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

Downside to IPO favourites. When a company comes out of the IPO gates a favourite, its valuation is at a premium, and it can take a long time for the earnings to catch up. Add in a sector that's facing a difficult market, and you can end up with a stock going nowhere for several years.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Key Metrics and Ratios When Analyzing REITs. Net Operating Income (NOI). NOI is frequently used when analyzing REITs as it is a good proxy for a REITs operating income and cash flows. It is used to measure a REITs profitability before adding in costs from financing or taxes. It is a good metric to understand whether rent collected from the properties are sufficient enough to cover the costs of owning and maintaining them. Thus, an NOI of greater than zero is preferred. NOI is useful in calculating the Debt Service Coverage Ratio (DSCR).

Maybe by Feb. 1, 2023, the Fed is done with rate hikes. If so (a big if) earnings may stink in the first half of 203, but the second half will look pretty good. The Atlanta Fed pegs this quarter's GDP at 4%--this is a strong economy. A recession next year is possible, but not guaranteed. Stocks have been hammered on the prospect of a recession, which does not have to happen.

Despite the rally this week, his forecast for the markets hasn't changed. Earnings will still fall significantly. Powell in mid-December will put the kibosh on the market; he will raise rates by 50 basis points. He remains bearish.

This week's rally We're not in a bear (or bull) market now, but in a long, hard consolidating process where there are peaks and valleys. We're not down over 20% anymore. Will the S&P return to 4,800? No. Peaks and valleys. You can make money, though.

Believes economic impact of rising interest rates yet to be felt by global economy. Large amounts of international leverage combined with interest rate increases are hard to predict. Less money will flow through the economy from the top to the bottom. A softer/more dovish US Fed policy does not mean a return to past historically low interest rates. Signs that tech, long bonds and Crypto starting to become priced fairly again. Positive on oil & gas as view is shifting back towards importance of the product (particularity gas). Also likes utility companies as power demand rising across Canada.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. What is a Real Estate Investment Trust (REIT)? A REIT is defined as a company that owns, operates, or finances income-generating real estate. REITs trade like stocks on major exchanges and offer investors a way to gain exposure to the real estate sector with much lower capital requirements than traditional forms of real estate investing and a steady income stream. A REIT company purchases income-producing properties, leases them, collects rents on the properties, and then redistributes that income to shareholders. REITs usually purchase properties with debt, earn cash flows to service that debt, and over time use the equity in those properties to increase their financial leverage and acquire more properties.

Inflation. He thinks about it in terms of the impact on interest rates more than anything else. Looking forward, the question is that with commodity prices having come off, are we heading for a more disinflationary environment. What's going to be the effect on the overall economy and the stock market?

Markets. Problem is when we look at the market, despite the fall we've had so far, the US market isn't cheap. NASDAQ in particular has only fallen from 60% above its FMV last November to 25% above FMV. Still not cheap, some ways to go. Canadian market is cheap, FMV of the TSX is 70% higher than the current level of the market. So that explains why the TSX outperformed the US market on the way down. Looking ahead, don't be surprised if we get another cycle in which the Canadian market outperforms the US. Canada has the fundamentals in place for a good time in the next market cycle, but that isn't tomorrow.

Dangers of a consensus market. When everybody agrees, the odds are that everybody is wrong. Today is a perfect example. Everybody was expecting US inflation to come in lower, and it was, so the markets have taken off. Going forward, we need to be careful. Inflation is not wiped out by any stretch of the imagination.

Weekly rundown on big tech. Every Friday, he posts a webinar on YouTube called FANG Friday.

Optimistic on precious metals. Have any governments done anything about their hideous balance sheets? No. Globally, the debt to GDP ratio has reached what he'd call a second-order insolvency, close to being a bankruptcy. Balance sheets either have to be fixed, which he doesn't see happening, or if we enter another expansion phase and the Fed eases up on QT, precious metals will soar.

Canadian banks. His advice for years has been to buy the Canadian banks, put them away, don't look at them. Perhaps review them in your portfolio every 3 years or so. They've just had a beautiful growth pattern.

Share buybacks. Doesn't like share buybacks, as it takes away from reinvestment. We never should have allowed them in the first place. And now the federal government is going to tax them. Begs the question whether the CEO is running a company or running a stock? The result is companies with enormous price to book ratios, but the balance sheet is in the cellar. Eventually the gap closes, but it doesn't close up, it closes down.