A Comment -- General Comments From an Expert

A Commentary

Market Outlook A large oil stock build this week when a draw was expected has put downward pressure on oil prices. We have almost 100 million barrels more in storage than last year and another 5 weeks before the summer driving season begins. We might see another run towards the low-$50s for WTI soon. Be a buyer on weakness. He thinks debt is still high for some key players like CPG-T and will hold back companies from buying back shares to improve per share metrics.

Why look at energy? He has seen two incredible bull trends in energy in his career. The last bull market was from 1999 to 2003. There were several 10-baggers during those cycles. He thinks a new bull trend started in February 2016 when we were at $26 per barrel. He is now watching India as the next source of major demand -- eventually growing to over 5 million barrels per day over the next five years. In the next five years, he thinks a five-bagger is possible in TSX Energy in the next handful of years.

Market Outlook - The trade war is weighting on the market. The US is basically holding all the cards. China can't stop importing what is importing. The only thing they could do is sell their US bonds but then they would have a currency problem driving their own currency up making the trade issue worst. India is then next big market to emerge. For now he prefers to play it by investing in large international companies with exposure to those markets.

Market. There are a couple of wars being fought. The super powers of China and the US are fighting a war that is bigger than is going to be solved this year. Now there is a technology war that is happening. It needs to be fought if the US is going to be a power in Technology. The smaller wars probably get solved with band-aids this year. China has their 70th anniversary this year and the US is starting the 2020 election campaign. He sees no recession on the horizon. Investors should be cognoscente of technical levels. The Fed has said they are not hiking this year.

Bitcoin vs. US$. The US$ is backed by a stable government. Bock chain may become a form of payment for younger generations. But Bitcoin is too volatile. It might change value before your transaction settles. There is always a market for something that gives you an alternative. With Bitcoin it is buyer-beware.

Market Outlook The Chinese trade situation is multifaceted. You have worries of spying in Canada and he wonders why our government is so uncertain how to proceed. You have to go back to the 1930s when we saw this type of trade wars.

Retail sales data of late have been weaker than expected. Trade talks is on the mind of investors. The sectors that are more driven by trade have lead the declines. However, corporate earnings are still looking good. 1.4% year over year on earnings growth. Monetary policy should be accommodative for some time. Last few years, growth companies have outperformed value companies and with low interest rates, he expects this to continue.

What's market telling you right now? It's decently positioned. Canadian market hasn't gone up a lot over the last 5 years. So Canada has more upside than the US, because of valuations. In the current decade, energy and materials represent only 25% of the TSX, a decrease. TSX is neglected among the world indices. Valuations are very attractive. Since 2010, S&P has done 3x better than the Canadian side. Financials are the biggest sector, but are still trading at lower valuations than the norm. International investors have turned their backs on Canada in energy. So this is an opportunity.

Navigating the choppy market. Volatily can be your friend. If you like a company that's a chance to buy it. The markets seems unsure about the direction it's going in. Regarding the trade war between China and the U.S, he thinks the U.S. is in a pretty good place since they don't export as much to China as China exports to the U.S., and the U.S. economy is going quite well, they can afford going through this deal. It used to be the Republicans and Trump being against China, but now you got the Democrats saying to put pressure on China.

Market Outlook He thinks we are into the correction part of "sell in May and go away". He is watching long term bond yields, if 10 year yields drop below 2.35% it is a sign that investors are heading for the exits. A break down could take the yield down to 2.00% -- a big boom for bond holders.

Price to book It compares the net worth to the value of the company. A cyclical company may trade below book value. Software companies trade a huge multiples. When compared to ROE, it has some positive influence on share price value.

The Dow was down today, though the US will lift metal tariffs against Canada and Mexico as the China-US trade war continues. He can't keep track. It's worrisome. Talks have stalled. Be patient. The market can't keep going up after Christmas. The trade war won't go on forever. Will interest rates still low? Stock market will stabilize, given low rates. Good earnings in Q1 including from Apple, but there is now the reality of American companies passing tariff costs onto their America customers. Apple's valuation is attractive now. Each year there are 3-5 pullbacks, so pullback like this should be expected, and each one is a buying opportunity.

Market. Sustainable Investing, or Socially Responsible Investing, involves soul searching and doing less evil, getting rid of the worst companies as well as doing more good. 'Doing more good' involves renewable energy, water infrastructure, and organic food. Sustainable investing is just managing your money. Definitions of what companies qualify vary. You may invest in companies that will benefit from a low carbon economy. Look at what you buy and understand the companies you invest in.

Green Technology Recommendation. He does not like picking specific technologies because there is a lot of change where something better comes along in the green sector. He would suggest an ETF (e,g, TAN-N) but for a stock he would go with FSLR-Q or BLDP-T. BLDP-T had disappointing earnings where they re-jigged their factory. There is a new model solar panel coming out early next year. There could be a really good buying opportunity.

Market Outlook - Consumers need to understand that if tariffs on products from China are increased you are going to pay more on many products as a lot of stuff comes form there. Private Equity seems to be an in vogue thing now. There is a trend now for for smart money to take public companies that are undervalued private. On the pipeline and energy and services global markets have kind of ignored Canada as they don't want to deal with the current regulatory environment and Government but that is changing over time as we see changes on Government at the Provincial level and probably at the Federal level. So more pro-business policies are coming.