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

Early Advantage for Canadian Marijuana. It is important for Canadians to understand that Canada is the first G7 country to legalize marijuana. Internationally, medical use marijuana can be shipped across borders, creating a great advantage for Canadian companies. He sees an early leader advantage to Canada for international trade. There are 40 countries around the world, representing over 1 billion people, who can legally use marijuana for medical use. He cautions domestic use in Canada may develop slower than people expect due to slow start to the number of legal outlets.

Meta Farm. He has visited their location outside Toronto. He believes there is enough capacity for cultivation and looks to those who can add value – oil extraction, for example. He likes this company and will be watching its development.

Gold has long been range-bound. To change this, there needs to be a systemic risk that hits the general market to force investors to flock to gold, where greed overtakes fear. It's usually trade events that trigger a move out of equities and into gold. Conversely in past years, the rise of equities has made gold a dead trade. Now, we could see a bounce in gold to $1,350. Junior mining is risky, but more retail investors have been moving into this space. The industry is concerned that there isn't enough supply in minerals like gold and lithium. His end game is to find a junior miner that gets taken out by a producer. For the past 5-7 years, gold has been undercapitalized with not enough exploration. But he's really concerned how grassroots exploration has fallen since 2002.

Active vs. Passive funds in mining Mining ETFs have taken out active funds which are seeing redemptions now. There are 18 actively managed mining funds in the U.S. and they dropped $1-billion in AUM and now sit at $8.5 billion. On the other end the 10 passive mining funds increased to $7.2 billion to $14-billion AUM. This is a turnaround, and it's playing out across the spectrum, not just mining. Investors wants the liquidity and anonymity of ETFs.

Markets rallied today, but we stil face volatility. But we're over the hump. We had a mild correction. Some money has moved from the sidelines, but expects some chopiness then the traditional Santa Claus rally. Netflix is the first of the FANG stocks to report, and it beat. Politics will make trading choppy. It's likely the Democrats will take the House and the Senate stays with the Republicans, so you get a muted Trump agenda, which is not a bad thing. Canadian stocks face a tougher road than the Americans where we face much lower oil prices. He expects good earnings in both countries, but Canada will still lag U.S. markets. Cannabis stocks dropped today right before legalization, because investors are nervous. Will online sales work out in Ontario, for example? He thinks the trade is switching to U.S. states that may legalize. It's unlikely that initial legal sales will take multiples higher. Cannabis is very volatile.

Market. It's October so we tend to get some volatility. There are issues with Chinese tariffs. He thinks it will get much larger before it get better. It is all part of the late cycle behavior. The tax cuts are a sugar coating that stimulates earnings. Current geopolitical risks are (1) Brexit deal uncertainty; (2) the Italian Budget; (3) Saudi Arabia / Middle East Tensions; and (4) Trade Wars.

Natural Gas. It has been a very localized market because of the expense and lack of ability to transport it across continents. LGN is a game changer. They have been talking about this for years. He would not trade based on this today. We should not get any more than seasonal spikes.

Educational Segment. You do a disservice if you just hold to an asset class mix. Interest rates won't go up much more any time soon. The recent market bottom was right about Brexit in terms of timeframe. Maybe people are calling for the end of the bond bull, but he disagrees. Bond ETFs have made no money from 2016 to date except high risk bonds. He recommends floating rate bonds.

Market. The S&P index trend has not been violated. We typically get week about a week before the midterm elections. Some of Canada's macro numbers are down little bit, vs. the US. Normally there would have been a weakness to the US dollar in the summer but we did not have it. A down turn would be very positive to the rest of the world. The Chinese market has been a sinking ship this year. He'd like to see it hold in this base but it is not holding. A lot of non-US markets look like this. We want to see them catch the base of Jun'17. Otherwise there are bigger issues.

AI for Technical Analysis. He incorporates AI into his technical analysis. He will hand orders to trading desks to execute algorithmic trading.

Watch out for more volatility until the U.S. midterms, just like weeks leading up to the 2016 election. He's sitting on cash. He bought a little during last week's dip, but there wasn't enough to disrupt his asset allocation. The correction was deeper in early-February. Be positioned for whatever happens. What kills the bull market? Interest rates will likely rise 3-4 times in the coming year, and there's nothing wrong with that, because it's a sign of a strong economy. But at 3%, the bond market looks attractive again. It's possible that the yield could rise then fall below 3%.

Options in cannabis trading? He doesn't touch this space. The problem is you'll lose your money. He doesn't like companies that don't make earnings. What are the rules for distribution? Overhead? Spreads? Will people buy legal weed or stick to illegal suppliers?

Floating rate bond ETFs: He has had the HFR product from Horizon for years. He likes it because the price doesn't change and has a good duration of six months. It kicks out 2-2.25%. The problem with alot of bonds, though, is that yields look good, but your actual total return is actually much lower. So, he likes floating-rate bonds.

Buy real-return bonds now? He doesn't like them, especially in Canada. Their average maturity is 13-14 years, so you'll get clobbered a rates rise. They're used protection against inflation--what inflation now? He'd rather buy a Canadian bond portfolio.

How to exercise a warrant? Warrants are similar to options in that they allow you to buy a stock at a certain price and time limit. But options are traded between two investors, whereas warrants are used to bring capital into a company at a certain date in the future. Warrants are rare now.