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

Do you believe we are entering into a bear market ? - The S&P 500 is not down 20% so it is not technically in bear market territory. But who cares? In certain areas we are. But profits are going up, interest rates are low, the economy is strong, employment is strong and stocks are trading at 14-15 times earnings. That is not unreasonable. Don't seem to see any sign of a recession in the next 6-9 months. Could it go lower? Sure, we could have a flash crash. He invests in good companies for the long haul. he doesn't have a clue what is going to happen in the next three months but you can buy some stocks and make a decent return with a five year time horizon.

What is your opinion on REITs for a long-term investor? - If you want to have income REITs are fine. They can't grow any faster. Some are stuck on stuff. You have to be careful with some. Some are trading above NAV in the real world.

Market Outlook In October and November he saw concerning technical indicators. This is both in Canada and the US markets. He watches moving averages and tracks technical monitoring service companies views.

It's been a rollercoaster lately. It's been tough. But always take the long-term view. He's a "decade" trader. This year could be a write-off, the market this fall having sold off January's highs. It's a buying opportunity--he may wait until January to buy. The market fundamentals say the economy is doing well across the board. It comes down to investors feeling nervous who are overreacting to headlines. Fundamentals say that there's still room to run. PE ratios are lot more reasonable now. He would put money to work now. Buy into weakness. There are definitely some good stocks out there. Green investors are less interested in the state of the market, but rather the state of the enivoronment and climate change. They feel pessimistic.

Canadian-dollar hedged green ETFs? Aside from the global water one, CWW, there isn't one on the TSX. (Mackenzie does offer a mutual fund in the F series.) Green ETFs are traded on US exchanges--Google Nobert's Gambit to lower the cross-border conversion fee.

Corporate profits need to lift this market. U.S. ones have had a strong YTD at over 20%. In 2019, they will increase 8%. That's positive if that happens. Markets will be higher a year from now, but the trade war is a serious overhang. Seeing car tariffs removed will certainly be positive. The detainment of the Huawei CFO is an obvious negative, so we must keep an eye on that. Executives are now hesitant to travel. Consensus is that Powell will raise U.S. interest rates next week and three times in 2019. But Powell has said factors could slow the economy and he'll be data-dependent. Now, the BOC has adopted a dovish tone. This means that interest rates in both countries will not rise as quickly as expected.

Today, we gave back impressive gains in the morning after Trump had a closed-door meeting today. That rattled investors after the day opened strong. We finished flat or in the red. Investors are now amplifying any bad news and muting the good. That's in contrast to earlier this year. For investors, don't emotional. He holds a lot of cash, from 40-60%, though it isn't fun to hold this much cash. Markets are unnerving now. Breaking news: Huawei's CFO is granted bail. He certainly didn't like reading that Huawei news last week or today's news of a Canadian citizen arrested in China. Canadian companies like Lululemon could face serious resistance selling in Chinese markets. But he thinks this is all a lot of fury that won't stick, and creates buying opportunities.

Huawei CFO just released on bail; she must stay in Vancouver It doesn't help resolve US-China trade talks, despite White House denials that it is. This is already spilling over--Bell and Telus have invested a lot in the Huawei 5G wireless network and it could cost a fortune to rip out.

Are algorithms controlling volatility? He's suspicious. The last few declines including the brief one in January was an algorithm-driven trade. At 10:30 or 2:30 every day is how the market will close. It's like the retail investors trade until 10:30, then the big institutions come in 10:30-2:30--there are many theories about that. That January day felt really well-organized, enough to trigger his suspicions. Regardless of the cause, you're losing money. Use stops. Alogorithms will rule this volatile period until at least February 2019. He also suspects alogos in Twitter feeds which are activated whenever Trump tweets (but he has no evidence of this).

Market. BREXIT: The UK cannot afford a no-deal exit but like all of these things, it will go down to the wire. There is uncertainty and markets don’t like it. You want to be long the British Pound. With China there is the arrest of the CEO of a major telecom company from China. There is no solution to the trade issue and this is just more of the problem. The Fed will raise rates in the US on the 19th. The global economy is still strong. The S&P is undercutting the October low. Some think we are one foot into the recession starting. Perhaps the lows will be broken in February.

RESET Preferreds. Now the expectation is that the next BOC move could be a cut be he doubts that. We will likely get two raises into next year, and in that case he would be worried about the reset preferreds market. It will probably be a bear market for the for the next two years.

Educational Segment. Seasonality this time of year is very positive as everyone looks for a Santa Clause rally. His chart does not include 1987. Sell in May and Go Away still holds until early October. This year has not played out at all. As markets recovered, there was a big down. We got none of the taking off from the seasonal lows of October. This is the longest bull market in history. We expect a bunch of failed rallies. We likely will not get anything big on the upside. The highs are probably in for this bull cycle. Bear market rallies on good news can make new highs, but we are in a bear market.

Canadian Dollar. There has been a lot of damage to oil and gas. The curtailing of supply has helped tremendously. In a global recession it will not have helped. It will play out into 2020. Buy US$ into a pullback.

Market. Sell the rallies instead of buying the dips. Many investors are feeling shell shocked with 10% loses in portfolios. This is not out of the ordinary. 2018 has been a tame year. Once every two years the S&P goes down more than 10%. In the last 5-6 years investors are used to much less variation. Tech stocks ran up a lot and now came off a lot. He does not think it is a tech bubble. They have economically justified their growth.

Aren't we already in a bear market? It is up to the companies that are in the index to be in a bear market to call it that. We are in a bear market in some sectors and with some companies. It all depends on how you define a bear market.