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

When will we get back into the interest-rate sensitive stocks? We're in a bear market for interest rates for long time. Not just a year or two. Inside those cycles are smaller cycles--maybe you can step into them. Utilities are full of debt, and interest rates will rise for the next decade or two, even. These stocks will face headwinds for a long time.

Is it a good time to invest in cannabis stocks? It's a trade, not long-term investments. It's like the tech bubble of the late-90s: no sales, no revenues, balance sheets were cash until they were all spent. Sure, there will be winners that'll survive, but others that'll go to zero (i.e. Nortel). The valuations are NOT cheap. Trade, trade, trade. Not an investment. He's not in this space at all.

The US Midterms--happening today--are usually bad for the incumbents. Tomorrow, we could have a rally because there's so much liquidity given the U.S. tax cut, artificially low interest rates. If the Democrats control both houses, liquidity would diminish and be bad for markets though. Also, there could be gridlock ahead in Washington but good for markets, because there'd be no interference from either party. Commodities should rise on a valuation basis. The commodities complex id priced near/at the price of production. Also, commodities are also economically sensitive--we are in the 9th year of an economic recovery and he can't see this lasting. Also, Americans and Canadians make the mistake from looking at the world economy through an American lens. We should consider MANY parts of the world instead.

How do you reconcile the difference between the spot price of gold and gold share prices? In the last bull market for gold from 2000-2010, the gold price rose $250 to $1,900/ounce, but earnings declined. Until management teams can effectively turn the gold price into cash flow, you'll see the gold share prices languish vs. gold prices. The companies that have the best leverage to gold are the inefficient producers (high costs). We need gold companies to show the same financial acumen as companies in other industries.

Why own gold? It's a hedge against collective stupidity, government and currency depreciation. It's like an insurance policy.

Market. He expects consensus in the US mid-terms where the house goes to the democrats. The republicans may gain a couple of seats in the congress. That may be the best case scenario. If the democrats sweep both that would be the worst case. Markets might get excited about another tax cut for the middle class. If tax reform is pushed back it might be a kind of a yawn. After that focus turns back onto China and trade. It could take years to reach an agreement. The theft of intellectual property is not easy to solve. We are late in the investment cycle and we are going to see the European bank stop buying 10 year bonds. There will be credit stress there next year.

Recession. When is it coming? Caller sites Larry predicting it later and later from 2017 through 2020. The average bull market is 5 years so that long after 2009 a correction seemed increasingly predictable. Since then it has a lot to do with what has happened with the interest market. An inverted yield curve is the best foreshadowing of a recession. Mid-2019 is his best prediction of when the inversion will come. Nobody knows. This is the longest expansion in time that we have had a bull market without recession in history.

If you own something that you owned for a while, you should think about it as: Is there something out there that I could own that would be similar in risk that will do much better? He has been nibbling here. He used ZPT-T for preferreds. ZWU-T has a similar risk and gives you a nice dividend.

Gold stocks. are trading at about a 35 year low. In the future they may do better than other equities. He is not a gold bug but he would play US and Canadian gold ETFs. He is overweight in gold right now.

Market. The market needs to hold the February lows or we could see it go lower. The overall markets are tricky right now, as has the whole year. We are not seeing too many tradable trends. RT-T is a good indication of what the banks have done.

The U.S. Midterms tomorrow won't make a difference. The market is very high and tired. But if the Dems win the House (not Senate) will be a relief, because it'll stop Trump from doing dumb things. If the Republicans win, then Trump's tax cuts will go through. The markets will go up either way in a relief rally. But if the Dems win BOTH houses, then we'll have a real stalemate in Washington. Women of all stripes and ages are turning out to vote. This looks like bad news for the Republicans. Trade (US-China tensions) is an issue, but really the market is expensive. The fundamentals, including earnings, are slowing down or flat. We're not seeing big growth or whether that value is coming into the market. The market is carrying overvalued stocks which have lately come down. Markets simply get tired of carrying that load, then say, "Forget it."

Where do you see the S&P 500 going? It's right between 2,550 and 3,100, a nice trading range. The S&P will stay here, unless there's a setback. He hopes there's more downside so he can buy stocks cheaper. October is traditionally bearish, and this one was. Powerful resistance on the way down and powerful support on the way