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

Junior energy stocks post-election? He thinks Trudeau buying a pipeline for over $4 billion shows his support for the sector. The issue is a new coalition government and having to deal with so many constituencies. There are some good juniors to buy, but be careful of their debt loads. He does not yet have any recommendations for juniors at this time.

Gold--he's a gold bug The gold price will move when the Fed speaks next week. The big picture is the currency reserve--if the system implodes, gold will come back to the fore. Trump wants to kill the US dollar. All debts are in dollars and have to depreciate--and that already started to happen. After a huge run, gold has been sideways around $1,500. The next move up happen when it breaks above $1,550, the last high. He expects the Fed to ease rates again--free money is coming in. Money is losing its value.

Expecting a bear market--sell now? He's been raising cash and buying convertible bonds. That said, he expects the market will continue to rise a little more, given the flow of funds from bonds into stocks. He's buying pipelines and utilities because they generate cash flow no matter what happens; especially likes those generating cash outside Canada. He is generating cash flow but has assets and hedges on the side to benefit from any downside. He doesn't know how high gold will run to the end of the year. The gold producers are holding on and will lead the sector--that surprises him.

CIBC Precious Mineral Fund He likes it, based on their top 10 holdings. Diversified. Charges 2.4% mgt. fee which is reasonable.

A Liberal minority government: he hopes it will be a benign environment for business, but worries that they will tamper with tax rules. At the end of the day, capital goes to where it earns a return, and Canada in recent years hasn't been that successful in doing that. The Libs need to pay for services and can't keep running up deficits....Half the banks in the world can't survive a sharp increase in interest rates, though Canadian banks are more robust. He doesn't expect a spike in rates...Everyone is talking about the oncoming recession, but doesn't know when. All stats point to a slowdown in global growth. A recession would weed out excesses, built up since the last recession. Let's hope it's not a deep, hurtful recession. Be cautious. We're no longer in a momentum market, but value.

Retail investing? He hasn't touched retail in a while. It's been a battlefield vs. Amazon and e-commerce. The Bay tried to compete online to mixed success and now they're going private. But Dollarama and Couch-Tarde have done well, though more in a convenience retail space. Retail will remain a tough sector. Also, there's more self-checkout in these stores.

He didn't foresee a Liberal minority government, but the good news is we didn't get Trump, Jr. as PM. Trudeau nearly won a majority and the NDP will work with him....In America, the Democrats really need a strong candidate to take on Trump--he believes Hillary Clinton is that person. Clinton was the widely respected secretary of state. The last time the US got into such a fiscal mess was 1992 when Bill Clinton cleaned up the markets, then markets soared. Now, we're near a Black Hole Condition--adding lots of Fed QE to a huge debt; the last time that happened was 2008 which led to the Recession. So, Bill can fix this mess with Hillary as part of the package.

A silver miner's ETF? It's early to get into gold and silver. Any g/s ETF is good to buy now. Not late at all to get in.

Market. The sentiment in the British pound tells you that we are going to get a deal here with BREXIT. There may be optimism around a US/China deal but he thinks that is miss-guided. 40% of the DOW reports earnings this week, so it is a big week. It will be bigger than expectations but beating beaten down expectations is not a big deal.

ETF to Target Senior Citizens on a Fixed Income. The traditional way of thinking about portfolios is to think about fixed income. With the real return on fixed income having moved to zero or negative, this not a lost asset. There are no ETFs specifically designed for seniors. Target date portfolios shift more and more as you get closer to your life expectancy. But with interest rates so low, they aren't great.

Canadian Dollar – Short vs. US? Yes. He is increasing his exposure to the US dollar.

ZW series of ETFs. Are they enough diversification? 8 ETFs is a good number. There's no fixed income, however. You are not diversified in terms of style, such as growth. You are only diversified by geography.

Educational Segment. The Canadian Federal Election. The opinions of people globally are going more and more to the left or right. The movement is away from the center. NDP performed very well in some of the debates. It looks like a coin flip. It is currently a statistical tie in terms of popular vote. He thinks we will see a minority with the liberals and then backed by the NDP to form a majority. In a coalition government he thinks it will be bad for energy. It's all about pipelines. He thinks the Canadian dollar will fall over time, and finally overall there is interest rate risk as well as debt. The electorate does not seem concerned about the debt. Oil prices will also go down. Interest rates will rise slightly in the short term, relative to the US.

Market. 94% of the time when the S&P 500 dividend yield has been above the benchmark bond yield, then stocks outperform bonds by 23%. Bonds are a sell. Rates on US 10-year should go up to about 2.5. There is a rotation into US cyclicals. Look at value over growth. Lumber is a good sector to buy. You should see an uptick in emerging markets. We will see positive results over the next 12 months. You have a huge number of institutional investors sitting on a boat load of cash.

Market Outlook A 20 year rolling study suggests we are into the meat of high volatility period -- September into early October. Last year October to December was miserable. Q4 typically sees bond yields and defensive stocks start to peak and cyclical sectors get some investor interest. The US 10 year yield hit a bottom in September and is now on the rise. The US dollar is starting to show a slow rollover, beginning to plateau. This is generally good for commodities (base metals, gold, etc.).