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

Difference between cash flow and EPS? In oil, you talk cash flow per share growth; EPS with banks. Payout ratios apply to both metrics, and be very different sometimes. Say a power stock has a payout ratio of earnings at 200%, but 42% free cash flow--vastly different. Hard to summarize the difference. Instead, you must know the company and balance sheet.

Market. December of last year was very bad and then we had a fantastic year and then news came out and who know what will happen. She is a bottom up stock picker. The strategy is to look for good management teams. Investors should expect more volatility. The political events seem to be digested very quickly even if creating a lot of noise in the market. It's going to continue to be a tale of winners and losers.

People are worried about where things are going from here. The most important thing is knowing when you need the cash. You should not be forced to sell into a depressed market. Also you need to stay balanced.

A good year for 2019? 2019 turned out be the best year of the decade for the TSX, up 95% in total returns when you include dividends. Dividends are often neglected when investors tally up their total returns.

Is there more juice in 2020? We think so. Doesn't see any reason why we don't march higher perhaps toward triple digit returns in the next decade, though not in a straight line. What was anomalous in the past decade was the subdued volatility. Expects higher prices over the next decade, but in a choppy fashion.

What does 2020 hold for the Canadian oil patch? In the first inning of a resurgence in energy. We won't go back to the days of $140 a barrel, but the psychology and sentiment of last fall are about as abysmal as you're going to get. Investors are ignoring the sector, yet the producers are generating a lot of free cash and buying back shares, things that the market will reward in due course.

What do you look for on rumours that a company's being acquired? You wouldn't like to sit on a stool with only 1 leg, so they look for companies that have 3 or 4 legs to the stool. So look for other qualities. Assess the credibility of the bid, regulatory approvals, sharehold approval, any competing bids.

How to invest in the theme of water as the new oil? Likes the theme of infrastructure. Owns it indirectly through BAM. For a direct play on infrastructure like water, Brookfield Infrastructure would be good.

When do you decide to hold more than one company in a sector? When there's enough idiosyncracy within that industry to warrant having two names. Or when there's enough exposure in the market overall that you ought to have more than one. For example, in a place like banks or the consumer space.

Market Outlook The market is betting that President Trump will not follow through on the attack into Iraq. However, any attack on US soil could be very detrimental to the market. Oil is down over 4% intraday today, testing $60. Shale decline rates may actually be much higher that originally thought, making the US not as self-sufficient as President Trump believes. Valuations in the markets today are based on investors chasing growth stocks. This may begin to change. Low interest rates has spawned very high levels of debt (consumer, corporate and government). This could make things precarious going forward.

CDN vs US financials? He thinks in terms of valuations it is in favour of Canadian financials based on price to cash (9.9 times for Canadian vs. 12 times for US) and yields (4.3% for Canadian and 2.7% for US).

Canadian vs US Large Caps? Last year the US outperformed Canadian due to energy being held back. The US is strong in industrial and consumer staples -- Canada is lacking that. In the current environment, global economies have been lagging and there is growing interest again in materials and energy. This could lean things back towards Canada perhaps.

We had an incredible 2019. If the Fed, EU and Japan keep interest rates low, the markets will chug along. Expect volatility, a rollercoaster, and earnings growth of 2%. Stock prices will rise accordingly. ESG investing will be a rising force in 2020 and years to come.

The rise of ESG in 2020 Asset managers are facing more pressure to invest in ESG in 2020. ESG is responsible investing, and this is becoming a big thing. Are companies you invest in doing the right thing? This will be a big theme in coming years, because climate change is so prominent.

This is a good time to be in the markets, following the Santa Claus Rally, then continues to do well into May. But expect volatility and a pullback(s). Recent chart movement bodes well. January means the small-cap effect when they outperform large-caps into February, but this isn't happening this year. Large caps still rule. Cannabis hasn't bounced back yet, which is surprising, following December tax-loss selling.