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

GOLD. Seasonality supports it. It is one of his largest positions. He has 25% between gold and gold equities. We are probably range bound. Over the next couple of years we might break out to the upside. He prefers ETFs than to be exposed to company specific risks.

Educational Segment. The Future of Economic Growth is Fake News. Larry does not believe what the US government is saying to the media about maintaining growth rates of 3+-4%. 1950-1973 were the golden years with massive growth in productivity. Today when the government spends money, you don’t get the same bang for the buck. Getting 1.9% growth in the US would come from a deficit.

Market. The fair market value for the S&P is now about 3000. In 20 years he has never seen the index exceed his calculation of fair market value. This would be a peak. Right now the market is stuck in a trend channel with the fair market value on the top and a structural break point on the bottom. If we hit 2500, he thinks we will see a bounce. This will be the case until something happens. He wonders if the market could die of old age. In 1987 we saw the end of the bull market without any warning. The FB-Q and TWTR-Q drops recently could be warning signs.

Market. The trend in Tech is still up. There has been a change in the character of the volatility since February. Of particular interest in the sector is the concentration. The top 5 stocks in terms of market cap on the S&P are the same market cap as the bottom 282 stocks by market cap. Tech indexes are concentrated in the largest 5. That leads to unintended consequences when managing risk. You are not getting the expected diversification. You want several sources of return that are unique and different. The indices that had a big piece of FB-Q had a big drop on the day FB-Q dropped. You should look at ETFs that don't let this concentration happen.

Oil ETF Recommendation. The IXC-N gives exposure in the US. He prefers to invest in producers than the commodity.

Where to put $200K cash besides Banks in Canada, Utilities and European dividends. Add REITs for their inflation hedge, XRE-T and ZRE-T are good, but XRE-T is equal weight so gives you less concentration and more diversification. Consider also something more global.

Millennium Investor – ETF vs. Mutual Find. The ETF is an evolution in technology. Their management fees tend to be lower. A mutual fund is not different in its structure. If you want some exposure to something and there is no ETF then you can consider a mutual fund. ETFs trade intraday vs. Mutual Funds trade at the end of the day.

Covered Call ETF or buy equity and write your own. You need to be diversified – 20 stocks. Do you have enough capital? Do you have the time to be writing these calls? You are paying retail level commissions.

Market. He stills sees value in the Canadian market, but volatility in the US market is picking up. He is playing defense now and Canada is the favored market right now. It comes down to the valuations of the Canadian sectors.

Precious Metals. Precious metals, he would have thought, should have performed better. He thinks the US is about structurally run trillion dollar deficits, so the outlook for gold over the next five years is very good. Over the next 6 months to a year, however, the sector is facing uncertainty.

Telcoms. He prefers owning BCE-T. They have made great investments in fibre optic technology and are well positioned for the 5G movement.

Market. Earnings season, beats and disappointments, especially in FANGS. Saw a big reversal today in a lot of the technology stocks. Market’s still pretty robust, DOW outperforming from time to time. Trends are still positive. No confirmation of a reversal to this uptrend that started a couple of months ago. No drivers for selling right now, though always need to be cautious.

Best US growth in years vs. reasons to sell specific stocks. US growth is why markets are doing well. S&P close to record highs, NASDAQ doing well until today, lots of enthusiasm for the bigger players. Concerns him a bit that it’s looking a little like 2000, where there was a divergence between enthusiasm for the tech names, and then Canadian banks started making new lows. Banks are not falling apart, but the psychology is interesting. Amazon is up $600-700, and you want to buy in, but if everyone buys in because of FOMO, then that’s usually the end.

TSX making new highs, but YTD up only 1% and a bit. Hard to be a Canadian money manager this year. US portfolio gains of 10-20% are quite strong compared to the TSX. Banks putting hammer down on rallies, a lot of divergence within the oil sector. TSX is difficult, as it has half its stocks going up and half going down, and so the broader index goes sideways.

Market. The story about valuation being stretched is nothing new but now you have geopolitical uncertainty and rising interest rates. The market is not willing to play as much for pure dividend plays. Earnings per share growth have been healthy on the S&P and half of it is from tax cuts. That growth won't be there next year. FB-Q is spending much more than expected and took a dive. They represent a lot of the US market. So you see this played out in the index. You should pick individual stocks and not buy the index because then you can control your weightings.