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

Have gone through a wonderful rally. But this rally doesn't seem to have the legs. Earnings are slowing down. Markets are discounting the future. The future does not look clear. Recession is not on radar screen but one of the wildcards could be a domestic slowdown. US Bond yields are telling us of a slow down. He is cautious in the markets and holding about 20% cash. Still seeing earning disappointments and that offers buying opportunities.

How do you time entries and exits in the market? Depends whether you are trading or investing. He looks at it from the investing side. Know what a company is worth. Control your downside. Write down why you purchased a particular stock. In volatile times, hold cash for when stocks go on sale

[Today the show was preempted by live coverage of a press conference with the finance minister. Entries on this site commenced after the approximately 15 minutes of preemption].

Market outlook - Very eventful time for investors. We are now into 9 weeks in consecutive rallies. We are now at 5% from all time highs. At this point we are probably a little overextended. The US economy is still very strong. Unemployment is low, the consumer is good. Since 1960 if you have a positive month in January and February, 92% of the time the markets ended positive the year. Overall there is a pause these days in the market after the tremendous start of the year. his top sector is financials, consumer discretionary, health care and technology. Energy doesn't have really a big place in his portfolios. The US economy looks a little more robust vs the Canadian economy. Energy is a big part of the TSX. He has nothing in Europe. He likes also China in the EM. Trading at 9.5 forward earnings vs 12 forward earnings.

Market Outlook It has been a great couple months for dividend stocks. People are looking for safety and good returns following the selloff in December. The oil story has been good for the TSX and today's inventory numbers were good. The Nigerian election has caused some dissension there, which could lead to higher oil price uncertainty. His portfolio sees value in banks and pipelines right now.

What Beta do you use? He does not scan stocks on Beta -- how it moves with the market. Correlations change as the market moves, he believes. Dividend stocks, on a long term basis, are less volatile than the market -- both in upward and downward moves in the market. Look at the fundamentals to determine how sustainable the earnings are instead.

Wilson-Raybould's allegations today are very serious. For SNC, it's only more negative news which could cause SNC to fall further, since federal contracts may now fall further out of their grasp. Infrastructure is not the business he wants to be in, where bribes are not unheard of in certain parts of the world....US-China trade negotiations will still lead to a deal, he feels....Q3-2018 reports was a tough quarter while Q4 reports (currently) are entirely different, positive enough to keep him fully invested....Laurentian Bank, which got punished today with a bad report, has been a broken stock for a while. Otherwise, he's impressed with Canadian stocks now....Alberta's deficit is lower than expected, which is good news for all of Canada. He has no exposure there himself.

The TSX is up 16% since the low of Xmas Eve 2018. Shooting fish in a barrel. Copper is strong, hitting highs, and is a harbinger of a soft economic landing. Or this rally could be FOMO after de-risking in Q4-2018. We're starting to see wage inflation though nothing like int he 1970s. The Fed wants to get back to a neutral rate, and he takes Powell at his dovish word.

He thinks the US Fed will slow or pause rate hikes this year. He sees no reason to raise them. U.S. housing starts are down 11%; Millennials don't look at a house as a foundational asset (though in Canada we do). Long-term though, U.S. housing should be fine. He's not worried holding Home Depot. He was bullish in December; he doesn't see a recession coming. He's holding onto most of his positions and he's bullish this year. The VIX has fallen back to normal.

Warren Buffet's letter: Always interesting, since he's the Oracle. His large cash position has risen dramatically since 2015. Buffet is looking for undervalued stocks; his cash position has risen because he doesn't see much fundamental value. Berman agrees, doesn't think the markets are now cheap and that interest rates will stay low. Buffet doesn't care about the economical cycle, only in buying good companies at good prices. In the next downturn, Buffet will surely buy with his large cash position. Berman thinks we're in the early days of heading to a market top. China-US trade: Berman doubts there'll be any meaningful change to the intellectual property issue. The markets are pricing in these talks, though. What's interesting in China is include the A-shares in the global indexes, which he thinks is propelling Chinese stock markets up, rather than a trade issue resolution. Apparently, Trump asked some hedge-fund guys about how to raise the stock markets, and they told him to stop tweeting or to tweet positively--and that has happened. Trump is gaming the market and timing his tweets. Debt: the amount of world debt is staggering and at some point we'll have a major credit crisis which will make the inevitable downturn much worse. Nobody knows when this'll happen. Berman is very nervous about markets. Gold: he's most bullish on gold; he still sees 10-20% upside and would sell into that. Gold is his biggest overweight.

Educational Segment. New "defined-outcome" ETFs by Innovator from the U.S. Each quarter they issue a series of these ETF designed with targets in mind. They look one year out and write an option strategy to give you protection on the downside with various buffers: 9%, 15% and 30% that starts with at least a 5% loss. Depending on the cost of the bear put spread they're buying, they write a call to pay for it. This limits the upside potential; caps it. Essentially, they allow you to participate on the market upside in the coming year with a cap, but protects you on the downside. So, when the market rises to the level where you ultimately want to buy in, you sell these defensive protection-minded ETFs and buy back into the S&P 500. When the markets recover, you get much more of the upside. He loves these innovative ETFs which allow you to participate on the upside, yet protect you on the downside. Caveat: If the markets jump 15% from here, you've missed out on these, but if we enter a bear market, these will limit and protect your losses.

Consensus says we will inevitably hit another recession, but not necessarily. There's a lot of scar tissue from the last recession, he notes. Recoveries are long, and we've had several resets since the last recession. So, it's not so simple to frame current markets as end-of-cycle. True, now we have the lowest expectations for global growth, and December saw huge outflows from markets. The bar is very low for upside surprises. The U.S. has and will continue to underperform vs. the world; has done so since the Sept. 21, 2018 market peak in America.

Mutual funds vs. ETFs Nothing wrong to own both, per se, but you can build a globally diversified portfolio with ETFs.

Hedged vs. unhedged U.S. ETFs Currencies are like stocks and bonds: CAD was loved until 2012 just like bonds and stocks. The USD is entering a long topping pattern leading to secular decline. The believes that the strong USD after the recession is now over. Meanwhile, emerging market currencies have been beat up. So, he would hedge the USD (vs. CAD). But what's the catalyst for foreigners to buy the CAD?

We're still drinking from the Kool-Aid post-Christmas Eve. The TSX is up 12% year to date, leading North American indices except Nasdaq. He fears that we're getting starting to get overbought. The pendulum is swinging back. China is a good example of this. Canadian banks and telcos have come back in Canada. Canadian oil has lagged but is starting to come back. The Barrick-Newmont gold deal announce today is certainly interesting. Gold is usually a safe haven during chaos, but we don't have chaotic conditions now. Could gold sell off? The US Fed could do a rate cut this year. That's ludicrous to cut rates right after raising them. Then again, the Fed could raise rates fiven the current economy.