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

Forest Industry, Lumber Producers. His strategy is to look for groups where earnings are starting to accelerate and we are seeing positive change. The forest products group has been difficult and is under-performing the group. Wait to see a turn before stepping in.

Cryptocurrency recommendation. They had a difficult year last year. He did not invest in them last year. It is not his focus. Recently we are seeing gold starting to lift along with cryptocurrencies, we are likely seeing a relative near term high in US currency. There are a lot of people who are big believers in cryptocurrencies. He thinks they have a place in countries where there is no stable currency, nor banking system where there may be a flight to cryptocurrencies. It looks like they are seeing another leg higher. It’s worth while looking at the space but he does not have a recommendation.

Central banks being accommodative. G20, US-China meeting, and OPEC coming up. We'll see what happens. Probably not much. Market seems to feel that any news is good news, and it's just waiting to march higher.

Global trade tensions are making the Fed cautious. If we don't solve the global trade problems, this is the optimal scenario, because we won't need to raise rates. As long as they're negotiating, that's good. Tensions have affected the economy, and Powell can continue to accommodate. Every negative piece of news is quickly counterracted with something positive. There's been enough negative economic news, plus stagnant inflation, to keep the Fed dovish.

Outlook for Canadian banks. If you assume we're late in the cycle, then banks are not ideal. But TD, BMO, and Royal are her favourites because they're across Canada and the US. You also have to keep an eye on credit. Doesn't subscribe to the shortsellers' views. They don't have the vulnerability they're accused of. But won't take much of a correction for people to pounce and say "I told you so".

Investing in the gold space. Plays both the metals and the miners. You own gold because there's a fair amount of inverse correlation between equities and the actual metal. Sometimes, in a volatile market, gold is a good offset. Frequently, when there's a major correction in the equities market, gold equities correct too. Still, if gold were to break out, you get a multiplier effect of 3x on the equities.

Can we have faith at some point in Canadian tech? Yes. US analysts don't see Shopify as a Canadian name. Canadian companies haven't done as well as US ones this past year. It's a small sector. The US tech names have a regulatory overhang, and perhaps this is contributing to the popularity of the Canadian stocks.

Market Outlook The Fed Chairman is moving the thought process away from a 50 point cut. The market reacted negatively as the Fed may now be trying to pour cold water on the market. You should always structure your financial allocation when emotions are not charged to be able to look at thing objectively. Your strategies should not be driven by short term headlines. He thinks the market sentiment is still fearful and thinks investors have actually taken money off the table. Overall, he doesn't view the market as being frothy.

It's a tough market because corporate earnings are declining, the global markets is softening, yet valuations keep rising. American stocks are diverging from Europe and Japan. Buying the market won't be a good idea with valuations at this level. No doubt that lowering interest rates are driving markets now, but 10-year yields are already down to 2%. Ultimately, you need earnings growth to drive stock prices. The high-yield bond market yields 6% and is in great shape, but to succeed here you need wide diversity across America, so best to use a fund. In contrast Canada is susceptible to commodity bonds and therefore higher delinquency.

Gold He's never owned gold, which he considers a lousy investment over the long haul. A disaster. Gold usually does well when investors expect inflation, but there's no inflation now. Rather, gold is up because of geopolitical fears, but those always blow over. Gold--why bother?

High-yield bond funds Any short-term bond fund will be insulated if interest rates rise. As long it's a diversified fund, if it own US funds, make sure it's hedge. If the Canadian dollar goes up and you own USD bonds you will get hit by a negative currency move.

Market Outlook The S&P500 run up does not worry him. The bull market was in place all last year until the latter half. The market is really going sideways in his mind. He tends to look at US stocks more frequently as Canada lacks the fundamental liquidity. Strength in the US dollar may hurt Canadian holdings, because of the currency, it does help to add to the profitability of US holdings in general.

US Home builders. The US home builders market is still way behind from the peak, despite a rapid population growth. Existing home sales are also not substantially higher. He has chosen the play the space through a Home Dept instead.

Gold now rallying? He likes the recent technical rally and he thinks it could go higher. The US Fed is negative on rates, which would be positive for the entire market. It is unusual for gold and stocks to rally at the same time.

I bought rreferred share ETFs for safety and yield, but their value has decreased. Preferreds are like high-yield bonds. Credit spreads are expanding now, so investors want a premium over risk-free rates. Preferreds act calm, but when they go off the rails, like in 2008, they really go off. There are likely rate-set reset preferreds inside those ETFs, so those resets will fall along with yields, which impacts ETF price.