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

Healthcare? This space has been the worst performing one on the S&P. He worries about when the Democrats went after the space happening again. There could be further downside yet to come.

Short Canada? He does not like going short as it is exposed to unlimited losses. Don't get in front of something only because of inflated values. He thinks investors are too complacent on the exposures that Canadian banks have on real estate. It could become a problem.

Market Outlook - It has been interesting over the last week as feels that people are taking profits in strengths. Most of his positions are withing reach of their price targets. He thinks there might be some consolidation from here. Trends and themes don't change that much. Main in the last 10 years and probably in the next 10 years is digitalizing business. Around that there are three themes: Electrification and Digitalization, Merging the Real World and the Virtual World and Intelligence everywhere. Among trends there are: 5G, The internet of things, AI and Machine learning, Digital Content, Autonomous driving and Smart Factories.

What percentage of the portfolio should be allocated to Technology ETF ? They are 50% cash and they have a hedge of 36% on the portion invested. It is important to look at the overall portfolio. A complicated question.

Fed chief Powell started hawkish then folded like a cheap suit. he was hawkish to show he meant business, but in December the market spoke (dropped) and Powell took note. The pendulum has since swung dramatically. The U.S. currently has the highest interest rates in the world. Make sure you hold bonds in your portfolio, and if you buy stocks, consider real estate assets and be diversified. There's been a sea change in ETFs with Canada and emerging markets outperforming the U.S. The U.S. won't collapse, though. Since last fall, bonds, EM and especially real estate have outperformed US stocks. Around the world, central banks are in near-complete control of markets.

The pros and cons of mutual funds vs. ETFs. The key difference is the fees. Definitely. This will effect performance. ETF fees are lower. But some mutual funds are exposed to narrower parts of the market that the ETFs haven't yet reached. What exposures do you want? If exposures are equal, then look at the fee. Cheaper is better and ETFs are cheaper. Then consider if you want income. Taxable income? The American exchange? Canadian?

What do you think of ETFs made up of other ETFs? He manages one, the HRA-T. Be fee-conscious. Is such as ETF giving you maximum diversification or are you getting more of the same within it? Is that what you want? HRA is broadly exposed in stocks, bonds, REITs and commodities with a currency overlay. You get value here.

The markets will continue to rise because Trump will continue to pressure the Fed to print money; Trump needs to fund a lot of infrastructure to get re-elected. The IMF has warned that America won't bail out the European banks during the next crisis and he feels that Trump won't. He feels gold will rise in price; since April 1, gold has become a tier-one asset again, not since the 1970s. Gold has been physically flowing to Asia and Russia. China has transferred 18,000 tons of gold since 2008 to its banking sector. So, if we see another crisis, then China raise the price of gold just like Roosevelt did in 1933. For Trump to really succeed, he needs to kill the value of the USD by restructuring the monetary system through gold with international help. Who? He thinks China will help through a currency re-structuring.

Silver He likes silver, one of the cheapest metals in the world and hasn't even kept up with inflation. But this will change. Don't buy the base metal, though, but buy silver companies instead. Silver is often a by-product of copper of which there are some good-quality stocks.

Sell in May and go away. Not a bad strategy. Now, he's sitting on his bonds and has taken some profits. He's in a good position, waiting. Never hurts to raise money and sit on 30-40% cash or bonds, then watch the geopolitics.

Market. He wanted to wear a red gold shirt! Everybody he golfed with over the last 6 years said Tiger would not come back. The US banks have had a choppy set of results. JPM-N had positive results. GS-N had some issues on the trading side. We are very late on the cycle. You don’t want to be overweight on the banks. Financial services don’t do well if the next phase of the cycle is slow down and eventual recession. The only question is when, but you won’t see it in the data. When volatility is up, banks should be doing better, but it means that GS-N may have made some bad bets.

REITs in Canada. The yield is attractive but they are risky at the moment. When we go into a slow down, real estate is one of the last sectors to be hit. Money loves the yield. But ultimately when the economy turns down and rents are at risk, these turn down.

Bonds. VAB-T, ZAG-T, XBB-T. There is great diversification but you have a lot of credit. He would buy a broad government bond ETF at this point.

Increase in Gasoline prices. The price is in US$ so as the Canadian dollar weakens, we buy oil at a higher rate. If we were able to get all our gas from Canadian oil, we would have carbon taxes etc.

Educational Segment. Retirement ages. We have this massive unfunded liability. The liability is that as we age, the government owes benefits. If the US does not change what they promise, by about 2035, they will have to borrow money just to pay the interest on their debt. Canada is much better off than this, we have the Canada Pension Plan. But now we have many less people in a working age range, vs. past the retirement age, than when the program was created.