John Hood

Volatility overblown? Realistically, the whole focus is on what's the Fed going to do. Are they going to overreact and plunge the economy into recession? He thinks highly unlikely. Even a hike to 3-5% would be historically low. Nor does he see a recession when there's a large demand for jobs. Some of the large investment houses are seeing modest growth, but not recession. Fed's learned a lot since high interest rates in 1990-91.

Best way to handle the wild ride? Main thing is to have a strategy for dealing with volatility. Most investors have the standard 60% equities to 40% fixed income. Fixed income has been a disaster this year, as the bond market has been clobbered. He took his clients out of fixed income and bond ETFs two years ago and went to cash. Though it's annoying to sit in cash and not make any money, it's better than losing 2.5-5% in bonds or bond ETFs. It's about preparation, not stock-picking or chasing returns.

Global ETF recommendation? If you're looking at a global ETF, remember that 60% of it's going to be US. For an Asian ETF, 52% is going to be Japan. People want diversification. To get decent global exposure, you're going to need to pick up a couple of ETFs, as just one can't do it all. One is XIN, which is mainly France, Germany, UK, and very little Far East. VA Vanguard Asia is primarily Japan, a good place to be, with exposure to other countries in Asia.

If you're looking at a global ETF, remember that 60% of it's going to be US. For an Asian ETF, 52% is going to be Japan. People want diversification. To get decent global exposure, you're going to need to pick up a couple of ETFs, as just one can't do it all. One is XIN, which is mainly France, Germany, UK, and very little Far East.

If you're looking at a global ETF, remember that 60% of it's going to be US. An Asian ETF, 52% is going to be Japan. People want diversification. To get decent global exposure, you're going to need to pick up a couple of ETFs, as just one can't do it all. VA is primarily Japan, a good place to be, with exposure to other countries in Asia.

Canadian utility ETF for steady income and capital preservation? Definitely look at ZWU. Yield is really high, around 7%. Remember that, for utilities, because prices are regulated by government, they can't respond as well to rate increases, and so they tend to underperform markets. When you put a covered call overlay on them, it reduces the upside a bit, but half of it is not covered.

Yield is really high, around 7%. Remember that, for utilities, because prices are regulated by government, they can't respond as well to rate increases, and so they tend to underperform markets. When you put a covered call overlay on them, it reduces the upside a bit, but half of it is not covered.

High yield can be a red flag. But here, it's because they do a covered call overwrite, which he likes. Proprietary option trading strategy generates this kind of return. Don't be dissuaded by the high yield. Also remember that US dividends are taxed accordingly. Look at it for a portion of your portfolio.

Geographic allocation. He's always overweight the US market. Greatest breadth and depth, best regulation, strongest market in the world, most innovative technological market in the world. He gets Canadian exposure through Canadian banks, as well as XIC and XIU. He bought XLE, which is US energy. Every time he goes into Europe, he loses money. They have wonderful companies, but crazy labour laws. He tends not to do emerging markets.

Problem is that Hamilton uses about 25% leverage. As a matter of principle, his contracts state that he doesn't use leverage of any kind. So he can't use Hamilton. But that's not an issue for everyone. The other issue is that Hamilton uses other ETFs within their ETFs, so you're paying double the fees of around 150 bps, and that's way too high for an ETF.

(A Top Pick Aug 03/21, Down 6%) S&P 500 companies that have been increasing their dividends. More of a value play. It's come down with everything else, but he still likes and holds it.

(A Top Pick Aug 03/21, Down 13%) Core holding. When it goes down, he buys more. Right now, he hasn't bought more just yet, but he's looking at it. It holds about 500-600 stocks, so you get more in the mid-cap range.

(A Top Pick Aug 03/21, Down 6%) Down with the market. High yield. In US banks, so he's very comfortable holding.

Strategy when markets go down. It's about proportionality. When markets go down, you can't stand there like a deer caught in the headlights. Plan in advance what you're going to do and what you're going to buy during volatility. For example, he bought some ZQQ yesterday. He's been waiting around for months to pick his price. For holdings he already has, he's prepared to go in and buy when they hit his target price.

International ETF without Russia or China? If you want a global ETF, look at the S&P 500. There's so much interconnectivity with trade, it's hard to totally avoid countries like China. Enormous amount of trade between the US and China. Easier to avoid Russia, as it has a very shallow export market. Emerging markets tend to be heavily China, though that could change over time. iShares might be a good place to look first, as they tend to have more international offerings than the other ETF providers.