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

Market. In October he said there was a minimum 85% chance of the market dropping over 20% by the end of 2020 and he did say it could happen this year. It is not surprising him. It is the biggest December sell-off since the depression. Debt levels of governments were not tamed during good times. He is surprised only by how much it has come down and how quickly. Markets were really high and people recognized the problems. People are asking what governments will do as we head into a recession. Human psychology says that when things are bad you run out the door. It could be a reasonable time to buy now and there could be more opportunity ahead.

Crypto currencies, AI, and marijuana. The key here is choosing the right companies. He does not have any recommendations, however. You are going to have bad actors and you have to stay away from them. AI is the big buzzword now and choosing the right companies is still the right thing to do. He only buys companies that have been around for 10 years.

Tax loss selling is huge this year and has been accelerated because of what is going on. He does most of his buying this time of year. Normally there is a Santa Clause rally worth a half percent or more. He never transfers between currencies. He would prefer, if he had to, to transfer US to Canadian right now because it is so beaten up.

Market Outlook Since Q3 the market has been downhill. There is too much uncertainty -- with arrests, indictments, and espionage leading the way. The recent Fed announcement hinted at raising rates next year, causing a 1000 point turnaround. He is not prepared to say the absolute worst is over, but for a long term investor there is great value. It is too late to exit holdings now. Lots of good value in the energy sector with tax loss selling. Hedge fund year end redemptions are also pulling the market down. He feels this could all lead to fresh buying early in the new year.

How does a small investor afford GOOG-N? Trading board lots does not make a difference anymore. It all depends on your dollar amount to invest. If GOOG split 100:1, it would not make any difference in his opinion -- it should not dissuade you from investing. Yes, a lower share price might attract more investors. Stay away from stock consolidations -- this is a troubling sign.

CAD currency and stock values. If commodity values weaken then our stock index will weaken. This would put pressure on the Canadian dollar. Most of the majors are inter-listed on US exchanges and benefit from re-trading. You would be unwise to buy US stocks right now, due to the weakness in our currency.

Dollar Cost Averaging He has been guilty of this -- sometimes it works out. If the outlook has not changed and you believe in the business model it can be a good strategy. It is tricky to find a true bottom in price. If something gets under-weighted in your portfolio it also makes sense.

Technical analysis on equity markets. You can follow his blog at valuetrend.ca. 2540 on the S&P 500 was a reasonably significant support level. Don't want to see it broken because it represents the lows of the year. It broke yesterday, and fell more today. So we've broken significant support. He uses the rule of 3 -- he doesn't make a move until 3 days, which has prevented him from buying back in. If Monday is down, after that if we don't start basing, then the market's in trouble. If it doesn't stop falling later next week, he's going to have to start selling out. We are oversold, and we could get a rebound to the old support level. But if we don't crack above 2540, we could be in a new bear market. The 200-day moving average broke some time ago, and we're getting lower lows. He has about 13% cash now, and will start raising more in the next few weeks.

How do you decide whether to keep holding a stock? You can trade in this environment. You have to switch gears. Let's assume it's a bear market, you have to look at ways to peel the stocks you're less long-term bullish on, and you can trade the swings. Or you grin and bear it and hold out. You can use momentum indicators to spot overbought and oversold opportunities.

Technical analysis on the TSX composite. He was looking for a bounce to trade. But it fell, so he's glad they didn't buy. Might likely see a bounce in the next 2 weeks, but you'll only know it's the real McCoy if it goes back above the old support level. So, look for the bounce, but then look for some follow through.

Short stocks? He doesn't short stocks, because there's a lot to it. But he has bought inverse ETFs. He's a mid-term player. He's 90% onside that this is a bear market. It's pretty oversold right now, so he probably wouldn't enter his shorts now, but wait and see if there's an oversold bounce and then decide.

Market. US stocks were the only market in the world that was going but that has now changed. Stocks leading the market are now expensive. These stocks heavily weight the market index ETFs. The FANG stocks have weakened off and they are not leadership. Things are vulnerable but we could get a reaction rally, such as a Santa clause rally. Interest rates, inflation and so on are all worries for the market. Nobody knows where to go and cash looks like a good place to be. This is a time for caution. People who are positive about where markets are going have to change before things will change.

Energy Sector. It has been a long time since we had a recession and we are overdue for one so he cannot rule out one sometime next year or the year after. Oil is a commodity and commodities are poised to go down. He has SU-T domestically. He is underweight energy holdings. He does not think you should put more money into energy.

US Debt. The US is viewed as a safety haven. As stocks come down, money goes into US bonds as a flight for safety. Money comes out of Canadian Preferreds also. Rate resets have come off quite a bit. You could buy US treasuries if you thought the Canadian dollar was going to weaken.

He's looking at the credit markets. Credit has been weaker than equities all year and has accelerating this week. Until those issues are solved by the US Fed slowing QT, but rather re-adopting QE. This is likely the end of the bull market. The catalyst was the central bank stopping QE. Overall, this has and will reduce M&A with companies becoming less attractive to private equity. Corporate buybacks will slow down, too, and will also stop fuelling the bull market.