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

Total return ETFs work on the basis that there are no distributions being paid. To do the swaps they have to have counter parties. He does not see a lot of risk with the counter parties, however. He does not see a tax risk, or a counter party risk. Horizon have a good piece they can send to you on the structure of these ETFs.

Horizons Total return product vs. a Vanguard product. It is a case of whether you want taxable distributions or not. He tends to use Vanguard because most of his clients are older and want distributions.

Bond ETFs, Canada and US – Buy, Sell or Hold? When COVID came up he sold all of his bond ETFs and has not budged since. Now the returns are so meager that he is not buying them.

Pfizer's vaccine news sent markets soaring today. However, the Nasdaq lost 1.53%. Sell REITs in offices and malls. Dump oil, because producers keep turning out volume whenever prices spike. Restaurants will see an uptick in 2021. Banks will earn more money as interest rates rise in the near future--sell into strength. Airlines of course will rise. Rails and industrials have had a good run, but are getting long in the tooth. Covid stocks like Peloton and Zoom Video will see multi-day sells, but we still need to get through this winter with Covid cases. Apple will do well under Biden, encouraging business with China. We would have rallied today anyway given certainty over the US vote. Covid names will continue to sell this week as the recovery ones continue to thrive.

The policies under Trump were affected by his mood, whereas with Biden you get more predictability. The markets are selling off today due to uncertainty. Looking forward, we could get a vaccine soon which is driving the markets too. A Biden presidency is probably better in the longer term.

Vaccine. The markets tend to be forward looking. There are over 230 vaccine candidates in production. News that there is a vaccine available would be very stimulating as this would allow for workers to get back into the office as well.

The market is bifurcated. There is high growth that has responded well, particularly non-profit making tech. There are some companies that have proven dividend payout and growth, yet the market does not seem to care for it. He is looking to put capital to work in the best risk adjusted basis. However, we must wait and see still. Asia will rally with a Biden win.

Residential REITs. There is legislation and backlog in landlord and tenancy board that makes it hard to get non-paying renters out. In the near term, there is credit risk and balance sheet risk. Longer term though, people need to live somewhere and REITs could be interesting. Residential REITs would be preferential but in areas with buoyant employment where it will recover. The valuation in industrial REITs are rich, and retail is problematic.

All eyes are on next week: On Monday, we'll know who won the election. What to do? Nothing. We will still have divided government. Oil is a no-go under Biden, but expect better relations between the US and China, like a truce in the trade war. Next week will be unpredictable in a crazy market, but he remains bullish. This week was the best in years.

How should investors play the US election results? A lot of election related uncertainty is dissipating. At a minimum, the "blue wave" has been taken off the table. Investors had been cheering the fiscal stimulus anticipated by that wave, but simultaneously fearing the strong likelihood of corporate tax increases. Divided government is often a good scenario for the market and the market is responding positively to the likelihood of a change in occupancy at the White House.

What about the interest-sensitives? Not all are created equal. Utilities or pipelines own stable, recession-resistant assets with predictable cashflows. If cashflows are valued at a discounted rate, the value goes up. On the other hand, financials are favoured by a steeper yield curve. But a recovering economy would help their loan losses roll over.

How are you viewing today's markets? It'll be key to see if today's action is a one-day wonder and things taper off, or if the strong reaction continues through November. The markets were reacting positively to the possibility of a blue wave and unification of government to enact stimulus. This has turned around, so we'll have to see how it plays out.

Are you making any trades today? Absolutely not. Sitting firmly in place. Positioned for a longer-term view with the background of this pandemic. There's going to need to be a coordinated global wave of infrastructure spending, focusing on the energy grid. Putting people back to work and stimulating the economies should result in big infrastructure spending. The contested election results are just a blip in time.