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

Convertible debentures pay well and offer little downside. They should be talked about more, much better than preferred shares. Problem is in Canada they are not liquid. Large institutional investors can't buy it; just retail. But he likes and own several of them.

Big news today was the impeachment announcement. The markets used to trade on earnings and seasonality... Nike reported after hours and beat in a big way, confounding China trade fears. The US Fed's 25-point cut was measured and smart. Germany just reported disastrous PMI numbers, and today America released weak consumer confidence numbers, so there is a slowdown. That said, consumers are still spending. He won't predict a recession. However, October is one of the most volatile months and the TSX is flirting with all-time highs. Be ready for big drops to swoop in. Beyond that, he sees good growth.

Market. There are weak economic numbers in Germany. You had BREXIT, Chinese trade, general slowing of world exports, rising interest rates and an inverted yield curves, and now we are seeing more and more of that showing up in real economic data. With Germany being so export driven you are seeing the lowest numbers in a decade in terms of German output. None of what the European central bank has done in terms of QE, and negative interest rates, nothing is going to solve or fix these economic cycles. Trump started a global trade war and contracted the global economy but it won't fix any of that. We need resolution of the trade issue to get through this. As long as Trump is running this we will not see any resolution to all this.

Gone to Cash, what is the timing on when to get back in. No one knows. Bond yields are so low it is hard to move to them as a safe heaven. Don't try to be in and out of markets because they are volatile. Sit down with a financial planner to plan out your financial plan within your time-horizon.

Educational Segment. Last week we had a perfect storm. We had quarter end tax needs, regulatory issues that hurt liquidity, the Fed unwinding the balance sheet a bit and then a massive push of new debt. This sucked a lot of cash out of the markets. QE may become more permanent.

Market. No one can predict the future but there are going to be lower returns in the future. Valuations are quite high and interest rates are low but that is because growth has been slow. He has over a 10% exposure to real estate, which is higher than the TSX. This has benefitted from low interest rates.

Quantitative Stock Picking. You buy a company's future value of its cash flow stream and then discount it back for how much risk you are taking. Fixed income has very low risk. With equities it is hard to figure out how sustainable the cash flow is. Rail companies, for example, are easy to be sure of. Moats can be many, many things. They can be legislated, natural like the rails, or brands. It could be network economics such as with a credit card. This could manifest itself in high returns on capital.

The Real Estate Sector. He is well over 10% in real estate. Publicly traded real estate is typically at a discount (20-30%) to private transactions.

Mortgage Investment Corporations. They are not publicly traded typically. Half the mortgages in Canada are insured by the CMHC so the lenders are making risk-free profits. They go after those clients who do not quite qualify for a mortgage. Typically you go directly to these companies to invest in them.

He's still finding companies with a competitive moat. The TSX broke out a little and the S&P flirted with 3,000. The markets are opening higher, then come down--interesting. Not boring at all. We're in a Twilight Zone where bad news (negative data) leads to good news (the Fed will cut rates). So, poor PMI numbers in Germany and Korea points to recession there. Then if Trumps tweets, markets may jump higher. He follows Nike which reports tomorrow--and this may reflect the US-China trade war. If the Chinese yuan gets weaker it will benefit Nike as well as Dollarama.

Dividend stock for an RESP for a child already in university At this stage, cash or bonds, nothing risky like stocks.

Market Outlook The market is a little scary up here. If a new client came today with cash, he would suggest only getting into partial positions and buy on weakness. Although there is some room for the market to go higher into the spring, he would be concerned after the US Presidential election. Then you will need to be more defensive, hold more cash and gold. Energy, banks and financials are all picking up momentum and he thinks these are good areas to find defensive holdings that can pay a good yield as well.

Dropped from an Index? When a stock is dropped from an Index, there will be temporary forced selling of the stock. When the selling is finished you may see a bump up as the stock then looks undervalued. It also means they are need meeting the requirements to list, so it is a warning sign.