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

Hyperinflation worries? Companies that are not price takers are the best in a hyperinflation situation, where prices rise sharply. Technology companies can -- like MSFT.

The virus surge in the US and elsewhere reflects complacency, since past outbreaks have had second waves. It's tragic. Expects these flare-ups in coming months. Investors have to be positioned for this and as citizens expect draconian lockdowns. Don't time the markets. The market now has high expectations and has been complacent about a second wave. He seeks defensive names, but also stocks exposed to a cyclical recovery happening now--a barbell approach. Caveat: he seeks companies with strong balance sheets to survive a sustained recession. Hot potato stocks like cruiselines have seen wild swings, partially because of novice traders.

Market. The big tug of war is when inflation is going to push interest rates up. He thinks we are in a deflationary period. At what point do we get serious inflation and what does it look like. We have to position portfolios for it. He looks at the velocity of money. Really, printed money is finding its way onto banks' balance sheets and it is their job to find a way for that money to get out in to the economy. There are greater deflationary pressures than inflationary pressures but you have to keep an eye on it. Inflation is unlikely but you should see how much money they are printing in Japan. When Japan started doing this there were fears of runaway inflation but it did not happen. Gold could challenge 2011 highs. There will be a period of consolidation and then it should move higher.

Canadian Banks. There is not a lot of innovation going in so it is how they operate and what is the environment that matters. The banks don't meet his criteria on return on invested capital. There is always the threat of being disrupted. If he did buy one, it would be TD-T or RY-T.

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.