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

Are we moving out of the valley of despondency over Covid-19? We've already done that. The market's decided it's clear sailing. Indexes reached record highs this week. He has no doubt that world GDPs will roar back in the second half of 2021, and so the indexes make sense. But he's worried there's too much enthusiasm, especially with the IPOs of DoorDash and Airbnb, which have never really been profitable. It gives him little shivers, reminding him a bit of 2000.

Controversy over the DoorDash and Airbnb IPOs. When people are enthusiastic, they find ways to look past the negatives. DoorDash is systematically bankrupting restaurants. No one knows how much demand will slip away once the pandemic ends. A prime example of people looking only on the bright side.

Gold. He's never been a gold bug. He doesn't understand the dynamics that move the price up and down. It's slipped about 10% since its highs. There are other ways to play a weakening US dollar: EM, non-US stock, developed Europe, or the TSX.

REITs. RioCan just cut distribution. Largest mall operator in Canada, and many aren't paying rent. Question is will people and tenants come back. It's on the wrong side of the trend. Steer clear. He owns CAP, apartment buildings are terrific assets. Also owns Crombie (grocery) and Granite (industrial) REITs.

Canadian telecoms. Telecoms comprise an oligopoly in Canada and are difficult to displace. Solid, long-term assets. Raise dividends over time. Compounders of value and cashflow. Put it in your portfolio and forget about it. When you look at these stocks, don't wear the glasses you use to look at growth stocks, but use the right glasses: boring, but profitable over time.

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.

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.

The market rolled over as Doordash IPO'd today. He likes Doordash, but the valuation is crazy. He thinks the stock is worth $100 given competition and lack of profitability. Today's buyers paid 13x sales at over $180/share. Tomorrow could be worse when Airbnb IPOs and push markets down again (as buyers sell their other stocks). Doordash buying actually sagged today until the last minutes when it rebounded. At least today's market declines helps to clear this frothy market.

Based on analyst Larry Williams' true seasonal index Williams says we are currently in consolidation until mid-next-week. Then, starting Dec. 16 the markets were rally, then go into overdrive a few days before Christmas, staying through the end of 2020 and ending in the first week of January.

We're seeing a ever-broader market rally due to stimulus and vaccines driving optimism. The outlook for 2021 looks positive, given vaccines and pent-up demand driving economic expansion. Cannabis: the US market will be 10 times larger than Canada's, but in the U.S. several states have limited licenses, which has created mini-monopolies within those states. Now, we're seeing a huge ramp up in EBITDA. In the U.S. there's a huge opportunity in cannabis for years to come. Growth rates look attractive. Telemedicine: this and e-health will extend beyond Covid. Perhaps people will do their first appointment online with a doctor before seeing him in person. Also, people are more focused on their health given the virus.

Stimulus. We probably won't get a massive spending bill like what the Democrats were hoping for. Democrats are really hoping to swing the senate in Georgia in January which could help them get more stimulus. Very much a political hot potato. How the Feds and Central Bank will monetize the debt is also a key point to watch.

Senate. Markets would like having Democrats in the senate for the stimulus. However, markets like checks and balances. If central banks pull back, markets will have a difficult time.

Leverage. He would not be using leverage to play equity markets. Things have reflated to valuations so you want to be defensive. Banks are okay but we are in a low rate interest rate environment. There will be little growth.

Educational Segment. When investors are bullish in markets, they are buying calls to participate in the upside. When there is an expectation of down-side, they buy puts. Looking at the markets, there is more buying of calls near highs and puts near lows. We are now seeing in the put-to-call ratio, we are at the 90th percentile. We are at an extreme point here. This tends to mean a 5-10% correction soon.