David Burrows

Regarding the latest news concerning the Bank of Nova Scotia, it is unusual to see an external hire of a CEO in the banking space. Overall it is a tricky market. It had rallied off the June lows but the Fed has declared that it is going to keep raising rates and will do so for longer than anticipated. Investors are concerned that this is a mistake and will lead to a hard landing. He uses stop losses on all positions and has built up a sizeable cash position.

The question included big name tech stocks in general. They have had tailwinds of falling interest rates for 40 years and investors have been overloaded in them. Tech stocks have under-performed since the beginning of the year. Multiples are coming down. Be careful with stocks trading sideways so be careful with companies such as Shopify. Even though it is a great company it is trading at 137X next year's earnings.

The markets dislike uncertainty and since they have just hired a CEO from outside the bank, wait for things to settle down and firm up.

It is a tough market and 80% of companies are technically broken. Look for companies outperforming the others and that are good and getting better. Wait for the market to get a footing - it could go lower.

The question was on averaging down on dividend paying ETF's. The answer is no - there are 60 000 securities across the globe to choose from and he only needs 20 to 40 in the portfolio. A stock can be down for a long time. You want to see the technical situation improve both for the market and specific company. Ideally the 200 day moving average should be rising and the stock should be trading above it. Even better if the same is happening with the 50 day moving average. Look at companies in an uptrend.

It has had a rough time lately, has taken out the June lows and could go lower. It is hard to see a catalyst in the short run.

It is spinning out its asset management business. Let the market set a price as to the value. This is a positive thing.

(A Top Pick Sep 23/21, Down 46%) It is a regional bank in the business of banking technology companies i.e. providing loans or funding them. It often gets warrants as part of the fees for these loans. However these early stage, unprofitable tech companies have rolled over and the prices are still coming down. He got out with a stop loss.

(A Top Pick Sep 23/21, Down 85%) It broke down through its 50 day moving average early this year and again he sold using a stop loss. With stocks like this the momentum investor moves out and the value investor moves in.

(A Top Pick Sep 23/21, Up 80%) It is still trading above its 150 and 200 day moving averages. It consolidated successfully between 2014 and 2020. He has trimmed a bit but it is still a big holding

Covered calls can help volatility a bit and enhance yield. However Canadian banks are under pressure because of very high consumer debt, especially mortgage debt. Technically if you were to buy it use a stop loss at $17.75 which is not much lower than where it is now. Wait for something to resolve in the market.

The question was on oil stocks. There has been some technical damage in oil stocks lately. Oil should not drop too much from here since the U.S. which has been selling reserves may soon be at the point where they may start building reserves again. Perhaps try Vermilion which is exposed to Europe. Start with a partial position and add on strength.

It has been a great performer over time. Two positives are its rising relative strength to to the S&P and TSX as well as trading above the 150 day moving average. The concern is the sector - transports. Be careful and if buying pick your spots.

The question was on accumulating cash and where might be the near term low. The simplest way (not too technical) is to look for a strong day (plus 2% or more) with heavy volume involving many stocks. Then within the next five trading days look for the same thing on one of those days. It means something is happening.

Be careful of the real estate space because of rising rates. Commercial properties will have to trade at higher cap rates and therefore lower prices. Treasury bonds have gone quickly from 0% to 4%. He owns short term bonds as cash instead of fixed income.