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

Market. Have had a little more volatility in markets this year as compared to last year, but seems to be continuing on same trajectory as last year with certain sectors. A marijuana bubble, and now cryptocurrency bubble which seems to be imploding. The old economy has been left behind, especially in Canada. A very sector money flow market right now. Be patient on weak stocks that have great fundamentals. Sees opportunities when some of these bubbles blow up. Feds tightened the yield curve again and thinks there may be 4 tightenings this year, but the economy is still doing well in a low interest rate environment.

Market. He is cautious right now, especially in Canada, where things get quite illiquid in the summer. He is holding a little more cash than normal. With the World Cup beginning this will only make things worse. This may create some short-term opportunities for buyers looking for opportunities.

Cannabis. His group did the first major financing in the space. There are only 5 or 6 major players. The stocks have had a massive run-up, which caused them to take profit a while ago. He is now looking for opportunities to buy again. He sees the Aurora deal as a pure paper-for-paper deal and is not involved in it.

US Fed hikes interest rates by 25 basis points today: that's a positive, because the US economy is
doing very well, with low unemployment and a progressive tax regime. Banks will be
making more money. It's easy to look at Trump as mad. Yes, he's petulant, but your portfolio is making money, like it has this week. He remains very positive about the U.S. Re: Canada/US clash & NAFTA negotiations: This is really a spat that'll get sorted out. Friedland is doing a good job.

How can I avoiding US taxation when buying a US ETF? There's no escaping the IRS. Instead, buy a Canadian ETF that includes a US sector(s).

Do you ever cover the short sold calls or leave them alone till expiry? When dealing with options, there are two components in the price: time value and intrinsic value. He looks at how much the time value has been squeezed out of option? One rule: When you get to expiry, close everything out.

When you do covered calls on the banks, do you make the covered call right away or wait for the share price to rise? He does it simultaneously. He looks for the price of the option to the bank, and looks for the ex-dividend date so he can capture two dividend periods.

Horizon ETFs: pros and cons: Most Horizon ETFs don't list the stocks inside, because they are total return ETFs, meaning they don't pay distributions, such as HXT-T. This reduces the capital gains. These are swap- and not index-based. They have a counter party, namely National Bank and CIBC, who swap the return on the portfolio. There's very slight added risk, not much. He owns some Horizon ETFs. This is very tax advantageous in non-registered accounts.

Closet indexing: It's a negative description where active portfolio managers are making their selections, but are really just buying the index. As a result, you're paying over 2% for near-zero input from the portfolio manager. You may as well buy the XIC or XIU. You're not getting what you're paying for. Also, ETF index investing outperforms active management 80% of the time. Lastly, it's nonsense that ETFs will cause the next crash: ETF's are not that dominant.

How to avoid being called away (and being charged steeped commissions) before the expiry date? Puts get exercised quicker than calls for some reason--and get nasty surprises. Watch how close the option was to the underlying asset. Sometimes these anomolies arise and you get exercised. It happens. Never sell a call that's naked.

What infrastructure ETF to buy that's not US dominant? ZGI-T from BMO, but that is mostly U.S. IGF-T has more Canadian infrastructure, like Trans Mountain. He'd rather see an ETF that's more construciton- or engineering oriented.

What's the difference between managed and passive index ETFs? If it charges between 5-20 basis points, it's an index. More than that, it's managed. Then there are smart-beta ETFs which are run by ex-mutual fund managers using their mutual fund principles in an ETF at much lower cost.

Overview Corporate earnings were terrific in the first quarter. The stocks that he buys are driven by corporate earnings. He looks for value stocks that have lower growth but are steady. There's a big appetite for risk in the market and so the high-growth stocks are doing well.

Comment on long term bonds as a stabilizing investment for seniors. He thinks these are a wise investment to reduce risk in a portfolio. Currently, a good quality corporate bond (BBB or BBB+) in Canada that will mature in 5 to 7 years earns about 3.4%. The real return, after inflation, is about 1.5% before inflation. No one will get rich from these. However, in the event of an adverse stock market, investors will be happy to have these. He recommends against buying bonds that mature more than 6 years from now because they do not compensate investors for the extra duration risk, especially in a rising interest rate environment.

Market. He thinks not much of real substance will come of the meeting between US and North Korea. The problem is what will happen with his twitter feed. He thinks there is an opportunity for Canada to mitigate the issues with trade tariffs. Trump is good for the stock market.