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

The recent sell-off Historically, September strikes fear in investors. We some tremors mid-last week in tech stocks. There are three meanings: 1) the ghost of September is haunting us and foretelling volatility in the COVID year and amid U.S. elections; 2) the cracks in the tech stocks foreshadows a long-awaited rotation into growth and cyclical stocks; and 3) the recent sell-off means nothing at all and sell-offs in FAANGs like Apple are a blip as these stocks continue to rise. Make sure your portfolio is positioned for any of these fates.

Silver outlook after recent run-up He's not a commodities expert, but gold and silver are in primary bull markets. Gold is enigmatic, especially--so, obey what the charts tell you. This means, when gold makes moves, it makes BIG, bold moves, not small ones. Gold could go much higher in years to come. Silver is like high-beta gold with fewer markets and less participation from central banks and ETFs. Silver has more industrial uses than gold, so if there's a broad recovery, silver should do well. We're in the early stages of a recovery, and he expects gold and silver to do well.

When to sell a stock? First, you'll be right and wrong when selling stocks in your lifetime. Don't be emotional over a loss, but determine why--important. Other times, take profits when you have a major winner, but keep a core position. Other times, you rightly thought that a stock would grow, but now the valuation is rich and the catalysts for growth have gone--take your winnings and buy something better.

Put the tech stock weakness in perspective. It's entirely normal, and we see it 3-4 times every year. After the enormous run-up, no one should be surprised about the 3-day drop.

The discounted dividend is one measure of the true value of a stock. Interest rates are close to zero. In the old days, if we discount Apple's dividend by 5%, you can come to some sort of value. But discounted by 1/2 of 1%, the discounted dividend model would suggest that stocks are much more valuable today than when interest rates were higher.

Will we have a directionless market until the result of the US election? Three major areas of uncertainty. Most important is when we might have a Covid vaccine and how effective it will be. Secondly is whether Congress will provide protection for the millions who've lost their jobs. The third thing is the election result and whether it will be respected.

Is the current disparaging of the US election process, with very little evidence, depressing? Depressing and scary. If you value democracy, you have to value the institutions that make democracy viable. If the results are questioned, the entire process is devalued.

Today's bounce-back following the fierce sell-off of tech No surprise there was a rally today--sell-offs tend to last three days, then tech bounces back. But what shocked him was the heavy buying in industrials, retail and especially railroads. We saw a recovery in both COVID and recovery stocks today. Everything. Tech sellers exhausted themselves. It wasn't just a tech rally--industrials and retail had a great move, like Caterpillar. Not to mention Home Depot. Investors circled back to tech names that just had good reports, like Zoom Video. You can't pin the tail on every donkey--sellers ran out of stocks to sell. We don't know the cause of this rebound or if it will last.

Current volatility Are we in a bubble that will burst or buy-and-hold? The solution is to diversity your holdings and invest with humility and caution. Diversification during COVID: put money in a cheap index fund as your foundation, then pick stocks from various industries, like Bristol-Myers and Campbell's Soup because people eat at home. Dupont is down now, but should rise--buy aggressively. The bubble stocks like Zoom Video, their businesses are here to stay, and could turn into the next Shopify and their lofty valuations today will appear smaller in the future. Value cash, so you can buy on weakness. Don't go all in with the bulls. Stay diversified.

September outlook using technical analysis by Carley Garner - https://en.wikipedia.org/wiki/Carley_Garner So far, this September is in line with seasonality, as ugly as it has been. It's possible we could see a very bumpy ride to the end of the year, though there may be short-term upside coming. IN march, the S&P broke below its Dec. 2018 low as the Nasdaq held on, then the Nasdaq started rolling, breaking resistance (last seen in 2017) in July. To compare, the S&P tested its resistance only last week then immediately broke down. Both indices have given great returns, driven by FOMO and momentum. As long as it holds above its support at 3,280, the S&P can ride higher in the short term to all-time highs. Long term though, while the Nasdaq's RSI has broken higher to a new high, the S&P's has not. A weekly S&P chart shows this. The S&P's RSI couldn't break 67 even though the S&P made new highs last week. A similar thing happened in January 2018. But there's a strong ceiling of resistance at 3,660 and it's unlikely to break above that. And what if it the S&P fall below 3,280? Answer: a furious correction to as low as 2,750.

Canadian vs. US banks 5-10 years ago, he owned both kinds of banks after the recession because they fell to such low levels. Great investments then. Long-term worries now are that interest rates will stay low, which will limit banks profits. The valuation compression on banks will be long term. He still owns TD an RY, and in the States, Berkshire Hathaway and EVR. When the economy recovers, so will the investment banking business. Banks are still good to own for long-term investors to collect the dividends. For now, be cautious with the banks. He's underweight.

After the tech run-up this summer, we were due for a pullback as we enter the fall. There's still uncertainty over restarting the economy and whether cases will increase this fall, plus the US election. It's natural to pullback now. He's still positive long term and expects a good buying opportunity this and next month. He's getting ready to deploy capital in the coming weeks after raising cash. He isn't buying today, but waiting. Another 10% lower he will buy. The rise since March has been so big. There's a lot of cash on the sidelines waiting to get in. The oil sell-off: there was a natural bounce-back in oil driven by the reopening of the economy. The move down now reflects economically uncertain times. Oil remains a bellwether of the overall economy.

Market weakness. He believes we will continue to see weakness in the next couple days. Markets have largely given up the gains from August in a matter of days. It's probably healthy to see a correction.

Tech bubble. There are different pockets of instability in the markets. Fundamentals have not changed but there is more expectation in the market now pushing the price higher. The companies today like Google or Amazon have good cashflow and are redeploying capital to grow. It is more by stock than the broader market.