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

How to avoid being called away (and being charged steeped commissions) before the expiry date? Puts get exercised quicker than calls for some reason--and get nasty surprises. Watch how close the option was to the underlying asset. Sometimes these anomolies arise and you get exercised. It happens. Never sell a call that's naked.

What infrastructure ETF to buy that's not US dominant? ZGI-T from BMO, but that is mostly U.S. IGF-T has more Canadian infrastructure, like Trans Mountain. He'd rather see an ETF that's more construciton- or engineering oriented.

What's the difference between managed and passive index ETFs? If it charges between 5-20 basis points, it's an index. More than that, it's managed. Then there are smart-beta ETFs which are run by ex-mutual fund managers using their mutual fund principles in an ETF at much lower cost.

Overview Corporate earnings were terrific in the first quarter. The stocks that he buys are driven by corporate earnings. He looks for value stocks that have lower growth but are steady. There's a big appetite for risk in the market and so the high-growth stocks are doing well.

Comment on long term bonds as a stabilizing investment for seniors. He thinks these are a wise investment to reduce risk in a portfolio. Currently, a good quality corporate bond (BBB or BBB+) in Canada that will mature in 5 to 7 years earns about 3.4%. The real return, after inflation, is about 1.5% before inflation. No one will get rich from these. However, in the event of an adverse stock market, investors will be happy to have these. He recommends against buying bonds that mature more than 6 years from now because they do not compensate investors for the extra duration risk, especially in a rising interest rate environment.

Market. He thinks not much of real substance will come of the meeting between US and North Korea. The problem is what will happen with his twitter feed. He thinks there is an opportunity for Canada to mitigate the issues with trade tariffs. Trump is good for the stock market.

Crypto Currencies. Bit coin is very different to the rest. It is more like digital gold. It is a store of value or wealth. The bit coin market is too small to significantly affect the gold market.

Three recommendations for a mid-career investor with 10 years. Focus on emerging markets. Go where the growth is. Own India and China. Include Technology. Marijuana is interesting but be wary of valuation.

Caller owns a bit coin and it has tanked. Think of it as a store of wealth. It has all the characteristics of gold. Hold it for the long term.

Greenhouses moving from vegetables to pot? He does not think it is a genuine concern. You still have to get a regulatory license. He thinks the black market will oversupply the Canadian market and people won't switch from vegetables to pot.

Market. There has been no shortage of commentary on the G7 summit this morning. Regarding Trump's comments. Things have to get worse before they get better. It is not a good thing. But ultimately it could lead to better trade deals. It seems this is what the market is pricing in. Trump thinks he needs to come out ahead on the trade deals. Attention is now on North Korea. This could play out for years and years. The ECB actions will be more important than those of the Fed. The ECB has purchased $3.5 billion of Italian bonds in the last three years.

Withholding tax if US ETFs held in an RRIF. Yes, there is a withholding tax and there is not a whole lot we can do about it. You need a W8BEN form signed and there might be some tax relief in some cases.

Canada's debt to GDP ratio. At the federal level it is around 33%. You have to add in the provincial debt. As a whole it is around 95% debt to GDP. The US is over a hundred as is Europe. Japan is far beyond that. When the level of debt is the same size as the output of the world, it is like hitting the breaks on growth. Debt globally is choking and interest rates can't go up much because debt servicing would be astronomical. We are in a 1 to 3 % growth world.

Recession in 2019/20? The yield curve is the best predictor of a recession. It is inverted within a year of the recession. The yield curve in question is the 3 year relative to the 10 year. There is a 10% or less chance of a recession next year. Equity markets peak about 8-9 months before a recession. Longer bonds should make you money as the market prices in recession risk.

Russia. RSX, an ETF, is the main index in Russia. There are other, broader ETFs that include Russia. You may want to look at it if oil under performs.