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

Market Outlook He thinks the market sell off is a little over done. The economy is decent and he does not believe that a recession is coming soon. The recent jobs report was supportive. He feels the Fed will work well to mitigate any negative moves. Today some excellent stocks are priced 20-30% cheaper than a couple of months ago. Will we go into recession? Not anytime soon. Only the UAE market was up in 2018. 93% of all assets classes lost money -- only TBills and cash had positive returns. There was no place to hide. This means the future should bring positive returns in 2019, he believes.

Equities vs. Bonds. An 8% earnings yield is implied in today's 12 PE ratio of the market -- the inversion of the PE ratio. The dividend can grow as well. While bonds are yielding 2-3%. He sees no contest, favoring equities going forward.

The markets. Extreme volatility is the theme continuing from 2018. Historically there's not been this much volatility. Not a lot of conviction in the buyers. Trends are short-lived. Difficult to find bottoms with reversals. Don't ignore the bond market, which got hammered today. Still in a downward trend, broke through the support level of November/December, and that will act as resistance. December 2018 ranks #9 from the bottom of 480 observations, a 9.2% loss. We're retracing back to revaluation levels, and we'll see where we go next week.

Do you slow down US investments when CAD is weak? Likes US markets better, especially for technicians. Has 30-40% minimum in US markets, and he's not slowing down. When stocks sell off, he holds cash. CAD above 80-85 cents would cause a headache for him. But for now, he's continuing to buy US stocks. Has about 45% cash, from selling off on stops.

When can the CAD go lower? Long-term correlation between CAD and the price of oil. Most of last year CAD was at the 75-76 cent level. He thinks the dip to 73 cents is temporary. Biggest risk for holders of US stocks is that it will get above the 77-78 cent level, so he's going to be cautious and aware of that level. On the downside, there's a lot of support. It's good for our economy. If it got below 73, he'd be very concerned, but you'd have to see a major drop in oil for that to happen.

Are you buying or are you wait and see right now? Biggest risk right now is not getting in. He's getting somewhat positive. Going to be deploying cash slowly, hoping for a steadier recovery instead of a sharp increase. Looking at moving above the 30 and 40-day moving averages as an initial buying point in the S&P. Support of 2627 is now resistance, and if we can get over that he'll reduce his cash position.

Market. He built up cash going out of 2018. 2/3rds of it came from tech and a third from banks and he is waiting to deploy it. If something presents itself to them then he can go after it. The technical breakdown since December has been lower lows and then lower highs. This role-over could have more legs. The market has shifted from momentum, news driven to something that is driven off fundamentals. Now the playing field is getting much more level. A company with a good balance sheet might have a good rebound. He is looking for what s really cheap today.

Allocation in retirement. He likes 30% in cash as a buying reserve. He does not feel 70% in equities is right if you are retired and we are going into recession. Don't sell a good company that is down to put food on the table. Plan for 3 years worth of cash requirements in retirement.

What is your number one black swan worry? He is worried about a credit situation that does not end well. He is worried about losing triple 'B' companies. Credit problems could cause widespread selling. A lot of investors have flocked to higher yields but that yield may not be there in the future. A major credit event is the thing he is watching out for the most.

Market Outlook - He anticipated that the S&P 500 would go at least to 2,500. But if that level doesn't hold we will probably finish the job. And that is probably at the 2,000 level. The market is 10 years old and is old and tired. He doesn't think it is a huge set back as the classic things that spell catastrophe are not there. Hydro One (H-T) is getting to a level and a yield that can be sustained. But give it a couple of bucks, don't rush.

You said that the downside on the S&P 500 is closer to 2,000 - What is your view on the S&P 500 if the Fed does not raise interest rates and we have a resolution to the trade wars - Outside of short rates he doesn't see interest rates going up. The demand for money in NA is not there. But these factors are not the main ones. The problem in the market is not interest rates but valuations.

Market Outlook First trading day of the year. The market started trading down again. December was a normal correction to start, but got worse. An 800 point down day on the Dow is not of too concern when you consider the overall level of the market. One should have a strategy to deal with higher market volatility. He is going to re-balance his portfolio and will avoid buying junk (like cannabis and bitcoin stocks).

Are covered calls safe in a down market? Covered call righting only protects a very small amount of your capital -- it is only there to generate income -- it is not a hedge. He has sold ZWH-T as he does not want to sell covered calls in a recovering market as it has sold off the upside potential. He might just consider outright buying banks stocks at this point. In a flat market or rising market covered calls are a good strategy.

Buy puts when the market is going down? When buying options (buys or puts) remember that time is your enemy due to price erosion. Rather he looks to buy options ahead of market reaction to a specific event -- like the earnings season. He thinks buying and holding options for an extended is not a good strategy as you can lose 75%-100% of your capital.

When to own Covered Call ETFs? Only until recently would he suggest moving out of coverall calls. However, right now he wants to own the outright equities. This is part of a strategy for volatile markets. He is afraid of giving away upside when the market recovers.