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

Growth of ETFs

Lots of new products. No one issuing ETFs can try to compete with the MERs of Vanguard. The game is over in terms of cost-cutting for ETFs.

Today there are more ETFs listed on the ARCA of the NYSE than there are single stocks. So the ETF world is growing rapidly. But almost all the new products are innovative and thematic. They're charging management fees that are 70-150 bps. But they're doing things that are different. There's also more work and thought involved than just replicating the biggest index in the world.

Here's an example of an ETF he likes to use, RSP, at 20 bps. It's an equal-weight S&P 500. ProShares recently launched an ETF called URSP -- ultra, which means it's 2x the upside and 2x the downside risk when you're wrong. URSP carries an MER of 95 bps.

Fixed income's been dead forever with falling interest rates. But it's one of the fastest-growing areas in the ETF world. Active strategies are growing rapidly versus passive strategies. Why? Because the average management fee on  passive is very low, and no one wants to compete with the Vanguards. But you can compete if you have an active strategy, while earning more in MERs. Many are worth it, but some are not.

At his conference in California this morning, he picked up a fact sheet for DDTS. For 79 bps, it gives you 10% upside on the S&P over the next year and 10% downside. If it goes down more than 10%, you're at risk, but you can't get more than 10% on the upside. Lets you make money on both sides of a market, but you are paying that higher MER.

There is investor speculation going on in different areas along with the return of meme stocks. An IPO window is opening and there is more leverage to ETF's coming to market. Also there is an increased popularity of call options, penny stocks are are coming back in vogue, and tech stocks are way up.
However just because the market is hitting all time highs doesn't mean it's going to drop back right now. The overall sentiment is still quite neutral even though parts of the market are getting frothy. The U.S market is becoming politically polarized with the Republicans being much more optimistic. There are grounds for interest rates to come down.

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Companies that pay regular dividends tend to be larger, well-established firms with stable cash flows and solid balance sheets, which help buffer their share prices against large swings. The cash flow from regular dividends offers investors a reliable return even if share prices fluctuate, making such stocks less susceptible to panic selling during downturns. Dividend-paying companies are often found in defensive sectors, which are less sensitive to economic cycles, further contributing to their lower volatility.
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He's always optimistic, so the answer is yes. The economy looks OK. He did look at the jobs report. The forecast for Q3 in the US was 3%, and it'll probably still be close to that. Interesting thing is that with today's jobs report weaker than last time, who's Trump going to fire this time?

Good chance of a rate cut in the US, with or without jobs being weak. Trump's pushing hard for that. That should be positive for the market. Doesn't seem to be a recession in the wind, so we should have a reasonable stock market.

Canada's job reports have been pretty weak for a couple of sessions now. The economy is weaker than we hoped, and it's all tariff-related.

Widespread talk about that market being overpriced at 25x PE. If you pull out the Magnificent 7, the less-magnificent 493 are trading at 16.6x PE and that's not a lot. It's below the average of the last 20 years. 

His team buys 25 stocks in the US, so he doesn't really care about the market per se except for the beta part of it. He looks for companies that are quite cheap, and he's found some.

He looks only at companies that are fundamentally sound, with businesses that will substantially increase in value over the next number of years. Looks for catalysts that aren't yet recognized in the stock price, so they're cheap on certain metrics. His team's view would be different than the consensus view.

That strategy works well over time, and it works well in slowdowns.

Why Investors Like Dividends: Dividends Get You Back to the Basics

In today’s high-speed investment environment, and with trading platforms that have used gamification features such as Robinhood Financial, it is surprising how many investors do not really know what they are buying. Many don’t even care, as long as it goes up, as evidenced by the meme-stock trades that pop up — and crash — every now and then. Dividends can help remind investors what they actually own: a portion, however small, of an actual operating company. Owning shares means you are an owner of a company. As an owner, you should be entitled to some of the profits, and this is exactly what dividends are. Knowing this, you might be inclined to keep your shares longer, if the company is doing well. It can help an investor ascertain the difference between company performance and stock performance, as we are sure you are aware that these two factors often diverge.
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Historically, September tends to have some weaker seasonality. That said, we've seen some strong momentum going into September with 4 straight months of gains in the market. Earnings have been good. S&P 500 Q2 earnings were up 13% YOY, with 81% of companies beating estimates. Analysts see about 12% growth for 2026. 

Add to that approximately $1T in stock buybacks in the US. Liquidity of $7.2T sitting in cash in the US. That's a lot of dry powder and could potentially be a powerful tailwind for equities, especially if we see an interest rate drop (90% chance of Fed cut later this month, 60% chance of BOC cut).

All that lays the groundwork for continued gains for equities. Still might see a bit of volatility in September, given that we've had a very strong 4 months.

Independence of central banks is important. That's why we've seen weakness in the US dollar relative to other currencies. That policy uncertainty has been something to consider in the US. But when you look at markets and the drive from technology and AI-themed stocks, the market continues to be strong.

He does like those areas, as well as industrials and communications. Other sectors are a bit too defensive at this juncture.

Prefers it to gold right now. Especially the bullion, as you get away from problems with mines and management. In addition to its being a safe haven, you get the added benefit of industrial demand with EVs and electronics. Gold to silver price is about 85:1 right now, very extended and silver might have a recovery.

You have to look at what's happening in the US. The uncertainty on US policies weakens the US dollar, which helps gold prices move higher. Be cautious, as it's very "shiny" and popular right now. Looking back to 2011-2016, gold prices fell 42% over 52 months, and a similar drawdown in the 1990s. There's a risk with gold, same as with anything else. Don't get too overweight, as it can have volatility as well.

RSI is way off the charts here. To enter, wait for a pullback. 

His approach has always been total return, and dividends are part of that. If we get dividends along the way, that's great. But they're just one factor. He doesn't want to exclusively chase dividends. Sometimes you get a company paying 5% in dividends, but the stock's down 15%.

So it's important for him to see earnings growth, as that can lead to future dividends. But, more importantly, it leads to reinvestment and more capital appreciation.

Her firm is cautious on a good day, let alone where we are today. They're conservative investors, wanting to focus on dividends in general. Their thesis is that the more you rely on dividends coming in, the less you're relying on the overall market to do the work for your total return.

She feels that today the market's doing one thing (going up), but the economy is telling a different story. Looking at the sub-sectors, gold is telling a different story and bonds are too. There's a lot of hesitancy out there, looking to gold as a safe haven. Gold prices have gone up over the last 2 years, and really in the last 3 months. Economic data is hit and miss. Full impact of tariffs hasn't been priced in. Long bond prices are selling off.

A bit of a head-scratcher, but there seems to be this risk-on sentiment. So that makes her firm extra cautious. Hard to put $$ to work right now, as so many valuations are unsustainable. She's actually hoping for a pullback.