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

REIT's vs owning real estate. Can access housing, commercial, industiral, senior housing through REITs. They are very liquid, so if sector changes and you want out, you can easily get out of the sector. Not as easy as owning real estate. Would not look at owning real property versus REITs as the same thing. They have very different risks and exposures.

high dividend names vs growing dividend names? There is a high correlation between raising dividend and share price going up. Generally you see a preference to companies that grow their dividends as opposed to high dividend names, is because you normally see share price appreciation as well in the names that continually grow their dividends

Market Outlook - The stock markets is quasi-ignoring the yield curve as the traditional signal (the 2-year to 10-year curve) is still not indicating a recession and paying more attention to the trade war. Going forward is going to be choppy but it will go up again. For Donald Trump the primary measure for him on how he is doing is the market. The bond market often signals trends before the stock market. Scotiabank missed but it was a very small in the big scheme of things. He is not worried. The rest of the banks exceeded expectations.

What is your view on Gold? - It has been flat for a year. A reserve in case Donald does something really stupid. There is a catalyst that he doesn't see for gold to go back to $1900 that was 6-7 years ago.

Market. EU elections don’t mean much to the markets. He has said for 20 years that the whole EU project does not work. We have to watch Italian bond spreads. We have to watch Italy in the next year or so for volatility. He feels there is a fundamental difference in the way China views the world and the way the US views the world. Theft of intellectual property will not easily be addressed. It is not going to be easy and will go well into next year. The markets are completely complacent about the volatility risks to world trade. There is a lot of talk of international people shorting the banks, but over the last couple of years there has been no growth in the Canadian banks. He would not buy them until they get back to the discounted levels of 2015/16. He thinks at best we will chop sideways for a couple of years, or perhaps an event takes us down the 15/16 levels.

Educational Segment. What does he like today. He is looking around the world like Japan, South Korea, and the UK, that have been hurt some amount. He looks for capital gains, the yield and what will the currency impact be. The UK market, currency adjusted, has made no money for a long number of years. After BREXIT, you have the potential to make about 20-25% on the currency alone on the UK. People have too much money focused on Canada.

Market. He has worked in the auto industry in manufacturing. The auto industry is the scale industry. You lower costs when you build cars on platforms. Alliances and mergers help this. Fiat Chrysler's merger with Renault would be an example of this. Renault has electric cars out there, but he does not know if they will be one of the winners. There are controversies in the electric car space. Internal combustion engines have to become a lower percentage of auto sales.

He has not been an investor in steel distributors. He is concerned that as the market improves, you are buying more inventories. It is hard to have a steadily increasing dividend policy. A lot of the margin has to do with selling prices going up. He has not been a fan of them as public companies.

Trade tensions. Trade is on the radar. NAFTA close to being ratified. Japan, US, and China will be a bit volatile before we see a resolution.

Huawei situation. Companies have a knack of adapting long-term, and that's where you want to invest.

Fiat-Renaud merger. Going forward, it's going to be an arms race. They'd be the third largest company. Car sales is a GDP play. We're getting later in the credit cycle, so it's more challenging for people to afford cars.

How long do you see the bull market lasting? He looks at the S&P 500 as representing the US economy. It's 17-18% overvalued. So the last few weeks have been healthy for the market. Q1 earnings have been better than expected, but mostly due to share buybacks. Someday the music's going to stop, and that's when things will get very interesting in the market.

Investment strategy. Fundamental, long-term investors of 5-15 years. Lower fees, compounding dividend growth, and limited realized capital gains. Important to stay in a position for a while, rather than turn over the portfolio frequently. Looks only at companies with strong history of free cash flow and dividend growth. 30 stocks is a good number for a portfolio, so if something happens to one, it won't impact your portfolio all that much. There are 5 reasons to buy a stock, and these should go up on your fridge. You shouldn't buy stocks willy nilly. It should be a thoughtful decision. You want 30 stocks doing different things from around the world that are going to work as hard for your portfolio as they can. Think about why you bought a stock and if things have changed, it might be an opportunity to sell.

Market Outlook A large oil stock build this week when a draw was expected has put downward pressure on oil prices. We have almost 100 million barrels more in storage than last year and another 5 weeks before the summer driving season begins. We might see another run towards the low-$50s for WTI soon. Be a buyer on weakness. He thinks debt is still high for some key players like CPG-T and will hold back companies from buying back shares to improve per share metrics.

Why look at energy? He has seen two incredible bull trends in energy in his career. The last bull market was from 1999 to 2003. There were several 10-baggers during those cycles. He thinks a new bull trend started in February 2016 when we were at $26 per barrel. He is now watching India as the next source of major demand -- eventually growing to over 5 million barrels per day over the next five years. In the next five years, he thinks a five-bagger is possible in TSX Energy in the next handful of years.