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Stock Opinions by Terry Shaunessy

COMMENT
His 2021 outlook is bright, because vaccines will be rolled out in first-half 2021, and because of cheap money (low interest rates). He sees a rotation in the no-tech sectors including mining and financials. IN recent years, US stocks have driven world markets, and in that basically a handful of mega FAANG names. Going ahead, he sees wider sector and country participation. 2021 will be the year. Vaccines won't go perfectly smoothly, given unpredictable human behaviour and possible side effects. The JNJ vaccine would be announced until January and, if it works, is positive news. Altogether, these vaccines will get the working population going.
Unknown
DON'T BUY

For recent years, he's been off and on preferred shares. Preferreds are volatile. When interest rates plunged 2-3 years ago, this asset class got reamed. HPR pays a big dividend, but also offers huge volatility. Also, it lacks the growth of stocks but carries the volatility. He had a terrible experience with this. Look at ZUP-T, which covers US preferreds which are largely fixed-rate, a key difference to Canadian preferreds. Also, US preferreds are less volatile than Canadians.

E.T.F.'s
DON'T BUY
It's a big-yield covered call ETF. Careful chasing high-yield ETFs, because this depends on how the underlying holdings are doing. In this case, it's healthcare, which is doing well during Covid. As a rule, he avoids covered call ETFs; the total return is actually low. In a rising market, you give up a lot of upside in cc-ETFs.
E.T.F.'s
DON'T BUY

You're in the heart of market performance. The top names here have been driving the market in the past 5 years and especially this year, like Amazon. This ETF is fully priced. He's worried about FAANG, actually. Hedged is okay.

E.T.F.'s
DON'T BUY
Caller hold this as a 10% weighting in portfolio The new economy (tech) stocks is played out with high multiples. Having a 10% of a single ETF in a portfolio is risky, too high. Be careful.
E.T.F.'s
DON'T BUY
Bitcoin in general He doesn't think this will ever be a transaction currency. For a portfolio, Bitcoin is an alternative investment. He's wary of Bitcoin, so less clear in pricing and origination. It's too much in crime, money laundering and tax evasion. He'd much rather own gold bullion--it's tangible, has a history and he know what it operates.
E.T.F.'s
PAST TOP PICK

(A Top Pick Jan 24/20, Up 12%) Owns a lot of this. Two-thirds of this are mega-cap Chinese and Korean stocks, including Alibaba, Tencent and Samsung which rank among the biggest in the world by market cap. Yet, they aren't in indexes like EAFE. Eventually he thinks these big names will be migrated into the regular global ETFs. For now, XEC is the way to play them. Growth will come from Asia.

E.T.F.'s
PAST TOP PICK
(A Top Pick Jan 24/20, Up 8%) EQL de-emphasizes tech which is perfect for the expected rotation into non-tech sectors. Big US tech is getting fully priced.
0
PAST TOP PICK
(A Top Pick Jan 24/20, Up 2%) He likes Europe. Banks there have been under a lot of pressure. He expects North American banks to do well, but Euro banks are really cheap--and are essential to VE-T.
E.T.F.'s
PARTIAL BUY

Or other similar ETFs? They're all basically the same thing: the S&P 500, the number one index in the world, holding every famous American stock you can think of. Looking ahead, he expects other country indexes to outpace the S&P 500, including the TSX. But you should still have some exposure to the S&P 500. Go with the equal-weighted S&P 500, rather than the hedged or unhedged ETF. Go with the EQL--it's fine. Don't worry about the CAD, because the Bank of Canada won't allow the CAD to go much above 79 cents.

E.T.F.'s
BUY
Industrials (and financials) will be the winners in the coming reopening. Overall, he doesn't like sector ETFs, because they overcharge to manage just a small basket of stocks vs. an overall index at a low MER. Caveat: Don't own more than 5% of a sector, including industrials.
E.T.F.'s
BUY
Charges a high 0.49% MER. EWJ is one of the earliest ETFs. Japan will do well in 2021; the Yen will grow as will Asia in general. It's a call on industrial and financial Japan that will continue to do well. Japan is the #2 or #3 player in the world, remember. Also: AEFE is an indirect way to play Japan at a lower MER.
E.T.F.'s
BUY

And how to judge an ETF? He starts with the asset class. Large caps: 60% America and 10% emerging with 3-4% in Canada. Look at the sector and stock exposure of the ETF you're considering. Here, these are ex-North America, an area he is really fond of now, because he expects emphasis to shift outside America in 2021. There's much more emphasis on non-tech sector, which will benefit from the reopening and cyclical recovery. For ETFs, he looks less at PE ratios. He also looks at liquidity. He has a bias in favour of Blackrock, because it's the most liquid ETF provider. (He owns BMO, Vanguard and Horizon, too.) Look at MER. Key is what makes up an ETF.

E.T.F.'s
COMMENT
An ETF to earn high interest If you hold cash and can't take any capital loss or have a short time horizon, do not buy any ETF. No ETF will pay you higher interest than where your cash sits now (i.e. bank account), because the MER and market fluctuations down won't make it worth buying.
Unknown
TOP PICK
He likes US midcaps. There are 400 holdings, value-oriented in fincials, It's more cyclical and non-tech. Small-caps still risk going out of busienss, while midcaps are in the teenage phase and will likely survive and are less risky.
E.T.F.'s
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