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

Are we entering or in a bear market and when would you jump into the market? Great question. Most metrics indicate that now, but he is not sure that earnings will contract next year. We're not through this malaise; it will last at least another quarter. Look at the VIX, which was 25 today (high, much higher than its 17 average). When the VIX rises above 30, he'll jump in.

Market Outlook The market has had a tough go over the past five years. He thinks, there has been a back room agreement between the Saudis and Trump to keep oil prices lows. A surge in OPEC supply and Trump issuing Iranian waivers have been examples of this. He thinks demand growth is understated, growing at 1.4 million barrels per day, combined with supply cuts in OPEC, other countries and now Alberta will help balance the market. There are a hand-full of companies benefiting from wide differentials, and thinks one oil trader earned a $9 million bonus for helping keep differentials wide. These companies are integrated companies that hold refining assets and strong trading desks.

Your mutual fund? His Energy fund that he manages is ticker NPP006. It is one of the few remaining mutual funds for energy with 65%/35% split US versus Canada. It is actively managed looking at heavy differentials. It has $130 million in assets.

E&P vs Integrated. There is a structural problem with a lack of funds coming into the sector. Small cap producers are off investor's radars, so the trading threshold is now over $1 billion to attract any investment. He would be very worried as a CEO of a small cap E&P -- will they be able to access capital going forward?

All 3 major US indices officially in correction territory. Two months ago, people couldn't get enough of the markets. Companies still have the same recurring revenue, but now the sentiment is all fear. Good time to put your money in.

How long will the volatility last? There's a lot of cash out there, but still a lot of uncertainty. Tariffs, concerns over growth, flattening yield curve, and the Fed decision next Wednesday. He thinks US rates have to rise next week, but with a dovish commentary. DAX is down, as well as China, Japan, and North America. Have backtracked from 3 raises in 2019, down to 1 or 2.

Concerned about Chinese or US consumer? Retail sales numbers from China were below expectations of 8.1%. France contracted on PMIs, and Eurozone ratcheted down too. People are concerned about the markets, not looking for the silver lining.

Huawei CFO under pressure, so why is it still instrumental? This is about 5G. Telecoms and equipment suppliers. The next generation of mobile internet connectivity will be faster and more accessible, so it needs more equipment. The players are finite. Huawei is heavily funded by Chinese government, and it owns 28% of the 100B market share. That's why it's a big deal.

Top 10 strategic tech trends. There's 5G, and so on. At the centre is digital business, with the 3 themes of business intelligence, merging virtual with the real world, and electrification and digitization.

Where are the markets going? Believes that there are so many moving parts, you're going to have mini-cycles. You'll have 10% up, then down, then up, but we're still in a secular bull market, with a lot of volatility. When you have these corrections, you don't want to catch a falling knife. Let the market settle.

Buy one tech stock, or add an ETF too? Buy a technology hedge fund, and that should cover you. It's a secular bull market, so he's net long on stocks. They have some shorts in there, less as an investment, and more of a trading vehicle. Once you go into a bear market, you want to roll out from being net long, and do a pairs trade, and then he'd be net short.

Investable Canadian company involved in 5G? The telecoms (Bell, Rogers, Telus) are going to take so long to get their money out, that you should really be investing on the equipment suppliers side. The closest one is Cisco, which is a huge supplier in Canada.

Market. When you look at the facts it is difficult to make an argument on how the next few years will be as fruitful as the last few. The market is tired, exhausted, out of steam and is running out of catalysts as to why it should go higher and higher. He is realistic with his expectations now. When volatility does subside, we still can't have the same expectations for equities because the catalysts just aren't there. He invests 1/3rd Canada and 2/3rds US. He does not think we will be entering any kind of commodity boom.

Preferrds – are they prudent now. The kind you own is important. Fixed reset preferreds have a correlation to interest rates so they are helped by rising rates. You need to know what the reset terms are. Perpetuals he would be very careful of. Preferreds are like bonds that are taxed as dividends.