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

US vs CDN Large Caps? Their view is that the US landscape is generally more favorable for valuations and diversification -- more tech and larger companies that are able to sell into larger markets. Tech companies in the US tend to have good capitalization and strong demand. He would prefer the US Index.

Out of nowhere came the coronavirus which hit the energy stocks of the TSX (and the U.S.). A rebound had to come. Surprisingly, investors are brushing off this scare, though he hopes the virus doesn't spread. Canada will do very well with this rebound, because China is a big user of our products. The TSX hit a new high today, but over 10 years it still badly lags American indices like the Dow. The Dow is way up today because of health stock soaring....He always believed in Tesla and still recommends it. Sometimes it's not bad to pile onto a bubble--but you don't lose money taking profits too early, either. Tesla could show big growth this decade.

Investors feel that the virus is under control. Also,the price of oil is falling because the market expects the (Chinese) economy to soften because of the virus. He doesn't expect a recession, because historically before every recession the price of gas doubles. YOY the price of oil is flat. The virus will impact Q1 growth in China but also the US; Chinese productivity will be down because the factories may be closed for another week following the Lunar New Year celebrations. Overall, manufacturing companies may re-examine the place of China in their supply chains, given this disruption; this means less manufacturing in China and more abroad. Other Asian economies may benefit....Bombardier will sell their business jet division and the timing is good; this space also crowded and needs consolidation anyway.

The indexes are manipulated. Markets are way too big to be manipulated. In time, markets go up, particularly the US, UK and Switzerland because those economies are advantaged and attract companies. Short term, they do down because of recessions. Short term, markets are highly influenced by credit, and there's a lot more credit available now than even 12 months ago.

The Iowa caucus (happened the night before) will probably benefit Pete and Bernie, but down the road he expects Bloomberg to prevail in the Democratic nomination. If Biden were 15 years younger, he would be a favourite. Nobody hates him, but he's pretty old. Bloomberg is old too, but as a rich New Yorker he can take on Trump. The Democratic nominee must seize the center to win... The coronavirus is important, but he looked up some stats and found that most deaths were of very old people, some with existing conditions.

Can I expect a 10% return from a Canadian bank? A portfolio must be diversified. Don't load up on big tech, for example. They will move in a pack. Also own banks, utilities and pipelines, which are more boring and won't offer explosive growth, but are dependable and safer. Sure, we all want to make 10% a year, but can that happen? True, collecting a 4% dividend and 6% share appreciation is possible. It has been possible for banks in the past, but we're in the low-interest rate world.

Lithium: will we run out given the popularity of Tesla, etc? There's a lot of lithium in the world, so there's not a limited supply. We won't run out.

Market. These things like the corona virus tend to blow over quite quickly. He does not mean to down play the human cost. Conditions are still in place for a pretty decent year in the stock market. As January goes, so goes the rest of the year often and January posted gains. The data is still supportive of an economical cycle continuing. 85% of the US economy has been in an expansion all along. He is expecting a good year for stocks.

Energy Stocks. He has exposure to energy stocks that are not Natural Gas. He likes producers and integrateds. The last two weeks have been unsettling but it goes with the turf when you invest in commodities. He plays the bigger, safer companies with the stronger balance sheets.

[Berman's Call did not air today.]

Before Christmas, he called a correction in January and it's happening.

What indicators do you use? First, his father was a stockbroker who taught him to chart stocks; he'd record the volume by hand. He's a big fan of on-balance volume. Also uses price momentum and relative strength (strength of a stock relative to its index). More and more the market is technically driven. He uses these standard indicators used by many.

Caller sells winners too soon. What length of chart to look at for a short-term trade of 1-3 months? He looks at three time frames: long-term monthly, weekly (3-5 years duration), and daily (a year duration). So, look at weekly to determine long-term trend and direction, and daily to choose entry or sell points.

A four-year cycle started in Dec. 2018 with upside into 2021. This current correction is an opportunity, but wait--don't step in yet. There's more downside to come. His S&P target is 3,100, or 5% downside from today's close. So, the hardest thing to do in coming weeks is....nothing. Wait. Overall, he's very bullish for the rest of the year....Gold has played out perfectly since Dec. 24. Say this correction we're in now last another 2-3 weeks. By the end of Febraury, there's a window of seasonality for gold (Oct-Feb) when demand peaks. Gold is fine as a place to hide during this correction. Hedgers are very short gold; gold could come under pressure into summer.... Oil's support level is $50, then $40. There could be continued downside. We're seeing lower highs and lows. Commodities are in a bear market that he expects to last 10 years--but with pockets of performance. In the next week or two, there'll be an opportunity to add some energy exposure.

Market Outlook Caronavirus is creating short term moves down, including today. This is creating some really good buys, with some stocks down 10-15% -- especially energies and small caps. Averaging in should be a good strategy. The WHO announced a health emergency yesterday afternoon and stocks rallied into the close as it was the believe that China is going to be able to contain it.