets. Will be a volatile period, so be prepared.... Western markets don't want to be so dependent on China, but that will lead to inflation, because the west will buy fewer, cheaper Chinese goods.

Tips for beginners

Buy a long-term ETF like from Vanguard, then overlay with a bank stock for stability. If you have more risk tolerance, consider TFII or Couche-Tard with a long-term growth horizon. Consider the PE you're paying.

Performance Metrics when Evaluating a Fund: Benchmark Holdings indicate the overlap between the portfolio holdings and the benchmark set for the portfolio. The ‘active’ measure in the third column measures the percentage of the portfolio, as position weight, that differs from the benchmark index. It is a metric quantifying the level of active management within a portfolio. While this metric might not give a whole lot to an investor, investors allocating to investments with a higher portion of ‘active’ holdings typically expect a differentiated return profile relative to a passive or a benchmark-driven portfolio. 
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He has faith that Jay Powell will engineer a soft landing for the economy. Don't sell now, or else you will buy back those shares later for more. Bulls say that wages have barely budged, there are major layoffs happening, Friday's unemployment number was an anomaly, China and Europe are bouncing back, and Powell learned his lesson of Dec. 2018. Bears say that Powell created this inflationary pressure, wages will rise regardless, layoffs are confined to tech, the unemployment number is correct, and a bouceback in China and Euro could fuel inflation.

Oct. 7 saw a confluence of five Fibonacci cycles (potential reversals in the stock market). The week ending Feb. 24 points to a confluence--and a pullback. That pullback is not guaranteed and may not happen, but be prepared so you protext your profits. 4,192 is the current ceiling of the S&P, which the index just touched. The S&P could struggle to break past that. There are signs that this current rally is running out of steam. He thinks that even rallies like this need to take a breather.

We're doing fine without a recession so we don't need one. Inflation is down, job growth is stunning. Tech firms are laying off workers but they are small portions especially in light of the huge numbers that had been hired over the past few years. Google is even hiring in some areas while laying off staff in other areas. Rates could probably go a little higher but it pays to be optimistic and bullish as opposed to bearish. Technically we had a recession in 2022. Actual returns in recessions are hard to know and a normal recession usually doesn't hurt the market too badly. However the ones we've been having lately aren't normal. He feels that a lot of things have peaked in terms of worries, inflation, and interest rates so he will stick with stocks.

Paying attention to US tech sector and recent earning results.
Earnings trends in major US tech companies(Apple, Amazon, Microsoft etc.) will affect Canadian holdings.
Cloud growth still at high 20% growth rate. 
Seeing lots of opportunities in markets, as recent selloffs have reduced share prices.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research.

Understanding Investing Assets.

It is important to know what the main investing assets are and their differences (i.e. stocks, bonds, real estate investment trusts (REITs), exchange-traded funds (ETFs), gold, commodities etc). Each asset class ‘behaves’ in its own way. Having a mix of these assets provides investors with diversification benefits and helps impk. The mix and weighting of each asset class is also connected to how much risk you can take and the time horizon you set for your goals.

For example, it is important to understand that equity ETFs (exchange-traded fund) represent a basket of stocks and is very different than owning an individual stock since the former gives you a lot more diversification than the latter. Unlock Premium - Try 5i Free

The trend is that this is still lagging data, seeing last year's results. Numbers have been reasonable -- not blowout, but not as negative as was feared. It's going to be more about how does 2023 unfold as the rise in interest rates gets digested for a full calendar year. 

The story maybe has played out in terms of YOY increases, but the squeezing of the economy has not yet played out. Consumer wages haven't kept up with price increases. Wages have recently ticked up, but on a 3-year basis they're well behind increases in food, energy, and broad CPI. Now increased interest costs are also squeezing the consumer, and we're only 6 months into that cycle. As that plays out across a full year, plus the view that durable goods were stocked up during the pandemic, the earnings story in 2023 gets worse and so does the economy. The market's saying we're going to get both a soft landing and a decline in interest rates at the end of the year, and he doesn't think you can have both. We might actually get neither, and the market is not properly discounting that.

Currently up to about 15% of a portfolio. The big difference from last year is the rate we're getting on cash balances, nearly 4%. At that rate, you can afford to be patient for a few quarters. When rates were low, there was more impetus to get that money invested. Notwithstanding the very strong market action over the past week or so, we may yet see a significant buying opportunity open up. Remember that last year, too, markets looked very positive in the first few months.