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

Market Outlook 2020 has been marked by the COVID-19 crisis, both by the plunge and V-shaped recovery and now the rise in cases. We also have a major US election this fall and escalating China trade concerns. Resilient business models, recurring cash flows and manageable debt levels -- exactly where infrastructure stocks fit. They have previously trimmed airport and energy exposures as the dividends are at risk. They are focusing on renewable energy and technology infrastructure, which has resulted in 15 dividend increases this year averaging 7% growth. Cloud computing and remote work location communication are all part of the technology push.

Pipelines? As an investor you should never put a lot of value into something that is a binary (go/no-go) decision. If the project does not go, you may have taken on too much risk. Given it is so hard to get a new pipeline built, the value of the existing pipelines is actually a lot more than the market gives it credit for. He thinks there will be room for two major pipeline projects and no more going forward out of Canada.

5G infrastructure? 4G tops out at 100 mbps, while 5G is supposed to be 100 times faster. It will allow streaming and open up new opportunities like autonomous driving and fast, real-time processing. He likes the cellular towers infrastructure plays. Wireless carriers, like Telus, Bell and Rogers, face far too high competition to be attractive.

Airports? There are not many Canadian airports that are listed. He thinks there is still a long way to go to get back to previous air travel levels. International business travel will need to get back up and that is no where near getting back to where it needs to be. He expects to see more weakness in the space over the next few months.

Electrical storage companies? This is a space that is still in its infancy as battery storage is still being developed. His preferred way is to look at renewable energy companies. As users of batteries on site, they can provide energy 24 hours per day. These companies will be beneficiaries of this new technology, but they won't have to take on the risk of developing this new technology.

Market. There is going to be a moment where the markets realize there is not going to be a 'V' and we are still in wave one and there is going to be a wave two. Right now it is all about the Fed and all the money they are throwing at it. He is bullish technology, however.

Percentage of Canadian Banks in your portfolio. 25% of the TSX is banks. In a taxable account you want the benefit of the dividend tax credit. In a registered acount, you don't need to focus on Canada. 25% of your Canadian exposure should be banks. This is if we DON'T go to negative interest rates.

ETF Recommendation for Growth and Income for a 70 year old. He pointed out that this is part of financial planning where one figures out how much capital gain and how much dividend you need to live on, as well as to determine how much risk you are comfortable with. It is not as simple as recommending an ETF. Cyber security is an area he really likes. CYBR-T is an ETF that covers this. This sector has tripled in a year and a half. One would have to be able to handle the ride in this stock. You would have to buy the dips. This will not be a good dividend payer, however.

Educational Segment. On-line Brokerages. A 20 year old guy was trading spreads and miss-read his on-line statement and felt he had made a colossal mistake and he committed suicide. Larry looked at rates of opening new accounts with on-line brokerages in the US, which have spiked during the COVID shut-in. He is worried about people doing crazy things – it's like a drug. People should need to take a course before being allowed to open a discount brokerage account. He would encourage viewers to take a look at his YouTube Channel.

Market. The market is looking at the rate of the change of the economic data. As long as it continues to improve and we don’t see a second wave, then the market will chug along. We will need some follow through with third quarter earnings. We will have to see what happens with analysts expectations. Everyone is watching US hospital capacity and to look to a second lock-down if they exceed it. The market would take a leg down in that case. Technicals show an improvement in the last couple of months. Monday is coming into the markets in a wholesale fashion.

The future of gold: he's been keen on gold for two months. Gold has broken $1,750 and on track to have its highest quarterly rise. He sees further upside in gold as well as copper. Often, both are mined and found at the same time. Teranga and Centerra will be huge cash flow generators in 2021. The small-cap gold stocks will also do well but are more leveraged than the large-caps who should do better. (Check his top picks today.) The long-term bull market is intact, but he feels we're now in a 5-7% pullback in the next 4-6 weeks, because North American stocks are overbought. But gold will continue to be strong. Long-term, the bull market still has 18 months to go.

Market. People need to look toward some kind of strength of track record of management and strength of balance sheet. Retail, hotel and airline industries are going to be very tough industries. The recovery is going to be a very rocky road and we are going to see a lot of bankruptcies along the way. It is going to be a touch environment for the next few years at least. The market is very short term in its orientation. FB-Q and GOOG-Q are facing regulatory headwinds at present. The carnage to the economy has yet to be tallied. The banks will survive.

Which company in the oils sands would he like to buy? All energy companies are going to have a poor year, this year. As the recovery takes hold, demand for energy should increase. SU-T would be one of the better places to be. It is well financed and has a good balance sheet. It is also quite diverse, covering up stream to down stream operations. It has the capability to pay a dividend throughout this crisis.

Market Outlook If you have held good companies they are probably still doing well during the pandemic. You need to see companies that beat their cost of capital consistently, have a good balance sheet and can take on debt safely to build their business with good cash flow generation. COVID-19 has changed the way we look at businesses, with a move to more mobile strategies. The PE ratio of the market is in the top 10% of history, while the economy is in the bottom 10%. This is not like 2008. There will be unanticipated events in the world, so therefore most people should be cautious and patient rather than making big decisions in their portfolio right now. He thinks retail companies will suffer post-pandemic, especially smaller retailers. Oil and gas will also continue to suffer due to a slower growth in the economy. E-commerce companies will benefit.

US Bank stress testing? US banks may have a couple of difficult quarters. They are not expensive, trading at 10 times earnings and trading close to book value. They are well capitalized, and will not be allowed to increase their dividends. The big banks will get stronger as they can spend money on technology to make them more competitive and reduce their cost structure. The pandemic is pushing this move sooner. From a regulatory point of the view, the US Fed has done the right thing.