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

Current yield vs growth? Both dividend yield and growth are important. The longer a company has been around, it really depends on the commitment to that dividend. He considers the yield as part of his client's total return. Since fixed income does not provide enough return, he looks for companies that are committed to paying a material dividend.

Market. He does not like the market here from a valuation perspective. The market is seeing something he is not seeing. He thinks there is a lot more economic damage to come. Today there were numbers suggesting quite a bit of job recovery. He does not see the US dollar selling off a whole lot more. The Canadian dollar is trading along side the US dollar and he does not see it getting a whole lot stronger.

Another Market Downturn Still to Come? He thinks we will not shut everyone down during a second wave. We are more prepared to handle this round. He still thinks we could get to the lows of a few months ago at some point, maybe a bit below. The fundamentals of the economy will not come back as rapidly as the decline took place.

Gold ETF recommendation. You are not early on this story. It is his favourite asset class by far. However it will be extremely volatile for the next couple of years. Once we get through the deflationary time it will be an inflationary one. ZGD-T for equities. GLD-N is the biggest ETF for gold. [Larry's audio connection was too broken up to capture other tickers he mentioned].

Educational Segment. The bond market is broken. The message is different than from the stock market. He looked at a Fed fund futures chart; he showed how they backed off a little after employment numbers this morning. The chart is suggesting a zero Fed Funds Rate next year. He expects negative interest rates. On a chart of Euro futures, the curve goes out for a decade at no more than 1.5% central bank interest rate. There will be no rate hikes for the foreseeable future.

Market. He has been surprised by the strength of this rally amid economic gloom. The question is if the Fed can get people back to work. It is probably going to be a slow return to work and a show recovery. There is the tech stocks, the mega caps. But some mid-cap stocks are down 30% on the year. If the market is correct and we will get back to work quicker than we think then there is opportunity here.

If you have cash for 90 days, If you have cash for 90 days, there is no substitute for just leaving it in cash.

Gold and Silver have been reaching recent highs – forecast? He does not actually buy or short gold stocks. They are quite volatile. They have an emotional component or a currency component to them. He is coming around to owning gold for individuals who want to own it because of the massive central bank stimulus. This is one of the only assets that can stand in in a deflationary environment.

Renewable Energy – Which is the better choice? NPI-T is the one he would prefer. A lot of money is moving out of traditional energy into renewable, as mandated by the funds. They are all reasonable.

Market Outlook He thinks the last 4 weeks have shown a shift towards opening and the market is responding. Volatility has backed down below 26, the lowest level since February. We are seeing broader gains in value and industrial and even banking stocks. He thinks there will be a shift in supply chains. There will be on-shoring and tightening up of supply chains. This quarter is expected to be weak and there will be still be a couple weaker quarters yet to come. But after that we should begin to see good organic growth.

Canadian Insurance and low interest rates? He thinks the valuations of these holdings, trading at 0.6 times book value, and 6 times earnings are good value. Premiums continue to come out of people's accounts, so he would not count them out. He likes the solid yields. You could buy and tuck it away, along with a good dividend.

He expects a vaccine sometime next year; the market is making a big bet that at least a treatment will emerge. This is a pretty fair bet. Governments have no choice but to pay people to stay home or else they'll riot in the streets. No one knows what will happen to the economy. He came into March holding 25-30% cash and spent half that, but was caught off-guard by the rally. So, he has sold some stocks to raise cash. He sold some of his cyclicals.

Sitting on a lot of cash. What to do? Start buying in underperforming areas, like Canadian banks and some consumer stocks. The banks offer good dividends. Insurance companies have also been beaten up and worth looking at. You can buy a little in these areas without undue risk.

Cryptocurrencies: will this be the future and completely replace cash? Only buy what you know. He's never gotten a satisfactory answer about the value of cryptos. So, he's steering clear of them. Every central bank now is printing money; world banks won't reset and aren't going anywhere.

A long-term bond or ETF in oil and not buying an oil stock Oil/gas bonds in Suncor or CNQ pay only 3%, or else you buy indebted oil companies that may not survive. He avoids commodity stocks. Oil needs to rise past $55 to really thrive. This could be a depressed industry for a while. Cash is a good idea.