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

CAD bank dividends safe? It is not very likely that the Canadian banks will cut their dividends. They are in much better financial shape than back in 2008. He thinks the Canadian Central Bank would make enough liquidity available -- we may pay for it as taxpayers however. The Great Depression was caused by there not being enough liquidity available for the banks. This is not a worry.

TFSA investment? XSP is based on the S&P500. He always has held this as a core holding in his portfolio.

He doesn't think we're ahead of ourselves, but responding to improvements in credit markes of the past 7-10 days. Not unusual--stock markets follow credit markets. Central banks are doing the right things, step by step, rapidly adapting, even regulatory changes to improve the smooth functioning of markets. Some of his portfolios must be fully invested, some not. He has plenty of dry powder still. He focuses on companies with strong balance sheets that have held up better than others. It's possible we've hit the bottom of the bear market. Maybe or maybe not there will be a testing of the bottom, but he feels most of the damage has been done.

Goldcorp vs. Pan American Silver He doesn't cover Canadian stocks. Gold bullion, he owns though. Gold bullion (not gold stocks) looks interesting. From 1970 to 2012, gold was a good hedge for an equity portfolio. A 5% gold holding in bullion was an excellent hedge. From 2012 to just recently, bullion wasn't acting normally, rising and falling in tandem with the stock market. Now, gold is behaving more normally. Gold bullion is not gold stocks and acts as portfolio insurance. When stocks perform well, then bullion is not and vice versa. It's a small part of his portfolios.

Market. The longer this goes on, the longer the economy remains significantly hampered and the longer it is in that state the more likely it is to remain in significant recession. If you look in history, significant corrections always take 9 months to play out. The down turn is almost mirroring the '08/'09 downturn. It states caution. We are in the relief rally phase of this market. The panic has subsided but when the economic reality comes around we will see more downturn in the markets. A dollar buys you almost 30% more dividend income than a couple of months ago. You have to look at it company-by-company. If your companies are doing things that are needed by society then you can buy those companies with confidence that will eventually get through this.

Long term hold to buy now. Look around at what we need in increasing amounts and look for the companies that provide them. This incident may have taught us to go away from nonessential consumption. Telecom, utilities, energy infrastructure banks are his core holdings. T-T are providing essential communication structure and they have a healthcare element to their business. Banks are struggling and will for a while but you can't replace that function. Utilities coming out of this with low interest rates have come 15-20% off their highs and you normally can't buy them there.

Utilities- good? and if so, when? He owns utilities in excess of 17% of portfolios. You will not get another chance in a persistent low interest rate environment like this. You would lag on a recover if we get a 'V' shaped curve. We don't know the path this virus will take but the economy being shut down will reverberate for months to come. You have to average in. Buy a bit each month or one company at a time.

Banks. He thinks the dividends are sustainable. It could be a prolonged down cycle for the banks. He expects them to maintain their dividends.

Market Outlook It is important to differentiate the short term and long term outlooks (post-2021). There is demand deferral accounting for about 26 million barrels per day, being associated to the number of COVID cases worldwide. The outlook for oil is positive going forward as we were already expecting global production to be slowing in growth and for US shale production already being mortally wounded with low oil prices. Shut-ins will begin to counteract the volumes increased by Saudi Arabia if new OPEC agreements are not worked out. At these prices, every oil company (outside OPEC) would be bankrupt -- so we know these prices are not sustainable. Companies with good hedging strategies and sound balance sheets will emerge from this. A price of $20 into 2021 could be catastrophic for some small cap producers, due to their outstanding debt.

Insider buying? Insider buying is a critical indicator as to management's belief they will survive in difficult times. The average energy CEO makes about $3.2 million, so their lifestyle would allow them to buy shares. If a CEO is not stepping up now, you should be asking, why not?

Educational Segment. Market. He suggested last week that the rally was more about a rebalance between bonds and stocks on a quarterly basis. That is now clearly what it was. Part of the legislation in the US says that any corporations that are going to need help from the government are going to have a restriction on share buy backs or dividend issuing until the loan is paid off. He showed a chart of expected dividends from the S&P and how three months ago they would go up steadily. Now they will take a dip and then climb back to what they are now in about a decade. His sleep at night portfolio (ZZZD-T) sank with others until about a week ago and then rose and has lost less than his other comparisons YTD.

EFTs Selling Holdings. 95% of units bought and sold of an ETF involve one unit holder selling to another. Ultimately when the market maker is accumulating positions and does not want to hold them, they are forced to sell them. Other than this 5% of transactions, there is no impact on the underlying shares.

Buffered ETFs – It seems they got dragged down with everything else. Go to the innovator website to see their videos. You are long the underlying, and then it buys a put and pays for it with a put at a lower strike and then a call at an upper strike. It is done at a zero cost to the ETF. The protection plays out over an entire calendar year. During an aggressive sell-off, you get a little short volatility. At the end of the year, if the market is within the range of buffered support you will not lose any money, but if it is lower like it is now, then you will have a loss. He likes the strategy and he uses them in private portfolios.

Japanese tech gaming companies. He has not looked through it nor through the sector because it does not appeal to him to invest in longer term. There has been a lot of speculation on companies that benefit from people staying at home more. He can't tell you whether these companies in Japan are better than those here.