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

All 3 major US indices officially in correction territory. Two months ago, people couldn't get enough of the markets. Companies still have the same recurring revenue, but now the sentiment is all fear. Good time to put your money in.

How long will the volatility last? There's a lot of cash out there, but still a lot of uncertainty. Tariffs, concerns over growth, flattening yield curve, and the Fed decision next Wednesday. He thinks US rates have to rise next week, but with a dovish commentary. DAX is down, as well as China, Japan, and North America. Have backtracked from 3 raises in 2019, down to 1 or 2.

Concerned about Chinese or US consumer? Retail sales numbers from China were below expectations of 8.1%. France contracted on PMIs, and Eurozone ratcheted down too. People are concerned about the markets, not looking for the silver lining.

Huawei CFO under pressure, so why is it still instrumental? This is about 5G. Telecoms and equipment suppliers. The next generation of mobile internet connectivity will be faster and more accessible, so it needs more equipment. The players are finite. Huawei is heavily funded by Chinese government, and it owns 28% of the 100B market share. That's why it's a big deal.

Top 10 strategic tech trends. There's 5G, and so on. At the centre is digital business, with the 3 themes of business intelligence, merging virtual with the real world, and electrification and digitization.

Where are the markets going? Believes that there are so many moving parts, you're going to have mini-cycles. You'll have 10% up, then down, then up, but we're still in a secular bull market, with a lot of volatility. When you have these corrections, you don't want to catch a falling knife. Let the market settle.

Buy one tech stock, or add an ETF too? Buy a technology hedge fund, and that should cover you. It's a secular bull market, so he's net long on stocks. They have some shorts in there, less as an investment, and more of a trading vehicle. Once you go into a bear market, you want to roll out from being net long, and do a pairs trade, and then he'd be net short.

Investable Canadian company involved in 5G? The telecoms (Bell, Rogers, Telus) are going to take so long to get their money out, that you should really be investing on the equipment suppliers side. The closest one is Cisco, which is a huge supplier in Canada.

Market. When you look at the facts it is difficult to make an argument on how the next few years will be as fruitful as the last few. The market is tired, exhausted, out of steam and is running out of catalysts as to why it should go higher and higher. He is realistic with his expectations now. When volatility does subside, we still can't have the same expectations for equities because the catalysts just aren't there. He invests 1/3rd Canada and 2/3rds US. He does not think we will be entering any kind of commodity boom.

Preferrds – are they prudent now. The kind you own is important. Fixed reset preferreds have a correlation to interest rates so they are helped by rising rates. You need to know what the reset terms are. Perpetuals he would be very careful of. Preferreds are like bonds that are taxed as dividends.

GICs - Interest Rate Outlook. If you buy GICs over equities because of volatility, they make sense. If you buy them for cash flow, GICs will not give you the same cash flow as equities if you can live with the volatility. There is not the opportunity for share price appreciation in equities over the next few years, however. He likes the real estate space in private equity.

Market Outlook - It has been a long term trend running deficits since the Financial Crisis. Populist programs, like the one Mr Ford is trying to do, make rating agencies nervous. It doesn't seem to be a problem now but it could be one down the road (5 - 10 years) if interest rates move up and interest costs eat up a larger part of the budget. The market is creating a lot of opportunities. Interest rates have been moving lower since the return of volatility. The economy is robust. Income levels continue to grow. Trade tensions are backing off a little bit. Underneath the surface, there are very good companies growing rapidly and trading at reasonable multiples. Like Google is down 20% from its highs trading at 18 times earnings. You don't even need to try to guess where the bottom is. There is value out there and if you have a relativity long term horizon (say 5 years) you can make nice profits.

What sector would you select to invest money now? - Financial in the US is in a bear market. People are worrying about yield curves and all that non-sense. If you have 5 years view, being paid 3plus % yield with a growth above market rates and a strong balance sheet and diversified platforms. Quality businesses that are on sale and trading at reasonable valuations. You can expect to make 10%/year over the next 5 years.

Opinion on Canadian Banks - They own Bank of Nova Scotia (BNS-T) which just bought recently. Canadians are heavily exposed to financials and real estate. Canadian Banks have to find new avenues for growth as they just can't keep lending to Canadians that are one of the most indebted people in the world more and more money.