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

Bonds. You have fixed coupon bonds and floating rate notes where the coupon adjusts so the price does not. Floating Rate and Reset Preferred bonds are better in a rising rate environment.

Canadian Banks, BAC-N. See his educational segment today on Canadian banks. The US banks will make weaker lows before new highs. He is long on KRE-T (US Banks).

Educational Segment. Covered Call ETFs. All the ETF providers write Options differently. The Covered Call bank ETF vs. the non covered call variant were compared since inception. In 5 different periods, ZWB-T went down less in market downturns. In strong periods, you make most of your money. The covered call exposure significantly underperforms the non-covered call strategy.

Market. The Texas rail commission in the US used to mandate lower production to boost oil prices locally in the distant past. But today, the NDP government in Alberta will probably not do that. Governments should not do this and the industry created the differential in oil prices themselves. Some of the companies that brought on extra capacity don't have the refinery capacity to refine it. He has been bullish on Natural Gas. Some funds are having to unwind their trade on oil vs. Nat Gas and that is forcing the price of oil down. He is turning bullish on oil.

Oil. We are already seeing oil prices reacting to the cold weather. There may be only one or two more weeks of inventory build. We have a dollar or two of downturn in oil and then tax loss selling, but after that: buy, buy, buy oil stocks. He likes condensate, light oil and natural gas.

OPEC meeting in early December. They are talking about cutting back production but only one country will do it. Differentials will narrow as a new refinery comes online. However we need asphalt season next spring to boost the stock.

Another sell-off today: we will see a bounce, but we are late-cycle and investors have trade concerns and about interest rates rising by central banks. Now, investors should be defensive. If you have cash, you can find some opportunities to buy oversold companies. He can't predict the bottom. Instead, focus on companies you like, maybe buy on days like today, considering dollar-cost averaging where you buy a company over a few weeks (buy-wait-buy). He has 20-25% cash and has invested about 4% of that recently. This is a normal correction, not a bear market. As for tech, Netflix and Amazon are too expensive now, but Google is good now.

Global energy. We have endured the worst sell off in history in crude oil. The market has looked at Trump issuing waivers for 180 days to 8 countries. This allows certain countries to import oil or condensate over the 180 days when the market thought exports were going to zero. The major countries have reduced their imports. He thinks there will be a monstrous cut in production from OPEC on December 6. OPEC will do whatever it takes to balance the market. It is speculated that there was a fund long oil and short natural gas. But with crude selling off for 12 straight sessions and NatGas spiked about 50% in the last week or so that created pressure on oil. He is bullish on heavy oil. The WCS differential tightens over the next 3 months. Refining is coming up, crude by rail is ramping faster than anticipated and voluntary shut-ins being announced. The market is balancing by Q1 of next year. However, very few care about the Canadian energy sector, but that creates some real opportunities.

Prospects for heavy oil producers: He still believes we are in a multiyear bull market for heavy oil market. There has been a surge in US production that caught a lot of people off guard. OPEC will cut and tighten supply. Canada is out of pipeline capacity. However, government seems to remain inactive to deal with pipeline capacity. Our oilsand companies are working within very environmentally friendly manners. With the addition of Line 3, and ramping rail capacity, and voluntary shut ins, the market will balance by the end of next year. He remains bullish oil, and bullish WCS differentials.

Volatile time in the markets? Stocks that have been darlings have all sold off. This is the perfect time to look at names you’ve been waiting for.

Is tech way oversold? When he sees headlines like “death cross,” it gets his attention. This is where he gets interested in oil and NASDAQ stocks. Tricky to pick a bottom, you have to be patient. The closer we get to a bottom, the more volatility you see.

Are we close to a bottom? For the TSX, sitting on the 200-week moving average. Very appetizing to him. Especially if crude or gold catch on, would be a good spot to enter. US markets are going to go lower. They’re selling off more as they go up, which is a bad sign. He loves volatility, helps him see where support and resistance are.

Are you making changes to portfolios? You have to stick to the game plan, and take some wins sometimes as with tech. If a stock has run up, why do you still have it? It’s about the sectors, not just the market overall.

Market. It is like 2008 as we slide to a crisis according to people's fear. People sell a solid company for missing a quarter. Investors are looking over the cliff, but he looks at the company and finds it is a buy at that value. Be a long term investor, not a three month investor. If we get a recession or slowdown of, say 9 months, what does it matter if you have a 10 year time horizon? The scenarios and economic fundamentals are quite different now than in 2008.

The markets were up today during a period of late-cycle correction after a 10-year rally. Investors are getting jittery, some very, while others look at the long-term. Some are savvy, looking for opportunities, as he does. There are opportunities to the end of this cycle, he means, perhaps 6-12 months later. If you are a senior, an older investor, can you risk, say 30%? Beware of the risks. Canadian oil is still trading at a steep discount, so it's time to pick away at it. The valuations are attractive, like Suncor. Is falling oil a sign of a weakening global economy? He doesn't think so. Overall, be careful of what stocks you pick.