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

Holding ETFs vs individual stocks. The ETF advantage is that you are getting diversification. The problem is that they have multiplied like rabbits. So many now that you have to be careful. Stay with the ones that give you representation to the larger space.

Market. There is uncertainty with the discussions between the US and China. He thinks investors should just dig down to fundamentals. In Canada almost 57% of companies matched or beat on earnings and 59% beat on revenue. Companies are looking strong and Canada is looking interesting. The Canadian dollar is stable although weak so our exports look cheaper. [Today's show started late, leaving room for only one opinion before Past Top Picks.]

Market Outlook. We are seeing a seesaw pattern with the markets Very solid economic numbers coming from around the world. Fundamentals look good. On the other hand, we are worrying about interest rates coming up. We worry about geopolitical tensions. We worry about a potential trade war. The long-term side of the yield curve is going to get close to the 4% level (he thinks). Stocks are going to continue to outperform bonds. Canadian banks continue to roll on nicely. With Trump there is always this pattern of big words, angry words and negotiations afterwards with much calmer policies. Keep a big bottle of salt in your cupboard because you have to take everything with a grain of salt.

What is a half position or a full position? In equities if you have 20-25 names and you have equal weight you are going to have 4 to 5 % on each name. That is a full position. Half position is 2% to 2.5%. He just goes for full positions. He does a lot of research.

Market. The Financial sector in Canada has been underperforming the TSX since April. The last three interest rates hikes have not proven as good indicators for the banks, despite expectations that it should be supportive for them. Although they can make more money it is impacting their mortgage business negatively.

Sell in May. From May 6 to October 27 tends to be the weaker six months in a given year. This is the time de-risk a bit and accumulate cash to look for opportunities.

Market Bubbles. The market could be susceptible to a correction, but it is only probabilities. Europe is starting to fall apart with weaker earnings. The US seems to be standing alone with its market success – but will it last.

Seasonality in Industrials. These tend to do well from January to May and retrace in the rest of the year. There has been weakness earlier in the year than normal, which is suggesting headwinds for this sector.

Health Care Sector. This tends to be known as a defensive sector, because of the stability of earnings. The issue this year was that President Trump threatened to come after the pharma sector for medication costs. Seasonally the sector tends to do best from August into October.

Bank share selloffs after earnings. Canadian banks are very popular and investors tend to prices up in anticipation of earnings, especially ahead of year-end earnings. There tends to be a price decline unless there is a really bullish earnings surprise. The concern today is about mortgage origination. This trend is scary for the sector.

Cash. This is the time to be more conservative and there could be bigger corrections than normal, so he wants to take advantage of any opportunities. Since 1950, eight of the largest market corrections have occurred from May 25 to October 27 – especially September. Only two big drops have occurred outside this window.

Breaking news: Canadian government blocks Aecon takeover by a Chinese company: There are security concerns. Aecon builds military facilities, nuclear power plants and telecommunications. It must've been a difficult decision, since
Trudeau wants to build trade with China. But realistically, it's probably a good thing to block this deal out of security reasons, and it's not the only deal that's been cancelled for this reason. It's a tough decision. It was always a risky deal, and tomorrow there'll likely be more downside and significant market reaction. Regardless, Canada needs to build infrastructure.

What to do with cannabis stocks once cannabis is legal? They're like mining stocks, which start with a run-up in price afer people recognize that there's a reserve of the mineral. Then you do an environmental study and raise money, but then people get bored until the mine goes into production. HMMJ-T ETF peaked at end-2017 then pulled back in early-2018, but now that we're approaching the time when the rules will come into play (legalization), we're seeing M&A and a lift. This group is now interesting. He holds a 4% in the cannabis sector.

Overview. He doesn’t sell everything in May, or even most of his stocks, but he does his tax-loss selling now and prefers to buy in August / September when prices are more likely to rise. This is a good time of year for stink-bids, in which he offers a low price late Friday and sees if someone fills it over the weekend or on Monday. However, he does not use put options because he prefers not to force himself into timing issues after he has bought a position.

Uranium. This sector has been out of favor. Cameco (CCO-T) and GSE Systems (GVP-A) are his picks in the sector.