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

Market. It's a tough market. Economic data points in Europe, and Germany specifically, are getting worst. PMIs are on a downtrend and cruising to contraction territory. Weakening in China. It's a been a long great run but the economics underpinnings are weakening. Historically when looking at the yield curve spread and recessions, when the yield curve inverses that means you are on average about 18 months from recession. The 1-2 year spread has inverted, the 2-5 year spread is just on 0 bip today and is inverting. The yield curve is flat or inverted. We are on borrowed time. You can still find spots to invest in, but we haven't seen any reversal yet. Sometimes sitting on your hands is the hardest thing to do, but sometimes it's the right thing to do if you don't want to lose your capital.

The Q4 sell-off caught many by surprise, and a lot of it was due to politics. The US Fed was tightening too quickly. Now, we have an opportunity where companies are much cheaper. We could see a little more downside but he's more optimistic now than in the past few years. The U.S. markets are acting like the U.S. economy is an island, untouched by the rest of the world. That was so in the 1940's, but not now. If China goes into recession, the impact will be huge for America (farmers, tech companies like, say, IBM). If Europe slows, it'll hurt the U.S. too. He needs to see one more interest rate hike in the U.S. to buy into emerging markets (telcos look attractive now). He's pivoting from growth to defensives. Samsung posted numbers today and slipped a bit. It's still too expensive for him. Semi-conductors are part of the phone business, which if it slows down, will directly impact semis. Apple is seeing peak-phone sales. But he's still watching Samsung.

WCS differential shrinking & outlook Alberta limiting supply is only a temporary measure. Much better is building a pipeline, but that requires a lot of political will and cooperation.

Which Japanese tech stock to buy? Nippon Telecom (NTT) that is a growth story that he owns, or Softbank which is a great performer.

Market. Market anxieties are still there. We got a bit of a Santa Clause rally. It came from a much lower level than he was expecting. He was not looking for support levels to break into well into 2019. It tells him that we ARE in a bear market and will eventually break into a recession. Into 2020 it will be very hard for markets to regain their highs. The market now has confidence that the Fed will not make errors. The markets may be okay for the next six months so play the rallies. He bought into the weakness at the bottom before the recent rally but as we go higher he is looking to go more defensive. A rate hike this week is completely priced out of the market.

Silver. Which ETF? SLV-N and SIL-N are the bigger ones and he would stick with the liquidity in this one. On the equity side XIL-N is the miners but has a lot more risk. Own the equities to be more aggressive than if you just own the bullion.

Educational Segment. Active or Passive ETFs? Guest: Raj Lala, CEO of Evolve ETFs. Their first set of ETFs were launched in September of 2017. They tried to serve two segments – actively managed ETFs and passive themes good for the long term. Their cyber security ETF was the country's top performing ETF. They also have a Future-of-the-Automobile ETF, an innovation ETF and a gender diversity ETF. Some sectors of the market don't warrant active management. Large caps are better passively managed. Preferred shares, high yields fixed income and small to mid caps benefit greatly from an active manager. Cyber security is very different than the FANG stocks and is an example of an actively managed ETF. The companies are creating the hardware and software to protect the fortune 500 companies and governments. Cyber crime will continue to increase and will cost the globe $6 Billion. It is a non-discretionary spend for a company. It is recession-proof.

Market. The party was put on hold and the next party will not be as flamboyant. The recovery in the US is still booming according to the jobs reports. The PE level of the market is returning to an average level. He thinks before the end of the business cycle we will see the highs of last September. He thinks the fundamentals of the market are strong. He is observing the level of companies buying back their shares because they are temporarily low. He owns AAPL-Q and bought some only a couple of weeks ago. For the patient, long term investor, there are gains to be made.

Off to a decent start? So far, so good. Stocks have rebounded. Market was worried about everything all at once, it got insane. September was at all-time highs, and now we're down 13-14%, and it will take a while to get back there. We were at panic levels, where people were selling without regard for value, a lot of insane volatility. You can't explain it. At times like these, these are the opportunities you're waiting for, you have to put money to work. You want to buy when stocks are down.

Do you see stocks going lower? What matters are interest rates and valuation. The spread between bonds and stocks is the highest since 2015. If you bought then and held, you've done very well. The valuations are as attractive as we've seen in the past 3-4 years.

Time to get into tech stocks? Biggest market cap stocks are hurt the most in a pullback, and they're going to come back the quickest in a rally. Apple and Facebook may not be as attractive businesses as Amazon or Google, but the valuations are incredibly cheap, so this is the time to buy. Over time, what will matter are profits. Amazon is creating one of the most durable moats the world has ever seen, though it's extremely hard to value. Microsoft is doing all the right things.

Time to buy Canadian telcos? Best performer last year was Rogers. BCE and Telus are the dividend payers. Looks as though interest rates now will not go up. Wireless and internet demand are huge, valuations are somewhat attractive, growth isn't going to be huge. But if you're looking for some anchors in a choppy market, buy one or two of these names.

In 2019, will traders look at the fundamentals again? Market will be more volatile going forward, because that's normal, but we won't see the big swings. When things settle down, they will focus on fundamentals again. When the market goes down, it feels good to own cash and bonds, but they won't win forever. You need to have stocks that have growing earnings and growing dividends.

How to play gold? Never buy gold. He's interested in buying companies, they have pricing power, good balance sheets, can compound capital, and can control their own destiny. That doesn't happen with gold companies.