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

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.

Bonds. There is not much yield left anywhere in the world and if you factor in inflation, you have negative yield. Once we get through the deflationary effect of COVOD over a year or more, we are going to have a massive run of inflation. The Fed is planning on buying all bonds above a certain amount. The bond market will be owned by the Fed.

Copper. COPX is a basket of copper miners so you are not buying the copper commodity. Buy on the next step down.

Gold. It is extremely unlikely it will drop dramatically in the short term. He would buy into the dip. It is headed higher for years to come. When bond yields are zero or negative, then gold has no competitor.

Educational Segment. Comparison of present economic situation to that of the early eighties. At the beginning of the eighties Regan had some economic tailwinds behind him. Today we have grossly underfunded pension funds, healthcare and have a massive need for infrastructure as well as major concerns about the environment. There is a tragic demographic in the form of the ratio of people of working age to the young and old which will get worse for decades to come. There is also a massive decline in the output of labour. These are all headwinds they did not have in the early eighties. In investing, quality will be one of the most important factors.

Market. It is certainly a concern that people will not resume going into the office after the pandemic is over, impacting office REITs. He feels, though, that the world will return to more normal than not. There are a lot of things we cannot do effectively when we are not working together. 2-3 years out we will return to some sort of normal. SHOP-T will reassess in 2021 as to whether to have everyone work from home any longer. Even if a portion of the workforce has to work from home, social distancing will dictate that more office space is necessary as we resume normal life.

Big 5 Banks. He likes the banks and is adding to them as he was underweight previously. These measure to be the most resilient and strongest businesses in Canada. These things are like utilities. He does not feel they will cut their dividends.