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

Market a year from now. Didn't fully understand the dip, but now we're 2% off the highs. Higher probability to see it breakout to the upside, not the downside. Though we may be in a range for a while. The wait just got longer for a 3.5-4% bond. He's been 0 weight in the interest sensitives (REITs, utilities) for a while. The risk on these has been to the upside, so they've tried to avoid that.

Favourite Canadian bank. Hard to choose among them. Tailwind is gone with interest rates not going up. For next nine months will be very resilient. TD dividend is close to 4%, and it's fine to buy, but that's not his favourite right now. See his top picks today. The big 6 have an oligopoly, so he tries never to go down the risk curve on Canadian banks and go outside those 6, he would go global instead.

Market Outlook - The main thing right now is that the US had the best quarter since 2009 in Q1. The US is the only place to be. Europe is still a mess. The whole issue of the inverted yield curve with low interest rates is not so much a problem. Worse case it means just that a recession is likely. Nothing about when, how big, for how long. If you are trying to leap in and out of the market, you are going to get burnt. If you do that, it is because you don't have a strategy to deal with the volatility. He is set on his core positions at the moment with the covered calls on. You never know with Donald Trump but he is very pro-business. The whole Brexit issue is a mess.

General question on Gold in light of the huge global debt - The only thing that gold does now is reflect the strengths or weakness of the US dollar. The US debt is huge but a lot is owned by themselves through different agencies. The gold bugs are waiting for the Apocalypse (and he thinks that they are hoping for it). He hasn't held gold for years. None. It doesn't earn any interest. Gold is a dead horse.

Is there any ETF that protects you on a downtrend? There are the inverse ETF. Just go with the single inverse. Be careful not to go with the leverage inverse. He prefers to buy puts anyways.

What do you think of the Couch Potato investing strategy? He is not thrilled with this. For a small account it is OK. As a portfolio manager you are expected to do a little better.

Market. PMI Numbers were released in China and they were little bit better than expected, but it was due to big builds in inventories as opposed to production for final demand. Everything globally is slowing down, economically. However, the total world ETF, VT-N, is showing we are lower than a year ago even though strong now. We are going nowhere. The Trump tax cuts gave a 'sugar high'. We are looking at a fragile EU economy and all China can do is add to debt. It is only cheap money keeping the economy going. Be prudent. We are going to have a credit problem any time. Britain cannot afford to leave the EU without a deal. They need a balanced soft exit, but there is uncertainty. He thinks they will resolve it and is making big bets on that.

Educational Segment. Educational Segment. Carbon Tax. Pollution and global warming are issues globally. He is bullish on green investing but bearish on carbon tax. He does not think this is the way to make change. If you want to get people to stop driving then you have to double or triple the cost but carbon taxes are not going to work. Transportation is 14% of gas emissions. The agriculture sector is much larger. There is more carbon in the dirt in the ground and as we disturb it, we release it. Clean energy investment does not perform anywhere as well as the total world market.

Market. The lack of rising interest rates in Canada is good for REITs. Real estate companies have been performing quite well because it really comes down to the operations within their business. In the last few years money went into general growth equities to the detriment of RETIs. So any interruption to this expected growth of other equities would be good for REITs. The fund flows into REITs have turned positive. They are pretty fairly valued at this point but he sees no reason for the momentum to slow up. He is holding on and increasing in some cases. REITs have a low correlation to the broader markets.

Canadian apartments REITs are still a good place to be. What drives their returns is their ability to increase rents. There is a shortage of housing in major Canadian cities. They have all been doing it. He likes IIP.UN-T. If you look at next year's numbers you see continued growth. They have been historically smart with their capital. They don’t come to the equity markets unless they can and it really makes sense.

Poloz said today that there are challenges around the world that need to be managed. Indeed, there is slower growth, though maybe things are picking up in China. Clearly, the U.S. is nervous and some there want to cut rates. Market growth may return to mediocre levels, but this is a good time to own stocks. No way interest rates will rise in North America in 2019. But he's worried about relations with China--Canada has taken several steps back in terms of befriending China and shifting away from the U.S., but Ottawa is currently distracted by the SNC scandal. He doesn't see a recession coming--good news.

Which bonds to buy? You gotta hold some bonds and not only stocks. Stocks can plunge. He likes liquid, transparent assets. He's buying very short bonds and corporate ones. He wants zero risk in bonds. He buys bonds to protect capital--but it's horrible to buy bonds right now because of really low rates.

He is not a fan of the commodity based equity sectors. The US yield curve inversion often indicates a recession. Quite often see the markets rally after a yield inversion. Need to structure a portfolio that can withstand short term and long term scenarios. There are always going to be 10% pullbacks, which is the risk of equity investing. You are never going to be able to time the tops and bottoms.

Market. BREXIT is not looking good and with earnings coming out, there is a chance we might see the market weakening a bit here. That usually pulls energy down even though fundamentals of energy remain strong. The time to buy was the tax loss selling of last year. If we pull back we will get another buying opportunity but not as good as December 23rd. Now that Muller is over, Trump needs things to tweet about and now it is OPEC and cutting back on production restrictions. If it happens repeatedly. The market could pull back. If stocks pull back as a result they could be a fantastic buy. He thinks we will see $70+ oil in Q4 and $80 in 2020. In April/May we could see significant erosion in stocks he discusses in this show and if you are going to buy them, do it then. He thinks we are in the early stages of a new bull market in energy and energy services stocks.

Market Outlook - He is finding much more pessimism in his clients meetings. Many people asking: is a recession coming? Pessimism is pronounced. Pessimism is intellectually seductive. There is an asymmetry in gain vs losses. That is why he uses stop-losses where possible. Diversification is a big tool and so a balance between aggressive / defensive. We just had a 20% correction. It wasn't as bad as 2009 but close to 2011. You have to take advantage of those situations. He would argue that in his years of career most money has been lost on opportunity costs or being too defensive preparing for a corrections than in the actual correction. The Market is a big world. Unless you are completed committed to a monthly contribution for 20 years then he is not for passive investments. The inverted Yield Curve is a little misleading and a recession could come after 8 months to 3 years after the inversion. Also some people are picking the points in the curve. Also some people are fitting this event to their negative narrative as there has been cases where no recession came after an inversion.