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

Essentially the Fed today announced that they had created an unlimited amount of money to backstop financial markets. They are buying everything from investment-grade ETFs to the bottom of the investment grade investment spectrum. There is a hope that the triple B investment credit does not slip. This is a very inflationary policy and is very bullish for gold. The playbook from 2003 for this market is playing out perfectly. We removed the froth from the market. We are in the phase after 2009 where it took 2 to 4 years to see them get the recovery of the multiples and earnings. At some point we are going to see tremendous value develop in the S&P and global markets. Pull-backs in gold and gold equities are just opportunities to get on board. Crude oil bounced around the $20 area and could go to $15. It might take a month or two to shake this out. Buying oil here is a no-brainer. Don’t go to the speculative names. Stick with those with better balance sheets.

Market. He is surprised the market is not moving about 1000 points up due to the fed's morning announcement. But it may be that the congress has not got its act together to pass its bill on the fiscal stimulus. It is more important to prop up the credit markets than the stock markets. The extent that people are stuck in their homes are practicing social distancing, that is also an impediment to economic activities. It is important to put money into people's pockets so they are spending even though they are not working so the economy does not go into a real nose dive. We are seeing a lot of panic in the market. Sound businesses without too much debt are going to come back. Speculative stocks that never had profits that maybe have unsound balance sheets and not a lot to rely on, you may have a serious problem with them. You are seeing unrealistic prices here on good companies.

Borrow Funds now to increase Equity in an RRSP? He is never in favour of leverage. The last three weeks are his reason why. Some stocks fell extra quickly because shareholders had margin calls and had to sell. Buy stocks in your RRSP now that prices are down but don't borrow money to do it.

If REITs are interest sensitive securities, shouldn't they be going up, rather than down? Yes, if you believe their tenants can pay the rent. It seems some think they will not be able to pay their rent – even in apartment REITs, which is absolutely dumb.

US$ - when to convert to CAD$? Currencies are difficult to forecast. A lot of traders view the CAD$ as commodity driven. The CAD$ is not viewed as a safe haven currency. Based on the cost of a basket of groceries, the Canadian dollar is worth $0.82 US, vs. the exchange rate of $0.68, so you should convert them now.

Market Outlook He is not looking to buy back in all the way yet. The speed of the draw down is impacting other markets like commodities (oil down another 10%). There is no where to hide, except in cash. They are watching how different countries are reacting to COVID-19. South Korea took the course to do as much testing as possible, finding people who could have spread the virus, but were able to be contained. Very challenging times.

Gaming stocks? In the "stay at home" bucket -- what people are going to do when isolated at home. Activision is their most favored stock that they hold in this space now.

Big 6 banks in Canada? Yielding 5.8% collectively. The Canadian banks weathered the last crisis better than their US counterparts. He thinks the Canadian banks will survive this. They are not impervious to COVID-19 and the interest rate curve is not helping either. He does not call for negative rates in North America, but where the curve ha fallen, it is impacting profitably. Your are safe holding in the long run.

US Healthcare? Healthcare generally under-preforms in election years. A safer pick would be GILD, for their COVID-19 research and HIV drugs.

US Healthcare? Healthcare generally under-preforms in election years. A safer pick would be GILD, for their COVID-19 research and HIV drugs.

Gold levered ETFs? The US dollar has been on fire lately, crushing all other currencies. This is generally not good for gold. He likes gold as he thinks interest rates will stay low for a long time to come as the opportunity cost to hold gold is dropping. He was surprised to see how much gold has fallen lately. If you don't understand how futures curves and swaps work you should avoid buying levered products due to the inherent decay in them.

Gold levered ETFs? The US dollar has been on fire lately, crushing all other currencies. This is generally not good for gold. He likes gold as he thinks interest rates will stay low for a long time to come as the opportunity cost to hold gold is dropping. He was surprised to see how much gold has fallen lately. If you don't understand how futures curves and swaps work you should avoid buying levered products due to the inherent decay in them.

Small caps? Small caps have historically out performed bigger companies. However, coming back to safety, big players that can still grow earnings at 20% are the safer way to go. Stick with the bigger names for now.