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

Double-down on a declining U.S. mortgage REIT that pays a high yield? There are various kinds of U.S. mortgage REITs, like agency-backed mortgage securities that are backed by the government, and non-agency ones that pay a higher yield (riskier, no govt guarantee). Also are commercial mortgages for offices and hotels. The biggest risk for mortgages REITS is repayment. A caveat: she has seen such high-yielding US mortgage REITs cut their dividends by 15% in Q2.

Bank earnings. Bank index in Canada has underperformed compared to the broad index, which is a first in 9 years. They usually trade around 9 - 11x earnings. They are currently closer to the 9x earnings range, so it is a good entry point. However, banks have changed and there are headwinds to bank earnings, such as fee compression and fintech encroachment. Still have 5% yield and growing dividends so it is good for dividend investors. Doesn't expect it to outperform largely.

RBC didn't blow away investors with their earnings, and doesn't expect any of the others to either. The quality of the earnings were good, so have to look at each bank individually. Isn't expecting any exciting things from banks this quarter.

Investors haven't been touching Canadian equities, particularly energy, and there is no big upcoming Canadian tech IPOs so there is little money coming into the Canadian equity market.

Preferred bank shares. Given the rates are low, and if the security is a rate reset, you should be careful. Preferred shares are equity and not bonds, so it could be better to buy the individual stock at these evaluation.

Investors flocked to Canada for resources when China was hungry for resources. Now, there is more preference to U.S. stocks. Right now, tech and healthcare is in, but the Canadian market has few of these companies. Could be a good time to buy US dollars if you believe the Canadian market won't strengthen.

The market is noise. The market today is like February 2018 with a correction in place during a bull market. The US Fed: it's in uncharted territory so they're making up the playbook as they go along. The bull market is now long in the tooth; the yield curve inverts periodically. Both point to a recession. The long bull market is based on easy money, which is actually indicative of inflation. The negative interest rates on the world's debt is actually inflation. No, the weakness in Europe or elsewhere won't trigger a U.S. recession. Only American forces trigger that. The US economy is 70% a service economy, which aren't as volatile as a manufacturing economy, like Germany's who have gone into negative growth. The boomers have money and are spending, so they will keep the U.S. service economy stable.

ETF/stock allocation? 65% of his portfolios are in their pools or ETFs. Stocks are riskier than an ETF, because a basket avoids company-specific risk. If one company in an ETF is hit by, say, wage raises, then it will be offset by other stocks that don't face wage raises. But if you own that company and it faces wage raises, then that stock will get hit. Hold no more than 50% in stocks.

If Brexit crashed out of the EU without a deal, is there an ETF to pick up then wait for a rebound? Good question. He's thinking of buying UK pounds after Brexit; the pound has slipped a lot. The EU won't discuss the last negotiation, so he expects a hard exit which will challenge UK markets. He can't think of an ETF now, but Google for a UK-specific one.

Trump said he may introduce more tax cuts, but this is noise. You can't trade according to the headlines. He doesn't know what's going through Trump's head. Huge sections of the stock market have gone nowhere or gone down 10-20% over the past two years, including Google. Investors are worried about a crash and inverted yields. Google, which he owns, boasts growing earnings, but the stock price has been down. Same with bank stocks. He doesn't understand what's going on. Buy companies that have durable balance sheets and ignore the noise each day. If you buy a stock, be prepared to hold it for at least five years, while investors who trade regularly make less over time. For example, Disney did nothing for years, then shot up this year (on news of the Disney+ launch). He doesn't buy one-day dips.

Canadian oil stocks have been punished, but the oil price has risen. What oil stock to buy? It's not just foreign but Canadian investors who are avoiding Canadian oil stocks. Until these companies start merging, things won't change. Stick with the big oil companies like CNQ, SU or Cenovus. He doesn't own them.

Market Outlook. Has seen twice as many inflows in fixed incomes compared to equities year to date. Bear sentiment in the market, particularly at the start of the year. Believes there may be reason to temper some of that pessimism going forward. Has seen outflows from emerging markets and international equities due to trade tensions, no-deal Brexit, tensions between Japan and South Korean, and political tension in Italy.

Banks. Up until recently the consensus was we were entering a slow steady path of rising interests rates. One of the classic way of playing that was with the banks. With the sudden reversal of feds signal and rate cut in July a lot of the profits have been giving back. The herd is moving where the consensus dictates.

Cannabis. Canada is an innovator in this space in the sense that the first marjiuana industry ETFs were available in Canada. HMMJ from Verizon being a prime example. We are seeing the U.S. catching up. The space is so volatile with so many ways to play it investors should take an active solutions if they want to profit from this on the long term.

Actrively managed small cap ETF? There are small caps ETFs, there are actively managed ETFs, but it's hard to find both. Dynamic iShares Active Canadian ETFs is an active one but it has some large caps in there as well. There are some small caps ETFs, Manulife has some for the U.S, kinda active in a sense, pretty close to the index. Perhaps you shoud look outside of ETFs for this.