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

Bear Markets. Inverse ETFs will go up 1:1 when markets to down. Don’t use leveraged ETFs. Utilities are best correlated to interest rates. Gold can rally in a bear market. You have to look at bonds because they rally in a bear market.

Cyber Security. There are two ETFs. HACK-N is one. You get access to all the companies playing in the space. It has been trending since day one. He would buy on dips as the ETF has been climbing since its inception. Risks right here are a little high, however.

Educational Segment. Measuring Risk and Reward. Within 20 years the vast majority of money in the world will be run by computers. The traditional portfolio manager will be gone. E.g. SU-T, 25% of the sector, a big player. Going back 10 years it has made nobody any money for 10 years. It is up less than the dividend. Buy it when it is cheap relative to the benchmark and the markets. Figure out how much you need in your portfolio. The price of oil is the most important factor in the stock price. Looking at the 5 year chart it is incredibly overvalued.

Markets. The US banks are overcapitalized greatly so expect special dividends, increases, buybacks etc. He is expecting more lending and so on that will make them grow. If the US economy grows overly, people will pile into the US $. Eventually all that reverses, but that would be a long way down the road. If we can get capital investment going again, that is all positive for the US$. It is positive for material stocks.

Market. The month of February tends to be a little soft i.e. choppy. On top of that, there is a unique formation. Last week the market hit a new high on a gap i.e. it opened higher than the previous day it closed at, and then it spent 3 days at a new high level, and then opened down without ticking down, an island. Since 1975, every time a 3 to 7 day island happens, we tend to get a 1% drawdown over the next 30 days. With February normally being a seasonally choppy month anyways, along with the “island reversal” he is going to give the market a good chance of being choppy over the next few weeks. However, we are still in a bull market. If the market dips low enough, it is time to Buy.

Auto parts sector? These tend to be choppy. They do tend to have a little bit of a pattern of moving up into the spring, along with industrials. He is cautiously optimistic.

Covered Call ETFS?

He likes these. He has 2 platforms. One is an equity platform that has a high turnover and which he trades frequently. He doesn’t pay a lot of attention to dividend stocks on this one.

The other is an income paying platform. It has some bonds, but it is 50% income paying stocks. In this, he has at least one Covered Call ETF, Canadian Banks (ZWB-T). He has also traded the utilities (ZWU-T). Both of these are pretty good products.

Currency? (You can also check out his blog on his website, ValueTrend Wealth Management.) A one year chart of the US dollar versus the rest of the world shows that it has recently broken down a little. However, looking at a 3-5 year chart, the US dollar is coming into a level of support. On a worldwide basis, he doesn’t see the US$ having a whole lot more downside. A Cdn$ chart will probably show a bit of short-term strength, particularly if oil picks up over the next few months. Over the long-term, he would be long the US$ versus the Cdn$.

Precious metals? As far as gold goes, the seasonal pattern ended around the end of the year. Seasonally, it tends to be neutral to flat, but also has a pretty strong technical resistance. However, silver tends to enter into a positive seasonal period right now. Also, the chart looks like it has done a bit of a bottom formation break out, looking like it has a little more upside and probably has 1 to 2 more months of upside.

REITs. It is hard to find screaming bargains as the sector looks pretty fairly valued right now, especially in Canada. He is not seeing a lot of income growth, so they are not able to raise the rents a lot. There is also concern of the interest rates. The yield is going to make up most of your return going forward. The market has been very counterintuitive and very challenging for investors. He is seeing more value in retail REITs in the US. If you can isolate the locations you think will be the “go to” shopping centres, there are good opportunities there. Simon Property Group (SPG-N) is a REIT that seems to pick these up.

There are a couple of Trump risks that do affect REITs in the US. There is the 1031 exchange which allows a sale of the property and then the immediate reinvestment of the gains into another property, with no tax having to be paid. This is a great benefit to Canadian REITs that are buying US properties. There is talk that it will be repealed, which will change the game significantly. Also, if Trump reduces overall taxes, there is a concern that it will put downward pressure on US REITs.

Market. He is just sitting, waiting and seeing. There is a lot of fanfare and a lot of talk. He would like to see what the US Congress is going to do. It’s going to take time. Feels that the Keystone XL pipeline will go through.

Markets. When you look at the market, financials had a huge year and resources had a huge recovery. His job now is to keep those gains and make money along the way. If you are being paid a dividend then you are being paid to wait. The S&P has sold off on news after building on rumour. What we are seeing now after induction is that it is becoming news and he is having difficulties getting his promises through. The question is if Trump can keep up with his promises.

Iron Ore. VALE-N has had a heck of a run. Iron ore and met. coal have rebounded. They are not going bankrupt. BHP-N has had a great double in the last year. These are the right names, but be is not a real bull on Iron Ore. He owns TECK.B-T so he does not need these.

Marijuana or Oil Stocks? Invest for a good time or a long time… Marijuana is much more speculative. Distribution of the product will eventually end up in a safe sector. He would not go for Marijuana stocks.

Emerging Markets. A lot of emerging market countries have their debt in local currency terms rather than US$. That is important, because if debt is in your currency, you are never in default, because you can just print more. That is why she thinks vulnerability with EM is a lot lower today. What is happening in North America markets i.e. people getting out of defensive stocks and into cyclicals, is the same for Emerging Markets. That is not only in the sector level, but also in the country level. There has been a rotation out of the more “safe” value, defensive countries such as Korea, and going into Argentina, Peru, Colombia, Chile, Russia and Brazil. Investors have to stay diversified because there are a lot of macro events which can be a surprise. Whatever happens in France and Germany, will have very minimal impact on Europe overall. However, if something happens to the euro zone, the global economic picture could be impacted. Emerging markets are still very undervalued. Currencies are interesting, but with the US Fed potentially hiking 3 times, emerging market currencies will probably stay range bound for the near term. A lot of the “worse case” fears that caused investors to leave EM just didn’t play out.