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

Pot Stocks and increased demand from Pandemic. In this part of the cycle where recession is the biggest risk, you want quality companies with clean balance sheets and not a lot of debt. Look at getting back into it when things normalize again.

VIX. Volatility is high right now and it is expensive. You need to know what future VIX is trading at. You have to be an expert to play the VIX. You’d be better to write puts on the S&P 500.

The economy is shutting down and we're heading to the PM invoking the War Measures Act. One in four businesses could go out of business, and is delaying the tax-filing deadline. Small businesses need help. How deep will this go? This is happening while the global economy was slowing down and we just came off the trade war. This could be a long, slow recovery, but the good news--this will end. It always does, but how long will it take to dig out of that hole? The hard thing is to decide to buy in this market and not get scared out of it. Stay invested, but prudently buy. Look for companies with strong financials that will survive. There have been dramatic dividend cuts in energy, but in this environment why pay dividends at all? Why not hold onto capital?

Trump press conference on right now. Muchin suggests mailing $1,000 to Americans Well, how will they spend that money if they are staying home and businesses are closed? Until we get over this virus hump, it'll be difficult to bring back demand--and which sectors will bounce back first?

Market. Stocks are on sale! The market is a discounting mechanism. Today's 7% haircut is narrowing the gap between prices and 200 day moving averages. There are lots of opportunities. He looks for low debt, large backlogs and free cash flow positive. There appear to be bargains in the oil patch.

Electric Vehicles – best way to play. Vehicles sales will slow because of CoVid19. EFL is a good company to play it.

Market. People need to remain calm. Your finical planner has set you up for a long term horizon. Where there has been social distancing, the spread of the virus has been mitigated. You should not be panicking but looking for opportunities in the next couple of months. It will take several trillion of stimuli to mitigate in the next couple of quarter for this global shut in. Gold is extremely attractive. You do not want to chase rallies at this point.

Liquidity. It is where the market maker stands between the bid and the ask. These are expanding and the Fed has created this unprecedented amount of liquidity by buying bonds. As the VIX increases you see increase in the bid/ask spreads.

Buying back in. Dollar cost averaging. Buying back in. Dollar cost averaging. In 2008/9 earnings got cut 40% and that is the magnitude we are talking about, however no one knows. You should scale in.

Financial institution dividends. He does not know if they will be maintained but most are distributing half or less of their earnings. Two years from now we will be long past it.

This isn't the end of the sell-off (despite markets plunging 10% today). We're in a perfect storm with the Saudis hitting us with the oil shock. Where's the bottom? On July 26, 2002, the S&P bottomed at twice book, 2175 points. That is just 200 points from today's close--and that amounts to one day's trading! You can trade markets now, but where's the bottom? All kinds of people are suffering. Also, this is the first social media bear market.

What is the intrinsic value of the S&P now? How fast will the economy--and earnings--bounce back? There'll be a lot of damaged consumer sentiment, making consumers cautious.

Be cautious short-term. All Dow stocks he tracks are halfway to his downside targets. One more nasty day like today will trigger his buy signals and offer a nice upside (except Boeing).

Market Outlook The markets have never correctly so quickly in history. The TSX is off 30% from its highs. Technically this is a bear market since we have already fallen over 20%. There is still uncertainty with COVID-19, especially with machine driven investing systems being popular. China is starting to recover and stores like Starbucks and Apple are almost completely re-opened. We need to still see policy statements from the government to compensate employees who will be impacted here at home. She sees more scenarios where negative growth will impact Canada for the next few quarters, making a recession more likely -- especially with the plunge in oil prices.

Bank dividends? The dividends are safe for the Canadian banks she thinks. The payout ratio is only 45-50%. Banks will increase their dividends similar to their earnings growth she believes -- around 5% a year. If earnings contract, they will likely keep dividends flat (three years during the last financial crisis).