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

How are daily stock fluctuations derived? A company's fundamentals. But also behaviour is having more and more an impact with extreme pessimism and extreme optimism that rarely reflects true value. Sometimes this means the noise (headlines) of the day. Also, algorithms are scanning headlines. Sharp fluctuations are becoming the norm.

Educational Segment. The price of oil Oil prices are moving up in Canada and America and rubbing against the 200-day average. Oil prices move in two ways. One is the supply push; the other is demand pull. When prices rise because supply is constrained, that's supply push, which is not a good way for prices to rise. The reason is ultimately economic output is going down--we're producing less. This is happening now in Alberta. The bullish move is the demand pull, where a growing economy propels rising prices rise which increases output to meet supply. This is good growth, but we're not seeing that now. Instead, we are in supply push. Sure, the price can still break-out, but there's resistance and that rise won't be sustainable. He'd rather sell into that rally.He doubts that the oil price will break out and he would sell during a rally. Now, it's a short-term rally driven by traders and speculators. He doesn't see $100 oil coming. Canadian oil stocks, though, are undervalued and need a demand increase.

The US market was a solid green to him for many years---until December 2018. It's now yellow. He's now raising cash, though the markets rebounded nicely since Xmas Eve. Data says that the global economy is slowing a bit. Geopolitics worry him in the States with the Mueller Report. Trump's threat to cut off Iranian oil is driving up today's oil price, but the world's biggest customer is China. Also, there's more oil supply than demand.

Where to start investing for a beginner? Buy an ETF of the S&P 500. Then, look at the top names within the S&P. If you use an iPhone, buy Apple. Buy around five stocks. Watch how news effects individual stocks.

American companies start to report this week. For example, UTX will give us some idea of how things are going in China, apparently grow is coming back there. Also, commentary from these companies will indicate where the U.S. economy is going....He'll be looking closely at Boeing's cash flow and operating leverage. Will they cut back production on the 737 Max? (He doesn't own Boeing.) He's surprised the company has held so well given the furor after the crash. It's fully valued now, so he wouldn't buy it. WTI has hit its highest levels in six months after Trump stopped waivers for Iran oil, up 50% since December 2018. There's a healthy, ongoing demand for oil (he owns oil stocks like SU-T and Parex).

Thoughts on Jason Kenney as new premier of Alberta. Have to look at the numbers. Rural Alberta went to Kenney, in Edmonton only 1 riding to Kenney, but in Calgary all went to Kenney except for 1 riding. Highest turnout ever. Tagline was "open for business". When gas prices were cheap, Peter Lougheed put restrictions on Sarnia, and they came to heel quickly. So precedent has been set by right-wing governments. Has potential to reduce the deficits. Likely that Alberta will play hardball with BC.

A new record high for the TSX today: It may run into a little resistance here, may pause, but Brexit is delayed and new unemployment numbers aren't bad. If Trump can sort of China, then things don't look bad. The second half of 2019 will look better. With flat interest rates, recession worries have faded. The big December sell-off was deceptive, because there were many, serious shorts by hedge funds. U.S markets could hit new highs and this will usher in another good run. In Canada, cannabis has surged and is a great place for investors to play around. But the fundamentals--and earnings--aren't there. It's like itnernet stocks in 2000. We'll see if there's real value here. This could be taking money away from investing in oil. Small, unknown pot stocks will get taken out, but there's a lot of room to play in the cannabis space.

Market Outlook. No surprise with the Alberta provincial election results last night. Don't expect any uplift in energy stock prices as a result, because these results have already been factored in by the market. Much is beyond the control of the new Premier, but he can end the production curtailments. Lower taxes will only help companies that are currently making any money. Don't expect any moves against BC from Alberta, because the province still needs the revenues. He needs a Conservative leader in Ottawa to make real changes.

Healthcare? This space has been the worst performing one on the S&P. He worries about when the Democrats went after the space happening again. There could be further downside yet to come.

Short Canada? He does not like going short as it is exposed to unlimited losses. Don't get in front of something only because of inflated values. He thinks investors are too complacent on the exposures that Canadian banks have on real estate. It could become a problem.

Market Outlook - It has been interesting over the last week as feels that people are taking profits in strengths. Most of his positions are withing reach of their price targets. He thinks there might be some consolidation from here. Trends and themes don't change that much. Main in the last 10 years and probably in the next 10 years is digitalizing business. Around that there are three themes: Electrification and Digitalization, Merging the Real World and the Virtual World and Intelligence everywhere. Among trends there are: 5G, The internet of things, AI and Machine learning, Digital Content, Autonomous driving and Smart Factories.

What percentage of the portfolio should be allocated to Technology ETF ? They are 50% cash and they have a hedge of 36% on the portion invested. It is important to look at the overall portfolio. A complicated question.

Fed chief Powell started hawkish then folded like a cheap suit. he was hawkish to show he meant business, but in December the market spoke (dropped) and Powell took note. The pendulum has since swung dramatically. The U.S. currently has the highest interest rates in the world. Make sure you hold bonds in your portfolio, and if you buy stocks, consider real estate assets and be diversified. There's been a sea change in ETFs with Canada and emerging markets outperforming the U.S. The U.S. won't collapse, though. Since last fall, bonds, EM and especially real estate have outperformed US stocks. Around the world, central banks are in near-complete control of markets.

The pros and cons of mutual funds vs. ETFs. The key difference is the fees. Definitely. This will effect performance. ETF fees are lower. But some mutual funds are exposed to narrower parts of the market that the ETFs haven't yet reached. What exposures do you want? If exposures are equal, then look at the fee. Cheaper is better and ETFs are cheaper. Then consider if you want income. Taxable income? The American exchange? Canadian?

What do you think of ETFs made up of other ETFs? He manages one, the HRA-T. Be fee-conscious. Is such as ETF giving you maximum diversification or are you getting more of the same within it? Is that what you want? HRA is broadly exposed in stocks, bonds, REITs and commodities with a currency overlay. You get value here.