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

Too much of the market is liquidity driven and this worries him. But he doesn't follow the broad markets that closely. He's started to take interest in Alberta oil, which hasn't been this bad since 1989-90--he likes the Canadian oil space now when NOBODY does. Even a dead-cat bounce is overdue. Encouraging news is two First Nations bands have backed out opposing the TransMountain and possible moves for a First Nations band to own the TM. Canadian drillers have curbed drilling and turned into free cash machines. Also, there are too many competent people in oil for this sector to be still for much longer. About Encana: when a Canadian-named oil company has to move to the US, that says something. Overall, Canadian oil/gas companies are too competent and too unloved for too long that contrarian investors should start looking at these stocks. The industry is quite solvent. Also, the mid-eastern and American shale plays will be in 5 years long in the tooth.

Gold mining stocks On a 40-year gold chart, we are closer to the bottom than the top. Gold mining stocks are cheap, and when they recover, they REALLY recover. Don't take too many risks nor invest too much. Returns could take 12-18 months, so wait. Gold trades inversely to confidence in the USD. US debt is too high and current levels can't sustain. Gold stocks won't beat the USD but will do less badly in a downturn.

The markets have endured a lot of uncertainty and are now confident. It's been more of a psychological issue. We're sprinting now to the end of the year. Things are good and he expects people to take some profits. It's business as usual. Norway is a leader in ethical investing with their pension fund blacklisting companies for ethical reasons. Investors are catching on that ethical investing pays off and avoids investing in unethical behaviour and carbon energy uncertainty. As for Canada's Liberal minority government, he expects them to continue with the carbon tax as scheduled. Let's see how they work with the NDP, and a proposed tax cut for green companies.

Oil companies investing in green in Canada--the right approach? Investors invest in an oil company for oil. Those companies are generating a lot of cash flow, and he hopes they invest in green. But this is happening more abroad like Total, not in Canada. Overall, capex in green remains small in their overall cash flow. That's disappointing in Canada and could be more. Here, Suncor has the highest ESG score.

The market is pushing away bad news like Brexit or the trade deal, but is it pricing in too much good news? Global manufacturing has slowed down and US GDP has slipped, but QE in the US is keeping markets up, encouraging more liquidity. Japan is thinking of more QE. This environment is good for risky assets. But there's fatigue with IPOs that haven't been performing as well as expected, such as Peleton and Uber. If there are negative rates, it will be tough for pension plans.

Market. Trade with China: Phase I (he does not see a phase II and III). Most of the difficult things will not get solved easily in the next few years. The countries each have a different philosophy. Markets are excited but we are going to be no better off than three years go in trading with China. The tariffs will still be on. The market sees this as good because things are not getting worse. On the VT-N, we have not broken out on a world basis yet. The US is leading this and when you look at other world markets we are nowhere near this. We are in a large cap earnings recession. He will be surprised if we get any S&P earnings growth over the next year. This is an opportunity to lighten up on your portfolio. Markets increasing is about QE coming and a potential trade deal that won't move the needle. You want to get more conservative in the market, not more aggressive.

Educational Segment. Energy. He always gets swamped with questions when his road show goes through Alberta. Not having pipelines is absolutely insane. Is it time to buy the energy sector? Going back to when oil was on the up, XLE-T, XEG-T, and oil were shown on a chart. This sector has made no one any money since the last crisis. He likes it as an asset class. He is long energy but short crude oil as a hedge as an option structure. The energy sector in Canada is impaired and needs options. The premiums are there today. The world is serious about climate change and the energy piece is getting pushed out of the portfolio.

Market. Real estate is not about location, location, location; it is about supply and demand. The Toronto market is seeing massive immigration. There is an artificial greenbelt that means no new supply of single family dwellings. He loves the rental residential market as there is a huge imbalance in Toronto. He is agnostic to rates. It is all about supply and demand. It is all about jobs. If you have a job you can shop in a mall and rent an apartment. He tries to find imbalances. He is focused on the US sunbelt. Dallas and Houston are in a low cost state, a low tax state. This is very bullish for rental housing. They have very defensive characteristics.

Vision Capital's Philosophy. He buys stocks in Real Estate. He operates long and short. He thinks like a private equity investor. He spends a lot of time trying to understand the value of the properties and then compares net asset value to the stock price. If it is trading at a premium then there is an opportunity to short the stock. He tries more so to find those stocks trading at a discount. He is about 60% south of the boarder. He likes industrial and multi-family apartments. He likes both on both sides of the boarder. Everything bad about the mall is positive for the warehouse. Residential is very defensive. It includes trailer parks. Seniors housing has massive demand. There are demographic tailwinds. In Canada supply in only meeting demand in certain areas.

He doesn't see a recession. We had a correction in Q4 last year and a flat market since 2018. We're laying the foundation for a market that will do just fine. The US consumer remains strong, spending money in services (food, entertainment, travel, etc.), and pushing up the real estate market. Manufacturing is a little slow, though the Fed is lowering interest rates. Caveats: Volatility is below 13 now, which worries him, and we don't know who will lead the Democrats. He doesn't like Elizabeth Warren's idea about taxes.

Which bank ETF or banks themselves to buy? Currently, he holds GICs. Buy the bank where you are holding your GIC. It's safe. With a GIC, you're loaning that bank money. Banks are starting to rally now after a weak summer. TD is solid. He also likes CIBC and Royal.

What do we pay the highest option fees in online trading with our banks? It's far cheaper in the States. Because most Canadian banks don't want to trade options, because they're risky. Most of the lawsuits that online traders get come from options.

Market Outlook Markets are in a tentative uptrend -- led by defensive utilities and REITs. Growth stocks and cyclicals have been lagging. From here, the market is either like 2001, which led into a global rally the following year after pausing. Or the market could be like 1999, when growth stocks were expensive and commodities were weak -- value stocks did fine, but growth stocks led the market down. He is therefore cautious about valuations with growth stocks right now. He does not like to buy stocks in down trends, so he is staying away from energies and materials, which is pushing him into trending stocks like financials, industrials and consumer discretionary.

The best energy pumping company? This is a challenging environment for any energy holding. The pumpers are driven by the health of this space. He would not hold any of them today. They are being moved out the index, because they are too small.