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

Markets. Over the span of his career, things are back to normal. The last few years have been a bit too linear. That is not how markets normally work. Nobody likes a bumpy ride, but in markets like this you want to get something for something. You want to outperform and then see markets get back into a healthy state. He made a call in the spring to move away from industrials with more FX exposure and that helped quite a bit. Clients want to be up, but you have to realize that the markets give you a premium for the risks you take. The US is the place to be for a portion of his clients’ assets.

Putting all of the caller’s RIFF in the US. You have to decide if you want to invest in a concentrated way. The question is if you can do it successfully over the long term.

Markets. In May he said to go in a big part to cash. He looks at longer term leading indicators. ‘Dumb’ money in March was buying and smart money was selling at that time. The VIX was quite low. These leading indicators said he should get out. Now we are seeing these same indicators, like VIX and market breath, reaching extremes. Also, he saw the ‘smart’ and ‘dumb money ratio reverse. Yesterday he got a special indicator. It was a Japanese candle. He needs two more days (today was one) to the upside to prove that it was a bottom on this correction.

Markets. We are in a long term secular bull market. Money is slowly moving its way back in after being out for 13 years. There have been 6 or 7 significant correction during this bull market. They reset and then leadership resumes and markets work their way higher. He makes moves to protect his portfolios though corrections. He feels we are a long way through this correction. As more stocks start to perform better technically, things will start to quickly improve. It looks as if we are going to re-test or even cut below the recent lows. Healthcare has really taken it on the chin recently so he has been stopped out of a lot. Consumer discretionary is a beneficiary of low energy prices. Financials also have benefited, especially US financials. If we had a crisis on our hands this is not how they would perform.

European equities. He saw deteriorating breath in Europe in April. He stopped investing new money and tightened up stop losses. He still has a couple of tech companies there. He would rather not recommend a single European name at this point.

Biotechs have been creamed over the last couple of days. As a sell off picks up steam, investors look for anything they can take profits in, so biotechs have been hit hard. Investors should be looking hard at the big names in this sector. This group will likely have a very good turn as markets start to improve. He likes GILD-Q.

Financials have the biggest weighting in his portfolios (mostly US). Large US banks are good. Regional banks could be more interesting or KRE-N that invests in a basket of regional banks.

Solar or Wind recommendation. He is cautious on energy. It is a tough space to be. He recommends ETFs (e.g. TAN-N) for the group. TSLA-Q is also recommended. VMC-N is another. Be careful adding anything in this space except as a trade.

Markets. This is a correction within a bull market. A 10% decline in 4 days only happened 9 times in history and after that it re-tests the lows. These are interesting times. It might be worth starting to dip your toes. There are a lot of risks in the market right now, however. Going into the summer he positioned for high risk. There is a lot of nervousness in the markets. He started picking away the last few days. The TSX got into the buy zone. Use stop losses. S&P earnings will likely be flat for the year. CXR-T was weak after the deal. The money from the new issue is in the bank. He thinks they can earn $6 a share conservatively so it is undervalued at these levels. He does not think the sell off is warranted.

Markets. Chinese profit numbers show an 8.8% drop. It is not surprising to see it unwinding the way it is. The Spanish are going to use the referendum to put together a proposal to separate from the EU. It is one of the things that complicate a recovery in Europe. The EWP-N ETF shows downside even after you take out currency fluctuations. There potentially could be some more downside.

In his dividend fund he hedges sometimes and not others. Now he is fully hedged. He is doing 30% covered calls (usually 20-40%).

Educational Segment. Financial Literacy. Financial Fraud: Guest’s book talks about avoiding identity fraud and financial fraud. People should go to their accountant with an offering memorandum before investing. The accountant should be independent of the offerer.

Markets. It has been a very difficult environment for small caps for the last 4 years. The energy names are coming off quite a bit. He concentrates on companies with good balance sheets and are good producers. He is still 8-9% in energy for his Canadian portfolio. He is waiting with cash on the sidelines to make some purchases as we get to tax loss selling. You have to buy companies with balance sheets with next to no debt. The tech sector in small cap looks good. There are special situations in base metals.

ETF Turnover rates in actively managed BMO ETFs. It is a measure of how often the manager makes trades. BMO does active management through covered call strategies. You have to look at the financial statements. Look at the SEDAR website to get the financial statements. Look for the TER (Transaction Expense Ratio), which will be in basis points.

Is there an ETF that tracks Canadian equities with resources removed? There is not one in Canada.