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

He's defensively positioned in the short-term, with 33% cash. The beta on his holdings are so high. In 2018, we had six corrections between 5-10%. He entered 2019 expecting volatility and it's worked for him. Self-driving cars: Waymo is the leader and pioneer, since 2009, which means they possess 10 years of data.) Tesla relies mostly on cameras to develop self-driving cars.

The key theme is the apathy towards oil stocks here and around the world. Oil prices rally one day by 4%, but the stock climb only 1%. But oil falls 6-8% on a macro headline or Trump tweet. The volatilty is soul-sucking. The oil price is up 22% this year, but oil stocks are flat or down 20-40%. A huge disconnect. Based on this disparity, oil stocks are trading all their lowest levels ever. Many oil stocks are trading at a 20-30% discount to a company's liquidation value. How did we get here? ESG concerns, capital flight and Trudeau won't build pipelines. Bottom line: there are no buyers of oil stocks. However, the pressure on oil companies to use their free cash flow (15-30%) is growing to buyback shares to fill this vacuum. He is championing this to all Canadian oil companies. That would jolt this coma. We are in uncharted waters with oil stocks. These oil companies are, in fact, more profitable today than when oil was at $75, because the companies have gotten leaner and more profitable. There is a massive disconnect between this reality and investor perception. The situation is horrible, frustrating. Inevitably (he doesn't know when), money will flow back into this sector, as history tells us. One positive is pipeline optimization, which increases capacity by 100,000s of barrels a day. The opportunity is there and eventually a catalyst will come to unlock this value. Meanwhile, oil investors must endure volatility.

Bills C-48 and C-69 and the future of Canadian pipelines Bill C-48 would've impacted only Northern Gateway, which was dead anyway, and so doesn't impact the Transmountain pipeline. Bill C-48 is another question that he's throroughly researched. He met with Enbridge and the upshot was that they feel they can never build another pipeline after this bill because they'd have to spend $500 million-$1 billion of shareholders money just to determine whether they can build or not. Currently and in the neart future, Transcanada and Enbridge can move 400,000 more barrels per day not by building new pipelines, but making existing ones more efficient. Crude by rail is the most expensive and most dangerous method to move oil, but we are pressured by environmental groups. Yes, investors are frustrated, but oil stocks are already discounted for the worst. Two scenarios emerge: a positive catalyst triggers international money to flow back into oil, or if we don't then oil stocks can turn into share buyback machines.

Lots of background noise, including Facebook's entrance into crypto and Trump, but having strategy is the most important right now. Having asset allocation, stocks and bonds, is to have a measured response. Last year's tax-loss selling is an example of when to take advantage of negative market sentiment.

Gold. Not a fan of gold, and doesn't see it going up in the future. Instead of gold, investors are running to the USD for security. Would prefer something that pays yield. Would only trade short-term.

Mixed data on the markets. Last week, Fed didn't pull back on expectations it was going to cut. But now PMI is pretty strong. Strong bounce today. Fed's highlighting that US manufacturing was weak. If you look through the data, they've guided that they're going to cut at least 25 basis points at the end of this month. Comes down to inflation expectations. They're afraid of the market having lower inflation expectations for longer.

US durable good orders vs. inflation. Fed's backed themselves into a corner. The trade war now has run longer than anyone expected. Trade war is hurting manufacturing but the domestic economy is pretty strong, and the consumer's in good shape. Trade policy has moved inflation expectations lower, and that's where they're going to try to cut that decline.

Hedge fund manager Ray Dalio's concerns about the economy and a depression. He's a thoughtful intellectual, but with decades of experience. Level of money printing in the next recession is underappreciated by people. How do you stimulate your economy when rates are already low?

Differential between WCS and WTI. Volatile for last 12 months, and will remain so. Problem is there isn't enough egress to get oil out of Alberta. As long as you have oversupply and problems with infrastructure, WCS will trade lower than WTI. Texas, for example, has built 3 pipelines in the last 2 years.

Gold bullion. Built a multi-year base as the US economy was doing well. Has broken through an important technical level of $1400. Question of what direction gold's going to go is to look at what central bank policy is going to be. Inflation's going to go down, so gold's going to go up.

Current state of the markets. Everything seems to be OK. Yesterday had a pretty good manufacturing number, which made people nervous that the Fed wouldn't be as dovish. But the message from the Euro Fed was that they'd be very aggressive in terms of easing, and so the market turned around.

Fed's performance so far. They were right to raise when they did so that they'd have ammunition when needed. He'd give them an A. The only fumble was last fall when clear that economic data starting to wane. If they'd pivoted in October, the meltdown wouldn't have happened. They did the right thing in January.

Earnings season kicking off. 64/500 companies on the S&P have reported. Earnings coming in pretty flat, which is good enough for the market, with bond yields where they are and the Fed ready to ease.

Inverted yield curve and Ray Dalio's concerns. Does give credence to Dalio, but he's too early. Worrisome sign that Europe is in a downturn. But when the Fed does lower, the 3-month bond rate will go lower, pivot, and steepen the yield curve.

Sell US bank stocks in favour of credit card companies? No. Concern about net interest margins, but they'll be fine. During last 2 rate cuts, bank stocks outperformed the index. Exceptionally cheap compared to their growth rate. So don't sell now.