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

I'm up 40% in stocks and can afford to lose 20% in a bear market. I hold only stocks. But I'm afraid to make money in lower-yielding bonds, though they're safer. What to do? First, rebalance your portfolio from 100% stocks, by taking some profits and put that money into bonds. If you're conservative, you can adjust say 75/25 stocks/bonds into 70/30. That makes you a little more defensive. Also consider an inverse product--when markets go up, this inverse product goes down--which is a pure defensive play when markets drop.

Market Outlook He thinks everyone is of the belief the market will not be another 20% gain next year. Only twice since WWII, when the market had a gain of 20% in a year has the following year been down. In fact, it has averaged a 9% gain. He would be happy with a 4-5% return this year, plus returns on dividends. 2021 could be another story, following the US elections and other geopolitical events. The US attack in Baghdad on a high ranking Iranian official has resulted in oil and gold rallying. The US Administration has warned US citizens to leave the region to avoid repercussions. We will have to wait and see how things play out. Phase II of a Chinese deal is required for President Trump to be able to influence a market rally. He feels multiples on earnings were stretched in 2019 and there is still some value out there, but it is causing him to become nervous about tightening following the US Presidential election in 2020. This could be led by a market sell off going into the election.

Alberta curtailment impact on differentials? The Alberta government is trying to help smaller producers with the regulated curtailments. It costs $12/bbl to rail barrels to the US gulf coast. He thinks the differential should trade between $12-$18 per barrel. He believes the Alberta government will continue the strategy to avoid the differential reaching $23 or more.

He's expecting a bullish 2020. With high-tech stocks, you could have made around 3-%-40% return for 2019. The results aligns with technical analysis. The economy is doing quite well. There are geopolitical events that flairs up now and then. However, S&P500 is still doing fine.

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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