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

Favourite Gold Stock. It is one of his favourite asset classes. He does not pick stocks out of the group. He would rather get the right theme. Play the sector with ZGD-T or XGD-T or GDX-N, GDXJ-N or ZJG-T, rather than a particular stock.

Hedging and how. If it is a taxable account it is more robust than in a registered account. You can use inverse ETFs but you would have to be half in cash. You could go to VBAL-T. It depends what kind of account you have.

There are going to be challenges to REITs and what he likes now is the apartment REIT. He would be patient.

Strip Bonds. You HAD the benefit of falling interest rates. He thinks you will have stagflation going forward. It will prevent bond yields going up so he could not stay with strips.

Educational Segment. V' Shaped Market Recovery. Fundamentally the risk factors are equity market valuations. Earnings estimates are too high for the S&P. The market is as expensive now as it was in 2000. Markets don’t bottom until we wash out expectations on earnings. There is a lot more to do on the downside before we can get bullish.

Market. He is cautious because market valuations have increased since the lows but earnings expectations have not kept pace. He is encouraged to see the stimulus from governments and central banks around the world. The markets are reacting positively to therapeutics, vaccines and they are making investors feel comfortable that we will get through the next couple of quarters. Also, there are reopenings over the last couple of weeks and that is encouraging people and keeping them hopeful. At these levels the market is really putting a bridge across Q2 and Q3 of this year and is looking into 2021 and putting a multiple of 18.5 on forecasted earnings which are from 2019. The market is saying 2021 will look a lot like 2019. Investors should be cautious over the summer. He is worried about the situation between China and the US, a cold war, and also the US election that is coming up.

Gold. We have a nice base building in gold and it will then make its way to $1950-2000 over the next year to a year and a half. It could drop into the $1600s as well. It is the stimulus that will put a floor in gold. It is a great play, though.

Market Outlook Investors are challenged with economic data showing record drops, yet markets are almost at year highs. Market economic data has softened, but now there are inklings of things looking positive. He thinks investors should avoid sectors that have not responded at all during the recovery. Also, there may be sector rotation going on, where sectors are now performing that were not before. Investors need to be cognizant of these changes.

Canadian REITs? He thinks the trend that is expected is that office space rental will shrink. Lower quality buildings are at risk. Industrial REITs for distribution will likely do well. The bigger, well capitalized offerings will likely do better. When trends become better known, you could look for value in the aftermath of the pandemic.

We had an initial panic and not a bifurcated market: companies immune to the downturn (i.e. grocers) and retailers who are struggling. The financial sector intrigues him--there's a 5-6% bump today. Yes, stimulus is driving this rally, but we still need consumers to drive it until there is rigorous economic activity. Very low interest rates will remain a drag on banks, but they will adapt, such as using more technology.

Is there really a V-recovery? For most U.S. stocks, like the banks, they haven't seen a V recovery. Remember that stock markets look to the future, so some investors are optimistic, while others are more cautious and expect a slower recovery. The market does not reflect the economy, necessarily. Tech stocks, like Amazon and Google, are driving the markets, while other stocks remain 20% down. This is a bifurcated market. Nobody really knows what the recovery will be. Also, remember that fiscal stimulus lasted 3-4 years after the recession, and there was slow economy growth. Don't be surprised if this happens again. Does your optimism about the recovery match the market's?

Market. We went through a number of phases since we went to market lows at the beginning of the pandemic. The market has looked at support from governments and so on and now we are in a re-opening phase. We need to see how that goes into June. Markets are a little bit too optimistic about a 'V' shaped recovery and he is encouraging clients to take a bit of money off the table. The market could continue going higher through June if COVID numbers don't overwhelm the healthcare system. At some point if the market is not getting guidance from companies on earnings then it could take money off the table by the fall. Investors are gun shy about putting money to work in the banks. The banks are providing some value right now.

Market Outlook He thinks there are two classes of stock out there -- the strong and the weak. He is confounded about how this market continues to rally back. Those strong companies continue to thrive, the weak are struggling. Companies are re-tooling and this may make some companies stronger. Although there may be fewer companies at the end of this and this may not be the best scenario for consumers. He is also hearing that some companies are looking to expand their scope of business, so it will be very dynamic. Earnings are being priced out beyond 2021 and almost zero interest rates are making stocks look attractive. He thinks gold's recent rise is on the back of higher debt levels globally, which are highly correlated together. He prefers to own physical gold.

CAD $ ETFs in other countries? It depends on your view of the Canadian dollar. He is not bullish on the CAD. He would not be afraid to buy the US dollar equivalent for other country ETFs. He would caution about being too clever about moving away from the US markets, which have a good thing going.

Market. They EU is going to back a Euro bond. It is yet more effort from government to put unprecedented support behind the response to COVID-19. The world is awash in debt and they are throwing more debt at it. They will eventually have to monetize it. There is the battle between the US and China and between China and Hong King and these are just more hurtles to get over. China has dropped its economic growth plan.