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

Should there be 33 holdings in a portfolios. Generally 30. If you have 10, then if one of those goes down, it will impact your portfolio. Remember to equally weight those stocks, selling off shares to return to 3.33%. Re-balance. Sell into an increase (strength). You don't get emotional doing this.

There are two markets. Bond markets are going down due to a likely US rate cut because of slowing world markets. Meanwhile, stock markets are hitting all-time highs based on hopes for a trade war treaty and rising growth. It's a paradox. Real growth is slowing. We'll see if there will be two rate cuts and if both are needed. Consumer sales are sluggish, merely OK. We have a manufacuturing recession globally. We have expensive defensive sectors like utilities and REITs (and you should sell them), but materials have too much negative momentum. You're stuck in the middle.

National Energy Board rejecting review of Coastal GasLink pipeline. Longer term if we can get a better price for the products we have in this country it's going to be great for Canada. Building new pipelines is going to create new jobs and create new opportunities. We just have to do this in the right way. Hopefully this will lead to a better economy for Canada.

Canadian Energy Sector. Fundamentally there are 2 issues. One is on the coast, probably a lot easier to put together, the other one really across big jurisdiction and having a lot of opposition. Even if we started tomorrow, it would take quite a while to build those pipelines, 3-4 years, and quite an undertaking. He prefers energy names outside of Canada at this time.

Market. If president Trump didn't engage in a trade war the world economy would be in a better place. There are definitively some challenges. Growth in the U.S market is very narrow. Many sectors of U.S economy are in recession as well. Growth is slowing, corporate debts are raising, other parts of the world are heading in recession. He suggests his clients more low growth, downside protectiton stocks. Watch fixed income. Some defensive stocks are quite cheap, telecoms for example, very cheap with big yield. You don't need to go on and buy Amazon at 53X forward earnings, at some point it's not going to work. The other broader issue is anti-trust issues in the U.S for big tech companies.

Why aren't energy prices higher? Seasonal factors affect the price. Prices haven't bounced because of imports/exports, the Iran concern hasn't played out, and trade war issues. Demand growth is not there, and we're heading to the end of summer driving season. In shoulder season, we're going to see significant builds in inventory. He thinks we're going to go below $50 in September or October, and that would be a fantastic buying opportunity.

Will solving nat gas issues propel stocks higher? Nat gas is an egress issue. More pipelines needed. Curtailment could solve it. We get higher prices in the winter, but the problem is, the price is just so low now.

Will electric car demolish oil & gas in 10 years? BP and Exxon have a lot on their website about this. Electric vehicle numbers are increasing. But energy is also consumed in airplanes, trucks, and in making plastics. Electric cars are part of the solution to extending the life of oil reserves, but oil will still be in demand 20 and 30 years from now.

Impact of central banks. Strong year for equity markets. Big catalyst for that has been central bank policy. They tightened in 2018, and global money supply shrank, so they had to reverse course, and markets rallied strongly from there. We're still trying to get back to normal. Challenge is that the economy can't grow without capital.

Fed rate cut next week? That's one of the three potential negative catalysts for the market. How many will there be and how deep? Could catch investors off guard. He thinks 25 basis points is sufficient. Keep your eye on this.

Did they go too far in their previous hiking cycle? Thinks they did. They did it to give wiggle room if the economy weakened. Global growth has slowed dramatically, so decisive action needs to be taken around the world.

Mixed bag of big beats and big disappointments. That's the dichotomy between companies that can grow and those that aren't growing. The quarter has been surprisingly strong.

Are Canadian energy names doing enough to explain that, in the future, energy will be more than oil and gas? We're making steps. Western companies are frustrated with the political environment. If it takes too long to become globally competitive, it makes the total return weak. There is value in the energy patch, but if we can't figure out how to ease the pipeline bottlenecks, it's going to be dead money for a few years.

Top 3 tips on how to build and protect your portfolio. These tips let you stay invested in uncertain times. 1) Figure out ideal mix of growth stocks vs. income stocks. Too easy to concentrate on too many cyclicals, bad balance sheets, and value traps. Really powerful to use extra cash flow to buy when things are down. 2) Know yourself and your investment style. Having some style flexibility lets you respond to what the market's giving. 3) Set sector and single name exposure limits. Easy to let the portfolio drift, and all of a sudden you're overweight.

What market would you deploy money in now? Assuming the investor is Canadian, look at Canadian banks. Energy infrastructure names like pipelines, and a few selective REITs. These sectors are out of favour. The growth profile isn't phenomenal, but you're getting paid to wait at lower risk. If you're not buying for growth, you're still getting earnings growth, dividend, and price multiple expansion to give you 6-8% in this environment. Doesn't make sense to chase the high multiples in growth, as there's too much volatility and price risk.