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

He's not buying the dips despite the market seeing an oversold bounce. Sweden's entire yield curve is below zero. Sinking interest rates point to zero or negative world growth in the future; and it's good for gold. He's very bullish gold. The stock market in the past few years have been in a bit of a bubble. He's slightly short the market. It's not too late to jump on the gold train.

If interest rates hit zero, will Canadian banks suffer like European ones? Canadian ones enjoy an oligopoly, so there is some protection. In a downturn, banks will struggle to make profits, but they won't plunge like Europe's. Regulators in Canada are diligent to avoid subprime mortgages among our banks, even though our real estate is very overvalued.

There is a lot of danger out there. After 2009, people were nervous, but after there were fiscal expedient things. Politicians have been boosting the economy and has run deficits. Lowered interest rates means that there is less ammunition to fight a recession.

A negative interest rate is not favourable, even though it boosts economy. Germany has negative growth, China is slowing, and it may lead to worse times.

People are too worried about deflation. Negative interests rate would be a shame, and people should be cautious right now.

Silver. Not as excited about silver right now, although there are some that say that the silver-gold ratio is growing.

Market. We are in uncharted territory and no one knows where it is going. The 5 most dangers words are 'this time it is different'. Investors are starting to get used to zero interest rates. The global economy has peaked and is slowing. Everything is based on valuation. There will be a recession sometime but he cannot tell you when. When stocks in a sector look weak, you want to lighten up on them. Focus on a long term time horizon. Go for quality and attractive valuation.

Oil. He is not a fan of the Canadian energy sector as they are terrible allocators of capital. They invest all of their cash flow and borrow money at the worst possible time. He has a zero weighting.

US T-Bills. They trade like stocks every day. If you hold it to maturity you get the rated interest. If you sell in the middle you get a gain or a loss. He does not recommend buying them to trade them. If you buy a 1% note then it is less than the inflation rate. You can get 6% in a bond fund in the US (high yield / currency hedged).

Oil. A lot of investors don't want to invest in oil for environmental reasons. It might make sense for private equity funds to buy mature producing companies but they would have to borrow money and might not get a good rate. That makes more sense than a private investor investing in the oil patch.

Healthcare Recommendation. Medical device stocks are trading at very high valuations. You really pay up for them. Pharma stocks have not had the gains. He sees better value and lower risk in lower PE / higher dividend stocks.

People are spooked. You should have a portion of your portfolio in cash. He has 30%. BRK-N is also sitting in a record amount of cash. There may be opportunities to spend this money at opportune moments. Real return bonds are too unknown as to how they react in a recession.

Times of volatility? Volatility can be your friend, as it may afford the opportunity to buy a great company that you like. As long as you have a long term view, you'll be fine.

Chase to jump into a crowded trade like bonds. Bond yields have come down a bit. Bonds offset equity risk and diversify your portfolio. Lots of ETFs out there that give you access to bonds, give you protection and some gains, without having to buy a particular bond. If you need money to live on, you need between 5-7 years of fixed income in your portfolio. It's like a bucket with a hole in it that just keeps dripping cash. Then when equity markets come back, you still have your bucket.

Rate reset preferreds. When these reset at the 5-year Canada rate, some of the resets don't happen for 3 years. But the market's trading as though they got reset today. And that's the opportunity. So they may get reset higher, plus they'll trade closer to par. Downside is they're not as liquid. Good thing is they're taxed as dividends, not as income. Please remember they're not bonds; they're stocks, and they can be more volatile.