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

Holding cash is critical as rates rise. Have cash to spend. He has 35% in his equity fund. We're in a time of massive volatility and there are few stocks of good value. He's looking for global stocks that are temporarily down (and will recover quickly), while he's avoiding those with too much debt, like Enbridge.

European recovery: Interest rates are still negative in some European countries. Spain's unemployment has dropped from 25% to 17%. There's still a long way to go, but that's massive. This picture is all over Europe. There's a natural cyclical recovery benefitting from North America's recovery and China. All Euro countries are decreasing their deficits (austerity has worked) and many are now in a position to spend money again.

Where to find a bond that pays 3%? There's no value in regular bonds which do poorly during rising rates. High-yields are one of the few fixed-income assets do, because they're short-duration. Don't buy a Canadian-only high-yield bond fund, because you'll get mining, oil and gas bonds with a high default risk if the commodity price falls. So, own U.S. high-yield bonds (bond fund)--which hedges the currency in case the U.S. dollar drops and you get crushed. Such a fund will generate 5% yield over the next five years in terms of income. Stick to a five-year horizon.

Should I buy high-yield bonds as interest rates rise? Don't expect them to necessarily increase in value. Instead, look for your distributions to increase over time, because you always want to get your principle back. As your old bonds mature and you buy new ones at higher yields, you'll get higher interest returns.

Market Comment. The divergence between small cap returns in Canada and the US will eventually return to the mean. Over 20 twenty years the correlation has been very strong. Oil stocks and material stocks may have found a bottom in Canada. Some of the US tech names are starting to be hit hard. He sees the oil service sector as a potential winner in Canada, where the multiples have come down so much.

Market. There were record flows into US Equities. Some bubble sectors in January went parabolic. Crypto and Cannabis have come off since January. We moved to a new environment for volatility. REITs are good if you are looking for yield. Utilities are strained to deliver. Growth cycles peter out as people retaliate. They should not pay as much for the growth to come. Industrial materials have much & more attractive valuations. The correction could be about the market discounting slowing economic growth.

Happy to see the markets recover the past few days, but we're still in a down trade at high risk levels. This is one of the most unpredictable first quarters in a long time. It's anybody's guess. He's been elevating cash levels and staying patient. Trump is a negotiator and a bully. Is he bark or bite? Mostly bark, then he pulls back his stance. But what if he doesn't pull back, like he sparks a real trade war? This worries him. It's a difficult time now. He still likes the big tech stocks. Will the TSX get back on its feet? (He's been negative Canadian and oil/gas for a long time.)

Silver or gold? This space isn't his specialty. He plays silver or gold through ETFs, American ETF, GOAU-N. He owns Franco-Nevada and Silver Wheaton. He has no preference for either metal.

What are the costs in investing $11,000 in an ETF, including the "spread" and how does it compare to a mutual fund? It depends where you're investing, like at a discount brokerage. All Candian banks have a discount trading arm. About the spread, with an advisor you'll pay a higher commission. Don't put in a market order, but ask what the bid-ask spread is and wait on a bid. This is the lowest-cost way. An ETF will still be cheaper than a mutual fund.

Short-seller Andew Left at Citron: Left is a good presenter. What bothers him is that Left has taken him out of some names (he got stopped out) like Shopify. Now, Left is attacking Nividia. It's bothersome, because there are over 30 analysts also commenting on these stocks. Why does Left get all the attention? Because pessimism carries a lot more weight than optimism. Pessimism sounds smart. Left's track record isn't that great.

Wild volatility these days, so to stay focussed buy companies with good balance sheets and growing dividends--and now you get them on sale. As a general rule, the safest upside has been companies that make the components inside tech devices rather than the big tech companies themselves. FANG remains expensive despite the current pullback. There is a changing pyschology in the markets. Value stocks and telcos were popular post-recesssion. Today, it's growth. Trump is taking big swings, but is playhing Russian roulette with a trade war, which is dangerous. The voter base supporting Trump will now feel the pain of his tariffs and moves. There will be challenges to the Canadian housing market, and we'll definitely see the impact of rising interest rates.

Canadian banks have been wonderful places to invest, but after the recession many banks have cut senior staff and hired younger staff. Do they have enough seasoning? He's concerned. Banks are a good place to hide now, but there are even better opportunies elsewhere.

Advice to weather current volatility: Trump is being increasingly irrelevant. Eventually, he will take guidance. Don't pay attention to the noise coming from the White House or his Twitter account. The market fundamentals count.

Canadian dollar 6-month outlook: In the past year, the Canadian dollar has been difficult to manage for investors. We'll likely see an interest rate rise here. The U.S. dollar should weaken as ours rises against other currencies like the Euro. If you're going on vacation, wait till the rate rise is done.

The market is in a quiet period ahead of earnings, when companies are blacked out from buying their own stock. Volatility has also risen earlier than normal this year. Investors have become lulled into a false sense of security and we should think of the recent volatility increase as normal. He thinks time will allow corporate fundaments of sales, earnings and cash flow to catch up with recent market peaks, so the recent market retracement is healthy. He has been reducing beta in his portfolio, which has created an opportunity to purchase good dividend yielding stocks recently.