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

Market. The markets are extremely strong. It's a dangerous game, and he is always ready for a correction. US banks ought to be able to stay out of a crisis mode, because they've been there. Commodities are making nice moves. Oil and gas is looking strong. He sees no real problems on the horizon.

Market. Thinks most people expected 2 to 3 hikes in interest rates, and he saw there were too many clouds in the future. That uncertainty is never good for the market. When the central banker doesn't know what the future holds, it causes a little concern. However, the Cdn$ dipped a little, but has now risen. The rate increase was small, so it is going to affect the mortgage holder, but not enough to create real problems. He is still concerned about NAFTA.

Market. Things are very good. The economy is rolling along nicely, which was validated by the government raising interest rates. Also, we have had the best job rate we’ve seen in 15 years. There has been very good retail sales. However, what happens after a long extension is that risk appetite starts running pretty hot, which is happening right now. It's always wise to take the long view and think about where you are in the cycle.

Market. We are at a point where some money might be taken off the table by people who want to put it aside. When he did a look-see at the stocks in New York, NASDAQ, AMEX and Toronto, there were far less things to add to his Stock Watch list. That list is at the lowest level in over 20 years. His "end of the year" buying was less than it has been in a decade. In terms of what he does, there is far less choice at this point in time. He is looking at stocks that are down at least 33% over the past 52 weeks, and then looking at the past 10 years. It is very, very difficult right now to find things worthy of being bought.

Market. The overall volatility has been really, really low. It's been a long time since we've had even a 3% correction in the market. Inter-day we are going to get choppiness, because there is so much quant driven money and computers looking for short-term trends. He tries to take advantage of that. If you focus on the fundamentals of your portfolio and you know that it is cheap, you buy on pullbacks, which is a great opportunity.

Market. He is bullish on natural gas and weary on oil. When we have winter things change very quickly. Mother nature takes down storage so quickly that it changes fundamentals very quickly. The price chart spiked up quickly in the winter of 2014. It is these weeks of 200 BCF draw downs that do it. It is again cool and if we have another cold spurt, every time you have had 4 historically, you have a spike up to $5 for gas. If cold weather persists we will see $3-$3.50 for gas. He is bearish on oil because US production will get back up overly quickly. ECA-T is saying they increased production 30% and will do so another 30% this year. OPEC is cheating. It is a percentage of honesty. They are producing more than quota already. Iraq has to get money in the door to perform repairs to the country. More capacity has to come online.

Market. Into 2018 the expectation for earnings growth is very high. It looks like the markets could creep higher but we could start to see more volatility in them. You have to be cautious on the market. Analysts can tend to be overly optimistic on companies they follow. A weaker US$ which we continue to see is good for corporate US earnings. Gold is a range trade for a number of years. He thinks we may get a bit of a breakout to the upside. He has been adding gold positions on weakness. A new survey on the ability of Canadians to service indebtedness may cause the BOC to be a bit dovish this week and to hold off on more increases for a year.

Zinc. From the beginning of where Trump was elected we saw a dramatic change in US$ expectations. This put a lot of upside price pressure on many commodities around the world, Zinc especially. He believes the US$ will not continue to weaken in a big way from where it is today. He would not chase base metals here. We are in the last leg of the uptrend in base metals.

Educational Segment. US$ exposure in your portfolio. There is a perfect storm brewing: What the BOC will do, NAFTA, oil prices. There is Canadian dollar risk. He is fully exposed to the US$ at $0.80. There is an 85% change they will raise rates in Canada on Wednesday. The NAFTA agreement will allow Trump to cause a lot of problems without ripping it up. He will use this against Mexico because he wants his wall. There is a housing risk in Canada with the new rules combining with higher interest rates. The Canadian dollar should be weaker rather than stronger. Oil prices are being driven by the weaker US$. He thinks they will pull back into the mid-$50s. Go unhedged in ETFs for the next 6 months.

Market. This is one of the great Bull Markets of our lifetime. The global economies are booming, the US has increased its GDP forecasts, Europe is actually stronger than North America for the 1st time in a long time, and emerging markets are doing very well. We are in a Goldilocks environment. Haven't been here since the 1990s, so just lie back and enjoy it. Warren Buffett explained that the tax cuts are giving every stockholder a 20% increase in the value of their shares. That is going to propel markets for another year. He is quite sure we are going to see earnings surprises continue through the 1st half of next year anyway.

Market. We are coming out of 10 years of financial repression and low interest rates. The two-year treasury actually went over 2% today, the first time since September 2008. Capitalism has been on its back literally for over 10 years. As interest rates move up, that is showing that capitalism is coming back. The market is recognizing that. The last time he was on the show, his fair value for the S&P 500 was around $3100. Now we are getting revisions and a jump up in earnings that we are going to start to see starting next week. Now his fair value for the S&P 500 is over $3200. We are on the verge of a parabolic move.

Energy? On the back of this global growth, there is definitely room for oil to head higher in 2018. The 2 key questions will be, what will the US supply growth do this year and will OPEC be able to hold their production cuts. At the end of next year, he expects we will be at almost 100 million barrels of oil a day in demand. The price Canadian companies are receiving for their oil is much lower than what the world oil price is. Oil by rail will be another huge story for 2018. He still thinks the bias is for oil to head higher. He is expecting a $70+ handle on oil before the end of the year.

Cannabis. Is it better to go with an ETF or choose one of the current companies? When would be a good time to get in? Not a space he is in right now. He looks for consistent businesses that generates positive earnings. There is a speculative frenzy going on now, so a lot of the shares have gone up incredibly. You are much better to own as a basket, because nobody knows who is going to be a winner.

Market. US Bond yields of 30 year bonds are down over the last 30 years but you can see a double bottom and they have broken the trend to the upside. We had a great melt up since the beginning of December. We are out of the disinflationary camp. There is synchronized global growth. We are moving almost to inflation. A stock breaking though its trend line like this would be bullish. In 2013 the TLT ETF lost 20% in 4 months and it holds government bonds. You have to be tactical in fixed income this year. The strategy makes sense.

Market. S&P 500 is trading around 24X. Historically it is usually 16X. We are getting overvalued. Now we have tax cuts, consumer spending, expectation for GDP growth, hence the expectation that if earnings are growing at a faster rate, then the stock market should grow faster. Peaks have occurred in 1929 before the market crash, up and down until 1938, and then the tech bubble in 1997 and 1999 was a melt up before everything came crashing back to earth. In this phase, we could get a melt up. If it happens, be prepared to manage your portfolio appropriately, so you will be able to counter if we get any kind of a selloff after.

You should pay attention to a stock's beta. For example, you have some high-flying tech stocks which are trading at high betas, which is simply the price volatility relative to the underlying index. If the market index is 1, and the stock is trading at 1.75, that means for every $1 the market goes up or down, the price of the stock is going to go up or down by 1.75. If the stock market were to fall 40% like it did in 2008, then the stock's share price is going to go down 65%-75%.