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

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.

If not banks, maybe utilities? He would continue to hold Bank stocks. Utilities could suffer if we continue to have a "normal" market and interest rates begin to rise. He does not have a holding in Canadian banks, they hold US banks, insurance or mortgage companies. Yield 4.8%

Markets continue to go higher as long as there is advances in defusing trade tensions. The yield curve is now sloping positive, the Federal Reserve keeps adding to their balance sheet. Job markets are robust, and seasonality is good. Earnings are beating expectations.

The yield on the S&P 500 is around 1.9%. The 10 year in the US is 1.73%. When this happens, stocks usually go up as long as trade talks continue.

The multiple in the market is reasonable. They probably engineered a soft landing. If global PMIs pick up, maybe there could be 3 or 4 more years of this cycle.

Are interest rates going to zero? He doesn't think we would get to 0 but they will probably go down.

Market. EnCana, it is part of a slap in the face to Canadian energy. Even TransCanada pipeline has changed its name to TC energy. Canadian companies are shifting their operations south of the boarder. This is financial engineering and you have the same business and the same results and the same management team. It is a lot of wishful thinking. They are desperate as many energy companies are. ETFs cause a lot of fund flows to go into stocks that are into the indices. It remains to be seen if this gets their stock price up. He is not playing impeachment proceedings in the US.