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

Marijuana stocks? There is a concern that a lot of people are getting ahead of themselves. The stocks are discounting, in some cases, total production sales into 2019. One analyst said that the overall average valuation is now 20X Enterprise Value to EBITDA based on 2019 production. You have to remember that a lot of the companies are in the mood for production. The real key is distribution and sales. Canopy (WEED-T) has a really good opportunity to say that this is going to be about low cost, getting branding. There is also a huge opportunity with LGC Capital (LG-X) which has a great opportunity to be in south Africa, and if they get approval, will be able to export globally. Thinks the demand will be there when the full recreational market opens up in Canada. The advantage we have is that it is federally approved.

Market. There is going to be a business in Canada in Marijuana but it is not nearly big enough to support the $6 Billion market Cap of just WEED-T. What worries him is that he is seeing unsophisticated investors buying online and having no idea how to value the companies. It reminds him of the .com bubble. Heavy users will grow their own and the government price that is set will be unsustainable. The whole thing is a complete bubble. It will end in tears.

Negative Sectors. Sector allocation should precede stock selection. Be wary of oil sands. Frackers will get back into business in the US and oil prices will be down by the middle of the year. Don’t own oil production. Don’t own precious metals. Gas is better than oil. Cryptic currency does not form a part of his portfolio.

Market. One thing to be careful about with the Dow is that the price weighted index versus the market weighted index gets a bit, convoluted over time. When looking at the long-term health of an investment portfolio, the Canadian market offers a great set of long-term conservative dividend paying opportunities that can really help track that move from bottom left to top right sustainably for your whole investment horizon, versus a quick move up to the right over a few years or months that can ultimately come right back at you. He would like to see, especially the longer rates like the 10 year, start to move up, which would indicate further health in the economy and that the economy is able to absorb the increases that are happening in the short term. However, eventually that will choke a growth and you wonder about all these leveraged vehicles that are built on the world of low interest rates that we have had for almost a decade.

Marijuana stocks? There are lots of companies you can buy, especially in Canada. They have been going up pretty sustainably over the last 1.5 years. Depending on the time of day they can be up 10%-15% or down 10%-15%. There is a lot of volatility. If you have a belief in it and want to be invested with a portion of your portfolio, there is no problem with that. He is not investing in this sector.

Should $50,000 Cdn be converted to US$s now? The Cdn$ is one of the hardest things to forecast. It's his view that the Fed leads the Bank of Canada, and if oil stays range bound between $55 and $65, you'll probably see the Cdn$ weaken a little from here. $.80 is a pretty decent level to be getting US dollars.

Market. Things look pretty good. We have some short-term hurdles as always, and we’ve had a lot of overbought situations that really never manifested. The last significant correction was back in August. The intermediate term is looking pretty good. We have an issue as rates move higher, i.e., what is it going to do and how is it going to change the landscape. There will be a possible short-term pullback, but looking at the structure of the different sectors, it’s a pro-growth theme. The defensive side of utilities, bonds and staples to a large degree are starting to trend downwards compared to the S&P. It is a sort of sector rotation. That means the pro-growth theme is going to move ahead, but part of that is the inflation theme.

Energy. Oil looks pretty good. $60 is sort of a key level, which is part of the pro-growth theme. The important part is the breach that occurred last year, and we now have an upward trend. All the oil producers were pretty good.

Should extra Cdn$ be switched to US$ at this point? Last year this would have been a good question, because it was a little clearer. Given that we have a sort of pro growth theme going on, the Cdn$ is probably going to want to move higher. The drive is definitely higher for the next 5-6 months. $0.83 would be the next spot, and that would be a good time to make the switch.

Market. 2017 was the year where almost everything went up. TSX was up about 6% and the S&P 500 was up about 19.6%. It wasn't just 1 or 2 sectors doing well, but it was across all industries and asset classes. Looking forward to 2018, the 4th quarter is going to be looking pretty good because we had a strong consumer going into the holiday season which should help boost a lot of consumer names. When you have strong consumers, other stocks usually do well also. However, he would temper expectations because it is not every year you are going to see all these asset classes go up like they did in 2017.

Hold or take profits on a stock that has gone up 67%? When you see a triple or a double, take out what you have put in. In that way the stock doesn’t owe you anything. If you still like what is happening, then you can let it ride.

Cannabis leader? You need to have 2 hats when entering cannabis stocks. You have to have the speculative hat where everything is going well, momentum is good, and there is a lot of hype behind it. With that, you could definitely make an argument for owning them. It is speculative, high risk, and highly volatile. However, when putting on a fundamental hat, it is very hard to get numbers to where valuations are. Canopy Growth (WEED-T), valuation wise, is trading at about 5X next year's Book and 7X current year's BV, stock is trading at about 23X Sales. Analysts are expecting the company to put up $550 million revenue by 2020. Even if they do, and they issue zero shares, it will be trading at 11X Sales by 2020, which is a pretty high valuation. It’s hard to make an investment case for this. A preferred way is probably to Buy an ETF.

Market. This is a very unique time in the market where the professionals have very little leg up over the average investor right now. The 3 biggest stories will be the crypto currencies, the cannabis space and the market levels, of which the professionals bring very little extra to the table. As the market crosses 7,000, these numbers mean very little. They used to matter and he used to trade on and off some of these restriction ranges, but doesn't anymore. With crypto currencies and the cannabis space, they are in the infancy stage. Everything is new and it is exciting.

Canadian Banks? One of those sectors that, like a lot of sectors, has had an incredible move. Looks positive. If you believe this market is going higher, then you can hang in. He can't see a reason not to be in these.

Market. The TSX has gone through a bit of a hard time this year, but we’ve broken out from the short term downward trend line, and currently are making decent progress. Charts indicate we should be going upwards, so a bullish conclusion is reasonable. The S&P is a very good upward trend without a broken channel this year. We are now in the early stage of a new bull phase, which argues for the TSX to outperform S&P, but there is no sign the S&P is slowing down. Going into 2018, the Canadian economy has its work cut out for it, as well as having to deal with the NAFTA negotiations.