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

Educational Segment. We are at full employment in the US so how can they fathom cutting interest rates? But in March the Fed was still intending on raising interest rates. Since then the tariffs and trade wars have driven policy. The market thinks the rates will remain where they are at only 82% probability. The Fed is now talking about emergency rate cuts with full employment.

Small Cap Index. Some companies come through the index and then leave it again. An index for these kinds of names does not work that well. You are better looking at individual names.

The markets liked the trade news today. People are getting used to being off-balance with Trump. He himself holds a basket of 11 diverse (through geography and asset class) funds that he rebalances every 6-18 months. He still holds mutual funds that are ETF-like with low MER and good tax efficiency. He is critical of traditonal, high-cost mutual funds, but he likes mutual funds that charge a low cost and are diversified. Areas he likes for the rest of 2019 are the US and Canada, but not Europe.

How to catch up on unused $51,000 TFSA contribution room? TFSAs are vital for low-income people. Put money in monthly into a basket of ETFs, like $500 ($6,000 yearly). Then you can save up and buy an ETF and diversified portfolio. A regular $500 contribution means you don't miss this money.

Preferred shares If your goal is growth, then buy growth stocks and not dividend-growing ones. The preferreds--many like them for their diversification from common stocks. He doesn't have a strong opinion or buys these oftens. Don't worry if your preferreds are down these days.

How to preserve a non-registered account for retirees yet minimize taxes? First, ttagger your sells and don't trade all/many stocks in a single year. Also, you can sell any capital losses to offset gains. If a stock is up $10K and you don't want to sell it all, then sell half of it to to offset another holding that's a capital loss. But remember, you can't buy back the exact same security you sold within the first 30 days; instead, buy something very similar or keep the cash. Overall, sell your stocks very slowly over many years to minimize taxes.

When you must wtihdraw from your RRIF, what to do with that money? If you have a spouse, you can make the RRIF withdrawals. Also, you can withdraw now, not at 71 which is the limit to withdraw from a RRIF. Sure, you pay a little more tax sooner, but there's less to sell in the RRIF later. You can withdraw $6,000 and put it into a TFSA and never pay tax on it. A note: in your late-60s/early-70s, you can still travel, but no one travels when they reach 80. So, if you're in your late-60s and healthy, travel now--don't wait!

My bank offered me a $30K line of credit with 3% up front over 10 months. I'm paying $900. What should I do with that $30K to invest over 10 months yet write-off that $900? Do you have any non-deductible debt? (No.) If so, pay it off. Interest is only deductible only for things that earn capital gains. So bonds and GICs make no sense; buy stocks. Buy if you're in the stock market for only 10 months, then you're speculating, not investing. Look for things that are cheap, but buy two or three things totalling $30K--and pray it works out. He won't say which geographies to buy, but diversify to lower risk.

A low-cost mutual fund? The DFA (Dimensional Fund Advisors) family, which are cheap and structured in cost like ETFs (very low); and are exposed across many geographies. DFA is the world leader in factor-based investing. He uses DFA a fair bit.

This morning's jobs data: June will be too soon for an interest rate cut, but likely one or two later this year by the US Fed. It'm impossible to know what's inside Trump's head. Tech is insulated from interest rate moves. With rate cuts, we're back to slow, muddled growth. As a result, tech will benefit, because investors want to invest in growth, which tech offers. Within tech, semis are exposed to China which, of course, are now effected by trade talks.

Self-driving cars There's been a lot of misinformation, partially from Elon Musk. We're a long way from self-driving, but robo-taxis in select markets are starting this year from Google's Waymo. The important thing is that these cars need extremely detailed maps, like where every street and shop sign is; people jaywalk; or a blind driveway. The car needs a processor needs to read other cars and people crossing the street. Google is testing this now in 25 cities and buildings these super-detailed maps. It's a potentially huge market, double-trillion-dollar globally. Also, a self-driving taxi's cost is 75% lower than a human-driven taxi. Five years from now, robo taxis will be widely used.

Tech staples (that his company runs in a fund) vs. consumer staples The market keeps giving above-market multiples in consumer staples like Coke, because they're safe and defensive, but tech is growing 17% a year and is trading cheaper than the consumer staples. He thinks tech stocks are not expensive and should compliment utility stocks in a portfiolio. Also, he expects tech stocks like Google to pay a dividend in coming years. Tech stocks have huge runway ahead of them, namely in digital advertising, as well as in healthcare and financial services. Amazon and Apple are going hard into e-payments. They also have gobs of cash and little debt.

After the Dec. 24 low, the market ran ahead and corrected, but stayed above that--that was really positive. This has been a great week, but it will be a little harder. The VIX was up today. Copper and energy stocks aren't participating in the current rally. Bonds are overdone now, but the markets won't take off until copper (connected to China) and energy rev up. Keep an eye on the 10-year rate which influences all, including home mortgages. He doubts we'll see a rate cut from the US Fed in June. We're at a seminal moment. The 10-year yield could increase, likely gradually. The economic backdrop is not terrible; Canada's job numbers are strong and our rate could actually increase.

Gold Gold is hitting resistance now at $1,351, very much linked to the strong USD--the market is telling us to own gold. (Gold) producers usually lead the price of the commodity, both the upside and downside. We have a breakout now in those producers, so he predicts a breakout in gold itself.

Market. Portfolio management changes every day. There is always risk but that is where discipline comes in. Regarding talks with Mexico, there is no direction and people are looking for any headline to drive the market. There has been no deal all year and we have been just treading water on a deal all year. If we look at the global PMI index we are seeing weakness. We have seen the global economy slow down but it is not at recession levels. He is not avoiding economically sensitive stocks but is going a little more defensive as of late. We will see the bottom this summer in industrials. Resolving of the tariffs into the election should let us see rebounding in the fall. The US dollar has stayed strong all of this year but he does not see it as a huge headwind.