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

Funds of ETFs and who pays all the management fees. The quoted cost of the fund includes the costs of the funds within it.

Educational Segment. Chinese 'A' share markets. It's always been a closed market. A couple of years ago some ETFs gave you exposure to these shares. They are now getting into the MSCI emerging markets index. This is going to become a bigger and bigger part of international markets. It will add some volatility as well. ASHR-N is the first Chinese 'A' share ETF. In 2015 there was this big run-up in that market and then it collapsed back down again. In the next number of months if the 'A' share market gets back into its range it will look attractive.

Canadians really need diversified portfolios. Investors don't appreciate how unique 2017 was: volatility was a low 6.5, the second lowest in 84 years, which bred complacency. This changed early this year. Canadians need to diversify their sectors and geography. Home-country bias: we're second only to Australia, with 59% of stocks in Canadian when it should be one-tenth of that. To hedge or not to hedge CAD: follow the 50/50 rule.

What are covered call options? An institutional desk can manage these more efficiently than a retail investor. For example, you sell a $10 stock to a speculator who wants to put up only 50-cents and own the stock anywhere above $11. He has ownership of that stock over $11, but you're betting the stock will rise above $11. You give up the upside, but get a little of the downside and pocket that little premium. Options decay in value quickly near the end.

Why is a dividend ETF considered income and not a dividend? It's a function of an individual ETF, depending on the holdings within that ETF. You will see a mixed tax treatment. Held within a TFSA, you're good, but outside you will be taxed.

Better to buy a country or a sector? It's a tie. It depends on the country and the sector. Example: Canada which is dominated by natural resources and banks. Consider the momentum factor instead--what's performed well in the past 6 months. If that momentum is in a particular country or sector, that's fine.

Market. His company is a portfolio hedge manager in the global technology market. Black Swan Dexteritas came from BSD, which in Israel translates to “great prosperity”. They watch over 700 technology companies and sees technology being the combination of intelligence, data, and merging the virtual and real worlds. He sees the 5G market growing to $1.23 trillion by 2026, with today over 6.5 billion wireless devises growing to over 20.8 billion by 2020.

Digital Twins. His research has lead him to think that a physical object could be digitized and put on screen, creating a virtual representation of that object. From there, you can gather data and hypothetically test it to see if you can run it more efficiently. It could be a machine, factory floor or even city. Singapore brought in a company to build an avatar of their city with sensors and cameras to gather data to change things like traffic flows or even sewer flows for maintenance. Hardware, software and end-users will all play a role for future investments.

He sees value in Canadian stocks with the pick-up in oil. He likes companies with low debt and lots of free cash flow. He wishes he had bought Magna a couple of years ago. Similarly, helikes Martinrea. It's amazing how these stocks have run up in light of NAFTA and trade issues. Glad that Trudeau dropped the gloves yesterday to stand up to U.S. tariffs--which are ridiculous. A trade war would hurt both countries. The U.S. economy is doing well, and Canada is faring OK. The market was a little surprised that the Bank of Canada was more hawkish than expected this week. He thinks the BoC will raise rates once this year. Overall, the trade issue is the elephant in the room.

Market. He likes the fact there are new highs being made on the short term charts. Not a lot of enthusiasm, but good signs. Over the past year the S&P500 has retraced to the 50% mark between the high in January and low in February. All the recent lows are trending higher, which is cautiously supportive. He is holding more cash than normal.

Market. Who knows what comes out of the US administration. Changes from one day to another. All countries are responding responsible to the belligerent trade practices of the US administration. There is good synchronized global growth at the moment and this guy is risking all that. Good for the Government of Canada for standing up to the US threats. Most countries are figuring out how to negotiate. For businesses to make plans you can’t review plans every 5 years.

Trans Mountain Pipeline. He thinks the Trans Mountain pipeline nationalization was caused because of the Federal government forcing themselves into approving only one pipeline. He does not want to see another National Energy Program. He is hoping the move will convince investors to come back to Canada. The challenge will be finding a buyer once the pipeline is completed. Hopefully this is a good thing for Canada and Alberta.

Market. Value is coming back into equity markets, albeit with higher volatility than last year. Economic growth has been tepid for the past 10 years, but at least it is still growing. He feels we are in a much more positive environment than before. This is a good time to be choosy when buying stocks – look for good management and balance sheets.

Bombardier Common versus Preferred Shares. Preferred shares will be much more sensitive to interest rate hikes. They have announced diversification of their aircraft fleet, but they still remain with a stressed balance sheet. He would not own either one.

There's a great wall of worry over markets, like Trump tariffs, Italy this week and tariffs, but GDP growth is strong and so is the US economy as well as global productivity. We're seeing more automation in factories. Yes, we're late in the cycle, but he still sees good several years ahead. He's more skeptical about Canada, due to political squabbling over oil. Ontario is heavily indebted though booming currently. The Bank of Canada didn't change rates today, but signalled a July hike--it's going to happen. Our economy needs a lower dollar. The BoC will be cautious. He's selective Canadian stocks. Canadian banks can continue to rise even if the economy and housing slow, especially those like TD with American exposure. In contrast, Scotiabank has suffered due to its heavy exposure to Canada.