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

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.

When do you expect a recession? We could see cracks in late-2019 and a recession in 2020, though it won't mean a 2008 deep recesssion, but an old-fashioned one.

Producers are already saying they are going to cut back their production. Capitalism usually finds a way to make it work, but would like to see if happen faster. We need to get a better price. Royalties and government revenues are going to be significantly down. This is not just an Alberta problem, but a Canadian problem. Albertans are very frustrated at lack of pipeline construction progress. If Bill C69 goes through in its current form, there will be few if any pipelines ever built again. Need more forward looking management and Boards in Canadian energy sector. She would like to see more 5 year strategic planning in the energy sector like you are currently seeing in other sectors.

1. Crude Oil Outlook: She does not see the renewable energy side taking charge for another 20-30 years. There has not been a lot of traction for non fossil fuel businesses. Weaning off fossil fuels is important but until there is a way to fix it, Canada has to continue producing fossil fuel energy.

The markets have entered negative territory because the Wall of Worry has broken down with fears over the US-China trade war, FANG stock weakness and rising interest rates. He's not worried about Apple; growth rates can't continue, because the iPhone is near saturation. Geopolitical concerns weigh on sinking oil prices. He believes that the overall market is seeing a temporary correction, because economies are doing well and unemployment remains low. He doesn't see anything to be really fearful of. Corporate profits will decrease next year, but remain strong. Stocks are the place to still be.

American banks He doesn't and wouldn't buy them. Why? He's a long-term investor. Citibank and JP Morgan have gone bankrupt in the past, while the Canadians have sailed through.

The trade war and the pace of US interest rate raises are key worries. The latter will continue because the U.S. economy is growing and healthy with unemployment at a 50-year low. It's difficult to determine what'll happen in the US-China trade war. In the Q4, though, US companies are starting to see pressure on costs (transportation, wages), so will this slow corporate growth? Tax cuts, that have helped corporations, will moderate next year. Earnings will continue though. We are at the latter part of the cycle, but she doesn't see a pending recession. Trade wars are not good for economies; they increase costs and inflation. In turn, the Fed could raise rates even faster.

Volatility continued today as oil plunged today. Corrections are normal. History tells us that we get one every two years. This year has been particularly volatile, because we've had two corrections in one year. Before that we had years of every little, which was not normal. We have to be patient (but not stubborn), and have a long-term discipline. With U.S. Presidents, there are always issues. Companies are the slaves of earnings--remember that. With dramatic rising earnings with an up-and-down market, to him, spells rising value in the market. He's a half-glass full guy. Be patient and diversified. And when you're wrong, can the confidence to make a move (i.e. sell a stock you own).

Market. Saudi Arabia is going to tighten the taps on oil to support oil prices. $50 +/- $10 is probably where we should be for the next 5 years. He is okay with trading US energy equities. When we hit the next recession, say in the 2020's, we will see oil in the $30s again. Europe is very fragile. Japan is not really tightening policy. Only the US is now raising interest rates and so the US dollar keeps getting stronger and stronger.

Long Bond Durations. Once interest rates start to fall these will make a lot more money compared to shorter term bonds. You can now tactically take positions in long term bonds. He is starting to sell TLT-T. He made one percent in less than a week. It is negatively correlated to equities.

Real Estate. Should one take profits or can you continue to take dividends. The answer involves risk. The Canadian REIT sector is tremendously overvalued. It is one of the last interest rate sensitive industries to turn over in rising interest rates. You could see 10-15% downturn sometime through to 2021. ZWU-T would give a better yield and he prefers this one.

Lithium. LIT-N is an ETF. It is the electrification of vehicles. It is an interesting sector. It is going to be a great long term investment.