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

The market expects a 25-point cut tomorrow by the US Fed's Powell. All these cuts are staving off the recession, which he expects 12 months from now. He hopes to keep selling in 2019. We will have trade uncertainty as long as Trump is President. (FedEx just reduced its forecast due to trade tensions.) Don't invest by guessing the outcome of the trade war; it's a moving target. That said, markets are relatively benign now.

Passive vs. active investing in US stocks He's shocked that Canada is 90% active vs. the US. There's increasingly more money going into passive investing. Active investing doesn't add value, so lower your cast by buying passive investing. Canadians have to catch to America where passive is far more popular.

How to protect an RESP with the coming recession with a child who just started university? Some of the RESP is in GICs with the rest in ETFs? That's a good strategy and asset mix. He has made his RESP more conservative as his child approaches university with fewer (riskier) stocks. He went from 60/40 stocks/bonds to 40/60 and this trend will continue for him.

What are the best stocks for a TFSA? It depends what you need the TFSA for, like a house. Otherwise, find something global, like VXC-T, and broadly diversified.

Portfolio building (in general) Build one according to your circumstances. Advisors have clients fill out a questionnaire to determine risk profile (bonds vs. stocks ratio) and advisors must create a portfolio close to that risk profile, like 70/30 with a 10% variance, like 60/40 or 80/20. Then, stick to that ratio.

A good ETF? What is your objective? Risk profile? Do not look at past performance. Find an ETF that tracks the benchmark. Instead of one ETF, find five to diversify.

Market. The attacks on Saudi oil facilities. The markets are under reacting because they don’t know what the policy response will be but Trump does not want a war. From an investment standpoint, we have to watch crack spreads because a spike in oil pricing puts up refining costs. We are seeing a weakness globally in demand for the refined products. The ETF CRAK-N is up a small percent today which is a material difference from the broader energy sector. This is a key thing to watch. Last week we saw a massive reversal in bonds. The question now is where the buyers step in. We are still heading for recession and this is just a technical correction. People should learn how to work this asset class into their portfolios. Gold is a tremendous asset class and nothing has changed recently.

Canadian Dollar 3 to 6 months out. We are probably going to hang out at $0.75 give or take a bit. 3 to 6 months out he thinks the global economy will weaken and the Canadian economy is headed for recession. Use strength in the Canadian dollar to buy snow bird dollars.

Saudi Arabia. This is a shock and more temporary than permanent. This is not good for anything globally. Oil prices go up and supply is constrained. This is not a reason to be excited about Canadian banks [as caller asked].

Index funds being a bubble. There is a battle between the managers that are tracking indexes and those actively managing. It is not in a bubble because it is money coming from a mutual fund because of higher costs. It does not matter whether you sell an ETF or a mutual fund, to the market.

US Investment with Growth Potential but good tax treatment in a Canadian based account. Horizons' has a new structure called Corporate Class and you can defer your taxes as they are done with total return swaps and no annual distributions.

Educational Segment. How do you Structure you Portfolio for Events like Saudi Arabia this week? We have an event now to think about. Don’t try to trade the noise on day one or two. Make sure your portfolios are structured to reach your goals in the longer term. This is probably temporary. We probably get a spike in oil prices and you should use this to reduce your oil exposure. You can't forecast international relations. Don’t make any big bets on this. The 2018 high in oil will be a monumental resistance. AMLP-N is the pipelines ETF in the US, which is the way he is playing it. He would trim this above $10.

Market. There was no risk premium in the market due to the attack on the Saudis. You need to know how badly the facilities were damaged and are there off-the-shelf supplies to fix it. The questions are how long it will take to fix the facilities? The game has changed but don’t chase stocks today.

Major Drillers. PD-T is on his action alert list, but he thinks the debt load is a lot. He likes the service sector. It will not do well now. It is a 2020 story. If they back off, it is a good time to buy them.

He doesn't hold many energy stocks, but today's spike could rise a few weeks or last into the winter. But this doesn't mean a material change in oil. Other countries, like Iraq, Iran and Russia want to produce more oil. That said, some pipelines were approved over the summer, so that's positive. He has picked away at ENB and BP, companies with big, sustainable dividends. He doesn't see a recession in the near future; the US consumer remains strong. He expects a 25-basis point interest rate cut, though it's possible this Saudi attack could delay that a bit. Don't be long bonds.