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

Buying on Market Fears:

Being a contrarian in investing can be tough, and the difficult part is it is never quite clear if being a contrarian about a stock is right or wrong, until enough time has passed. I find that the more worried and concerned I am about buying a stock, typically, the better the decision it has been to buy. It is when I am excited about buying a stock, or the decision seems too easy or comfortable, that I have to second guess myself. The reasons to this are fairly logical, when a good, high-quality stock has dropped by a lot, it can be nerve-wracking to buy at that point, as many thoughts may be going through one’s head – ‘did I miss something’, ‘is there more downside left’, ‘has the narrative changed’. But, usually in hindsight it has been a good buying opportunity, and it is important to battle through the emotions following a large price decline, and ‘buy the fear’.  
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There's a good chance that the Fed won't cut rates until 2025, given that the US unemployment rate is 3.7% and GDP is rising. Housing markets remain good. Long-term bond rates are too low; you're not getting real returns to justify holding a 10-year bond. He used to recommend corporate bonds 100%, but recently has been adding government bonds given the tight spreads in corporate. Also has been adding floating rate bonds where rates are well over 5%. Investment-grade and junk bonds are extremely tight, near historic spreads. Due to compounding, high-yield bonds are outperforming everything.

Doesn't like preferreds; they lack the growth of equities, are volatile and lackthe safety of bonds, though you get the after-tax yield. Bonds are the better option--you know what return you will get.

No. The investor doesn't get a good deal while the underwriting collects a profit. Find one yourself, a 1-year maturity that pays a better yield. Better to buy-short liquid notes with your US cash.

He definitely prefers dividends, the bigger the better.

Each are A-rated bonds. Very flexible.

Govt of Canada 0.5% bond, December 12030. 

It's in the sweet spot of the curve and offers a good 4.3% yield, relatively. Only 3 years to maturity, good risk/reward.

Don't buy preferred shares without resets.

TPO PICK: LYZ801F: It holds corporate-value funds. A good performer with a track record.

PIC3501: It's a long short fund. No MER. The manager shorts credits when he thinks they're expensive. Has done well over time.

It's classifying retail investors and their money flow. Not that retail investors are dumb, but that they're traditionally less sophisticated than, say, Warren Buffett. 

We can track money flow by following ETF and mutual fund flows, small lot trades. He pitches that against people like Warren Buffet, Teachers' Pension Plans, and commercial hedgers. Those would be the smart money. When the two are at opposite ends of the confidence levels of who's selling and who's buying, he has leading signals that say perhaps we need to be cautious or we need to be aggressive. If dumb money's selling and smart money's buying, maybe he needs to go in, or vice versa.

There's evidence to show that retail investors get it wrong more often than the pros. He's even written a book on it. There are lots of indicators to look at, like the put/call ratio and the VIX. So when retail investors are bullish, that's a bad thing; and when they're bearish, it's good.

Again, these are leading indicators. When big money is selling and getting out, you want to follow the smart guys. There's a point when they're going to start buying again. When retail people are bidding up, it's not a bad thing since it pushes the market up. But at some point, you hit the point of Greenspan's "irrational exuberance". 

Yes, their confidence levels are lower. It's a leading indicator. Doesn't mean that tomorrow the market's going to fall. But it does mean that the market's setting up for a correction, whether it's next week or 3 weeks from now. He's put some charts on his blog, valuetrend.ca. 

Things get overbought and they either fall, consolidate for a while like a yo-yo up and down, or go up again. Trends have to take pauses to be healthy. So the story might not be very exciting for a while.

He's always looking at peaks and troughs. Don't get too complicated with your analysis.

A series of peaks and troughs getting lower and lower is a bad thing. But if you have a series of lower peaks, but the troughs are more or less flat, that's another way of saying that's a consolidation. You're looking for that sine wave, up and down, type of consolidation. But it doesn't have to be a nice, even pattern. Just has to be a discontinuation of the pattern of lower highs and lower lows. Once it breaks out, it's really good news.