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

Interest rate hikes in US being dialed back a bit. Fed has said they'll focus on the data. There have been trade disruptions, but wage inflation is real. This is a good thing for employees. Bias for interest rates remains upwards. Central banks only impact short-term interest rates, but the bigger impact will be on bond yields rising.

Concerned about inverted yield curve? No. This is part of the regular business cycle. Encourages everyone to read Warren Buffet's letter to shareholders this year, which details how many times his net worth went down and then recovered. Just ride it out. It's always about doing your research, finding value, and stepping in when the world looks terrible.

Are tech stocks on sale enough? He owns Microsoft, trading at a much more reasonable valuation. It's hard to put a valuation on companies like Amazon and Google, though they're growing well.

Is Japan an investable market with the yen going up and CAD going down? Avoid the "big uglies" like Sony and Panasonic, which have lost touch with the consumer. Third largest economy in the world, 4th largest exporter. Everyone has exposure to Japan. Best in class electronics, they shine at manufacturing equipment, and they're long-term thinkers. Owns about 24 stocks, not just the single stock risk of 1 or 2. Problem for investors is most trade just in Japan.

Outlook for gold producers? Never owned a gold stock in his life. Don't look at the 1-year chart, look at the 30-year chart. Barrick is where it was 30 years ago. The only group that's made money is management. Cost of producing now is much higher. If the whole world falls apart, he'd rather have apples than gold bars. Wouldn't touch a gold stock. Instead, own great business that are going to increase dividends.

Massive selling in the markets. Sitting at about 30% cash, and has been for a while. Real issues aren't political. They're rising interest rates, flattening yield curve, and slowing economy. NA economy's peaked. A normal part of the business cycle. If you own expensive stocks, you should probably sell and reposition. Cheaper stocks do better over time. Value will win at the end of the day.

The Santa rally is up 83% of the time, 30 years on the TSX, up 1.4% on average. Sometimes there is a January Effect, which is the tendency for stocks to bounce after tax-loss selling season. Don't hang your hat onto these events too much, but these rallies tend to happen. He is pivoting his investments into defensive stocks as we are in the end of the cycle: REITs, grocers, utilities.

Huge sell-off and volatility today. Investors catastrophize everything, thinking of 1987 or 2008. He's seen countless corrections over the years. People panic. Keep an eye on the long-term. Also hold bonds in your portfolio. Now, we're in a normal correction phase of around 10%. There's no reason to dump your stock. Trade deals don't drive markets--earnings do. As of last month, earnings were up 9% year-over-year. Panic is not a strategy--you must manage that emotion, and have a plan. He's enthusiastic about tech stocks.

Buy tech stocks now? It's time to get back into tech stocks. Except for MSFT, these stocks have been beaten up. Amazon, for example, is doing well, though he's not a fan of Facebook. Also, these are not for the conservative investor.

Long-duration bonds? He wouldn't buy any long bonds because they'll get hit by rising interest rates. He'd buy only very short duration, floating rate and/or high-grade bonds. It's a place to park money during volatility.

Which healthcare ETF? HHL or FXH. Both are covered calls and hold large U.S. healthcare (pharma, hospitals). Problem is, you're sacrificing growth for yield (around 7% because of the covered call premium). Do you want growth or income? If not, look at XLV, a very low cost MER. He prefers the U.S. healthcare over Canada. Also, ZUH-T which has a Canadian dollar version, hedged and diversified. Note: Some ETF's are more diversified than others; you want more than just pharma. Also, watch the cost (MER); he prefers under 15 basis points.

Are there hedge fund ETFs? No. 75% of hedge funds in the past decade have underperformed the S&P. As long you hold balanced, broad-based portfolio, you don't need hedge funds. Also, they can kill your portfolio.

Market. Regarding China vs. the US on trade negotiations we have no resolution. The theft of intellectual property is at the core of this. The Chinese got an extension and everyone is celebrating. This is probably going to become a big issue again. This is going to be a hard issue to solve. He does not see a solution. He hopes they are smart about this. We will see how all this plays out three months from now. The Saudis and Russia have agreed to extend but not on size. Don't look for a big rally here, just stabilization. The bottom line is to fix the problem with pipelines and capacity for refining.

When to get defensive. No one knows when we will get into recession. We are late in the cycle and the yield curve is flattening. Once it inverts, the market will peak in about 6 months or so of that inversion. There is not a perfect inversion.

ETFs that achieve diversification – how to compliment it with other investments. If you put a Euro ETF and a US ETF together, you have geographic diversity but they go up and down together. You are not getting diversification of asset classes. You need bonds, REITs, utilities, commodities and so on. That's where you get your maximum diversification. See his road show.