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

Trump 2.0 will see him using tariffs as a negotiating tool to add jobs to the U.S., but there will be inflation. The debt problem is real. Trump wants tax cuts, too. His decisions will add a lot of volatility. For every 10% tariff, the US dollar gains 4%, so we're pricing in a 20% tariff across the board now. But at 8:30 am, the Wall Street Journal said that Trump won't impose tariffs, so the Canadian dollar rallied as the US futures and US bond market rallied. Risk assets rallied. Get used to volatile markets in the first 100 days. Private equity and bonds are very attractive now.

He's the wrong person to ask for a crypto recommendation. He doesn't touch them for being highly speculative. He's an investor. Pick any crypto ETF.

He expects the gold trend to continue as central banks keep adding gold among many reasons. He buys on dips, though, not on rallies.

Advantages of ETF's for Investors:

They are a great tool for investors transitioning from passive to DIY

In investing, there is no need to choose between being an exclusively passive ETF investor or a DIY stock investor. There’s certainly room for investors to do both and create their own hybrid strategy. Investors who want to make the gradual switch to DIY stock investing can also take a hybrid approach by starting with broader market exposure through ETFs as core holdings, then selecting individual stocks as “satellite” holdings. As one gets more comfortable with the risks and concentration of owning individual names and develops a more refined strategy, an investor can slowly sell off units of core ETF holdings (or take new cash that come into the portfolio) and move more towards individual names.

 There are many ETFs with niche exposures that allow you to differentiate from the market

There are enough ETFs and variety out there for an investor to create a portfolio of ETFs that he or she views as more optimal than the broad market. An example we often use is owning a TSX ETF which would be overweight in financials, materials and energy. A more optimal allocation may include increased exposure to technology, industrials and other cyclicals for investors looking for growth or utilities and REITs if one is looking for a higher yield than TSX. These adjustments can be achieved via specific sector ETFs. One can also tilt their portfolio towards smaller market cap ETFs that may have higher growth potential and are not well represented in market-cap weighted indices.

Why buy one or two stocks when you can buy the sector?

While this sounds like a rhetorical question, there is an actual reason for this: superior returns by being concentrated in a winning stock of course! But the trick is getting to a level of conviction where one can believe the particular stock is a winner in a specific indsutry. Of course, this can require a lot of time and energy researching a company and its competitors. Meanwhile, one may want exposure to this sector until deciding which name(s) to be more concentrated in. The solution: ETFs. For example, you want exposure to the cybersecurity space and are bullish on the sector in general. To not rush the decision of which cybersecurity stock(s) to pick while getting exposure one can purchase an ETF like the First Trust NASDAQ Cybersecurity ETF (ticker: CIBR) or ETFMG Prime Cyber Security ETF (ticker: HACK) to benefit from industry tailwinds and ultimately let the market decide which individual companies get a higher weighting in the ETF (assuming a market-cap weighting).

Low knowledge areas

Related to the point above, another benefit to ETFs is that they give investors access to instant diversification in areas that are far out of an investor’s realm of knowledge. For example, an investor may want emerging market exposure in their portfolio for geographic diversification. If one knows barely anything about emerging markets, it can be a daunting task to learn the ins and outs of companies in foreign countries that have very different economic cycles, regulatory and competitive. Many investors may not even want to own individual securities outside of North America and this is understandable. Again, ETFs offer a solution to gain this exposure of broader regions or specific countries. Of course, low knowledge areas for an investor can also be specific sectors in local or North American markets.

 Final Thoughts

ETFs have many other uses that we can on and on about such as hedging a portfolio’s broad market exposure through inverse ETFs, getting exposure to commodities, currencies and precious metals or even using as a proxy for exposure for the 30-day period one needs to wait before buying back a stock sold as part of a tax-loss selling strategy. The point is, given how easy ETF make it for an investor to customize a portfolio and quickly gain diversified exposure, ETFs can find a place even the most active investor’s portfolio.
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He is focused on U.S. foreign policy, both economic and geopolitical, and the trajectory of interest rates. He is looking at being overweight in the U.S. market. Some of the risk premium is coming but it is hard to understand what Trump is going to do and how tariffs will play out. There are a mix of sectors doing well. In Canada he is seeing sectors like financials,energy and materials starting to look very promising so maybe tariffs may not be as bad as expected. There is a positive sign right out if the gate.

The question was on buying Canadian-hedged ETF's with the Canadian dollar being low. if you have a balance you can't go wrong as long as investing in the U.S. market with Canadian or U.S. dollars.

The question was on buying a Canadian or U.S. bank ETF. He would migrate to U.S. financials which have much more diversity including Visa and Mastercard. You need to pick the right ETF.

Editor's Note: The question was on Harvest Premium but no symbol was given and there are several Harvest Premium ETF's. This is a covered call ETF on long dated U.S. treasury bonds. The yield is 18% so he sees alarm bells. Half of the yield is the return of your own capital.

The caller wanted a suggestion for an ETF for his 9-year-old granddaughter. You can stay heavy on growth and then dial it back as the granddaughter gets older.

The caller wanted his suggestion for a laddered bond ETF. There is Vangard, RBC and TD. His pick would be TCSB from TD bank. It is better over the longer run.

The question asked for a U.S. bond fund in U.S dollars. He suggested UBIL.U (TSX). Its yields in the U.S. are still quite strong.

Editor's Note: The question was on an ETF called RTA but no company name was shown on the screen. He didn't know much about it. Some tactical changes are being made which should add value. Had a gain of 11 to 12% over the past 52 weeks.

The question was on crypto currency ETF's. He considers bitcoin, etc. to be trading vehicles. He uses BTCC and has been talking some profits along the way. The breakout still evolves but it could turn around quickly. You can keep bitcoin, etc. as a very small portion of your portfolio as a trading investment.

Regime change in US formalized on Monday with US markets closed. 

Election in Canada in 2025, with increasing expectations that it will be sooner rather than later. By all accounts, polls favour a change in government. Only plausible change in direction policy-wise is pro-growth, more productivity, and favourable to innovation and investment. That could, and should, prompt a rerating in Canadian equities which are very discounted versus US counterparts.

He's expecting the presidential pen will be busy signing executive orders on Monday or shortly thereafter. Trump proudly calls himself the tariff man, so implausible that he'd make all this noise without actually doing something. This is a real and legitimate threat to Canadian businesses and economy and, more broadly, to Canadian sovereignty.

Our leaders would do well to take this seriously, and to work night and day to mitigate any economic harm done by tariffs enacted on both sides. A tariff war isn't in anyone's interest, it's a mutually assured destruction. Both countries have centuries of history of being friends, allies, and each other's largest trading partners. Too much at stake to let this brinksmanship take hold. 

He's concerned, but confident over the medium term that there's a win-win solution to be had.