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

Market. Into 2018 the expectation for earnings growth is very high. It looks like the markets could creep higher but we could start to see more volatility in them. You have to be cautious on the market. Analysts can tend to be overly optimistic on companies they follow. A weaker US$ which we continue to see is good for corporate US earnings. Gold is a range trade for a number of years. He thinks we may get a bit of a breakout to the upside. He has been adding gold positions on weakness. A new survey on the ability of Canadians to service indebtedness may cause the BOC to be a bit dovish this week and to hold off on more increases for a year.

Zinc. From the beginning of where Trump was elected we saw a dramatic change in US$ expectations. This put a lot of upside price pressure on many commodities around the world, Zinc especially. He believes the US$ will not continue to weaken in a big way from where it is today. He would not chase base metals here. We are in the last leg of the uptrend in base metals.

Educational Segment. US$ exposure in your portfolio. There is a perfect storm brewing: What the BOC will do, NAFTA, oil prices. There is Canadian dollar risk. He is fully exposed to the US$ at $0.80. There is an 85% change they will raise rates in Canada on Wednesday. The NAFTA agreement will allow Trump to cause a lot of problems without ripping it up. He will use this against Mexico because he wants his wall. There is a housing risk in Canada with the new rules combining with higher interest rates. The Canadian dollar should be weaker rather than stronger. Oil prices are being driven by the weaker US$. He thinks they will pull back into the mid-$50s. Go unhedged in ETFs for the next 6 months.

Market. This is one of the great Bull Markets of our lifetime. The global economies are booming, the US has increased its GDP forecasts, Europe is actually stronger than North America for the 1st time in a long time, and emerging markets are doing very well. We are in a Goldilocks environment. Haven't been here since the 1990s, so just lie back and enjoy it. Warren Buffett explained that the tax cuts are giving every stockholder a 20% increase in the value of their shares. That is going to propel markets for another year. He is quite sure we are going to see earnings surprises continue through the 1st half of next year anyway.

Market. We are coming out of 10 years of financial repression and low interest rates. The two-year treasury actually went over 2% today, the first time since September 2008. Capitalism has been on its back literally for over 10 years. As interest rates move up, that is showing that capitalism is coming back. The market is recognizing that. The last time he was on the show, his fair value for the S&P 500 was around $3100. Now we are getting revisions and a jump up in earnings that we are going to start to see starting next week. Now his fair value for the S&P 500 is over $3200. We are on the verge of a parabolic move.

Energy? On the back of this global growth, there is definitely room for oil to head higher in 2018. The 2 key questions will be, what will the US supply growth do this year and will OPEC be able to hold their production cuts. At the end of next year, he expects we will be at almost 100 million barrels of oil a day in demand. The price Canadian companies are receiving for their oil is much lower than what the world oil price is. Oil by rail will be another huge story for 2018. He still thinks the bias is for oil to head higher. He is expecting a $70+ handle on oil before the end of the year.

Cannabis. Is it better to go with an ETF or choose one of the current companies? When would be a good time to get in? Not a space he is in right now. He looks for consistent businesses that generates positive earnings. There is a speculative frenzy going on now, so a lot of the shares have gone up incredibly. You are much better to own as a basket, because nobody knows who is going to be a winner.

Market. US Bond yields of 30 year bonds are down over the last 30 years but you can see a double bottom and they have broken the trend to the upside. We had a great melt up since the beginning of December. We are out of the disinflationary camp. There is synchronized global growth. We are moving almost to inflation. A stock breaking though its trend line like this would be bullish. In 2013 the TLT ETF lost 20% in 4 months and it holds government bonds. You have to be tactical in fixed income this year. The strategy makes sense.

Market. S&P 500 is trading around 24X. Historically it is usually 16X. We are getting overvalued. Now we have tax cuts, consumer spending, expectation for GDP growth, hence the expectation that if earnings are growing at a faster rate, then the stock market should grow faster. Peaks have occurred in 1929 before the market crash, up and down until 1938, and then the tech bubble in 1997 and 1999 was a melt up before everything came crashing back to earth. In this phase, we could get a melt up. If it happens, be prepared to manage your portfolio appropriately, so you will be able to counter if we get any kind of a selloff after.

You should pay attention to a stock's beta. For example, you have some high-flying tech stocks which are trading at high betas, which is simply the price volatility relative to the underlying index. If the market index is 1, and the stock is trading at 1.75, that means for every $1 the market goes up or down, the price of the stock is going to go up or down by 1.75. If the stock market were to fall 40% like it did in 2008, then the stock's share price is going to go down 65%-75%.

Market. It's a tough market, and he doesn't remember when returns were as prosperous as they are now and feeling as bad as he does now. Experience teaches us that when you go through such a period of low volatility and no corrections, you have to pay the piper at some point. In anticipation of one that will come, it's hard to be over celebratory in this environment. However, markets are good, and you have to be invested, and need to build some defence as well. He is two thirds US and one third Canada in his investments, and has been that way since 2012. He is carrying about 10% cash and a 5% weighting in gold bullion.

Market. The strength in the US market is already reflecting US tax cuts. The lowered corporate tax to 21% and the 100% expensing of capital investments for the next 5 years will be good for the bottom line. Also, the repatriation of funds from overseas will help. It will also be healthy if interest rates go up, because they have been historically way too low. Because inflationary pressures are now relatively benign globally, there is no pressure on banks to raise rates quickly. Growth is fairly solid in the US and is improving in the rest of the world as well.

Market. He is positive on equities, versus other alternative assets. The decade ending 2000, was the worst decade for the US market ever. It makes sense that the markets 2010 to 2020 are going to be better markets. He is expecting spectacular earnings growth this year. The tax reform is not priced in whatsoever. As long as interest rates don't go up significantly, stocks are the way to invest. Sees a lot of value in technology.

Market. There might be trouble in the Whitehouse as we learn with the book just released. It is a 25^th amendment type of work, meaning impeachment. The market could go considerably higher still over the next two years despite geopolitical challenges. The market will ‘melt up’ in a fear of missing returns. This is usually the last phase blow off of the market. It looks like Canada is moving toward raising rates. He thought they would wait for the outcome of the NAFTA negotiations. They probably don’t want a stronger Canadian dollar, but it could be the right decision if inflation is picking up. Oil above $61 could last. The Canadian energy sector is probably going to lag the US.

Marijuana or Tech ETF Recommendation. HMMJ-T is the Marijuana ETF but don’t buy it here. The sector is tremendously overvalued. You would have to trade it with pretty tight stops. For Tech, it includes Bitcoin and so on which are very volatile. This is not the best time to put money to work in Tech. IYW-N is a way to play the tech sector but look to buy it 10% lower.

India ETF in Toronto. XID-T and ZID-T are the two was to play it in Canada. You need to be aware that the XID-T holds the INDA-N ETF and so there could be some double taxation. He does not own India right now but in the next 6 months we will get a chance to jump into India.