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

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.

What FANGs to buy into? Feels as though there's going to be more volatility. He owns Google. Wouldn't own Netflix, as it will have big competition from Disney. Facebook and Amazon are great cash-generating businesses. Tech regulations are coming, but will take a long time.

Market Outlook The Ethics Commissioner found the PM wrong in the handling of the SNC Lavalin case. The Canadian dollar has been impacted as well. He feels this goes beyond just a political misstep. The Dow is down 600 points today and it confirms in his mind the best strategy is to be finding things to sell rather than buy. It is time to be defensive. Gold is up $15 per ounce and that makes him feel more comfortable getting back into this space. He especially likes holding a gold royalty like Franco-Nevada to avoid any specific mine risk.

Oil by rail vs pipe? You simply can't build pipelines in Canada anymore, so rail companies are benefiting to the detriment of pipelines. The rail companies assume that pipe will eventually be built, so they are careful to not overbuild infrastructure.

Retail stocks down 10% today. Tariff wars are very bad for consumer spending as tariffs lead to higher prices. President Trump must understand that tariffs only punish your own consumers. He can't understand why Larry Kudlow, whom he used to respect, is supporting the President's direction.

Today was a very tough day, though markets are still near the highs. Know where your asset allocation is. Yes, we can go into a recession given the inverted yield curve today and there are dangerous things happening, like Trump's trade war and declining interest rates. The global economy was doing well until Trump took on China and now the U.S. is a corner. Trump is bungling. It's an inter-connected mess that involves the world, including Germany which is heading to recession. It isn't too late yet to fix things, but what is the catalyst to turn things around. Yes, you can pick away at stocks now, but remember that markets are still near their highs. That said, recession risk is higher....Canopy Growth is a good company but expectations are too high for a company with a super-high PE ratio and little room for error on the balance sheet.

Long-term view if a recession hits. You'll be okay long term. Don't do anything...unless you capitulate at the worst time at the bottom of a bear market. Have a 60/40 or 70/30 allocation in stocks/bonds or cash. Understand this before it happens, so you are strong and ready. As for bonds: you can lose a lot buying bonds now.

How to use the PEG ratio? If BCE trades at 15x and the growth rate is 15%, then the PEG is 1. Less than 1 is better. Those are the basics.

The US announcement of delays in tariffs to December instead of September is driving the market higher today. This shows it has been a real concern for the market. The other factor is interest rates. She does not expect tariffs to be lifted in their entirety, just that no new tariffs will be introduced. Business spending has been slowing because they are not sure what the trade picture would be. Corporate profits in Q2 grew by 2% when expectations were for declines. She is not proactively raising cash. They are taking some profits though.

Recession proofing? The first step is to make sure about your asset allocation of stocks vs bonds. Historically, stocks have always recovered back to new highs. If you have to draw from your portfolio, it is best to sell prior to a market sell off. Stocks should be ones with good yields that will protect you when a stock market fall occurs. Growth stocks would be hurt hardest in an economic downturn. Don't overpay buying in late in the cycle.

The markets reacted positively after Trump's announcement this morning about scaling back China tariffs. 2,946 is his S&P target. If so, then "game on" to 3,100 in mid-September. A new 4-year cycle is under way. Market sentiment last Thursday revealed very high bearish attitudes that hadn't been seen since March 2018 and December 2018. He also looked at the put-call ratio, which saw elevated put levels, which means investors are scared that markets will go lower. The market is trying to form an intermediate low, and he feels the market will go higher. He's not defensive now. His longer-term bias as to the upside to 2021. Closing at 2,946 tells him we're off to the races.

The Dow Index's direction He still likes it, a bellwether chart he looks at everyday. In 2015-16 and 2011-12 it was muddling, but when it breaks out it moves higher. He expects further upside into 2021.