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

Generally, the market returns around 8% on average per year. Tech hardware stocks could grow. However, the banks in Canada have struggled. With the dividend, it's alright but he is underweight in banks right now.

The energy sector seems to have more momentum now. You definitely want to be in oil, natural gas and service side. He's trying to find a bottom right now. It's poor looking right now, but there are still companies that are multi billion dollar companies that will bounce back.

Market. Following a 25-30% year it is pretty tough to say we will have another one. He feels we should get a 5-10% gain this year. The CAD$ is up about 5% over the US dollar and the US dollar showed strength against all major currencies last year. Maybe it is foreshadowing better flow of funds into Canada. Perhaps we will see Western Canadian Crude being stronger. We got smacked at the end of 2018 and then global markets did well. He is still forecasting another 5-10% this year. He does not feel we can have a recession until US housing turns over.

When he has fixed positions in the portfolio that move up, he re-evaluates them and may trim them back. Sometimes the company is doing better than expected and he moves his weighting up.

Will 2020 be another year of gains for stocks? There really isn't any reason for the market to turn over. Unemployment is at 50 year lows, low interest rates, and you have a president who is pro-business. We're seeing the result of increased productivity from technological innovation, not just a fake market runup. Though US manufacturing is slowing down, housing and oil look good. But the main thing is the US consumer and buying through Amazon. We don't realize how much tech changes will impact our lives and how quickly.

ETFs for income. ZWB is a good ETF for income. Only 50% is used with the covered call, so you still have 50% for growth. The covered calls provide better income, somewhere around 5.5%. Though you don't get the tax benefit in a TFSA. The XSP is another good one.

ETFs for an RESP. Bought VGRO when it came out. Thought it was going to be great, but ended up selling it all and buying XSP instead. He found VGRO had too much Europe, and so the performance was nothing. He looks for broader based ETFs.

2019's broad-based rally impresses him, particularly the global nature of it with Europe making new highs. It feels different heading into past years. In 2020, the US dollar will struggle--Canadian investors are now very overweight the US dollar and US stocks, so they should reduce exposure heading into 2020, because he expects the US dollar to roll over. Meanwhile, the US deficit keeps growing. There's still good growth there, but they have expanded the deficit 5% to gain 2% economic growth. Investor sentiment is so bullish that we're not in an overbought market. Hold onto some cash for an opportunity in 2020--it's always great to buy when everything is negative. Shifts in sentiment can be big.

EQX-X / Gold Hard to examine a one-month chart for EQX; there's not enough history. So, looking at spot gold: the one-year chart shows a flag. Over three years, gold had trouble breaking $1,350. Now, gold in the past half-year shows a flag after a run-up earlier in 2019. Gold's outlook is good. Buy a gold ETF to be safe. Besides, gold, he also owns silver bullion.

A lot of the action in 2019 actually happened in the last 3-4 months and before that markets were mediocre. The large caps are a little overbought. It was a year of extremes--go big or go home. Massive losers were energy and oil, small caps and emerging markets. Massive gainers: tech, large caps. Small caps should do well in the first part of 2020. He's been buying into EM and dipping into gold and oil (but not cannabis). He expects a rotation out of large caps. Bonds are underloved, but it's time to consider them and pull some risk out of your portfolio. Canadian oil seems to be basing with stocks breaking their downtrends and starting to move up--but it's super-early and an unconfirmed trend. He's dipping his toe into the energy space for now and watching its progress. Same with precious metals. He's remaining fully invested and getting more defensive, but not bearish.

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Market. We are seeing something of a year-end melt-up in the markets. We have had a ten-year unprecedented run in the markets. What a decade! Valuations are stretched now. It's a pattern we saw in 1929 and in 2000 in the tech bubble. He thinks this trend is now focused more on the large caps. We have a narrowing market with a blow-off top. There is going to be payback for all for this when liquidity pumping stops. The global economy peaked out earlier in the year. Purchasing manager's indexes across the world are having a bit of a dead-cap bounce now. It is still a topping process in the global economy and will have an impact on stocks. We are due for a bear market.

Markets sold off today, but he won't make predictions--they're usually wrong. But if you need to change the structure of your portfolio, then do it now. With low interest rates, there's nowhere to go except stocks, especially tech and interest-sensitive ones. European stock indexes are actually up 23% this year, so don't avoid Europe. It's important to diversify across all sectors and areas....Cash in 2020: Nasdaq is trading over 30x multiple; tech now is like tech in 1998; don't go full bore into tech, but take some profits. Also, don't be 100% cash either; have cash in case markets fall. Markets are toppy.

How often should I rebalance my portfolio? He's not an active trader; since 2016, he rebalanced Shopify twice, Heico once, and Cognex once (i.e. selling half when a stock climbs high). That's it. Rebalances enhances returns long-term 1-2% annually that (compounded) adds up over time.

Gold strategy? First, what percentage do you want to invest in stocks, bonds, real estate, precious metal, currencies, etc? This determine how much gold you want to buy--a gold and silver stock or an ETF, for example. Don't just roll the dice on a gold stock. Consider your goals and investing style. Maybe allocate 5% of your portfolio in gold, like buy gold itself and store it away. ETFs mean you pay that MER, which is giving away a lot. More than 5% means more risk and volatility--can you handle that?