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

ETFs started in the early ‘90s. It is rare where the ETF provider is creating an index. Big name indexes bring you a way to do long term holdings. Actively managed ETFs bring you lower costs. Larry is biased toward ETFs for good reasons.

WTI vs. Brent. The quality of oil has changed. Alaska oil is at $63 and WTI is $55. You have delivery costs higher with some sources of oil than others. Since about 2010 since the US started fracking, supply went up and so domestic supply increase in the US force prices down in Europe.

Educational Segment. Volume on ETFs. Consider ZEB-T which is high volume. The underlying stocks each trade way more volume and especially the value. ZJN-T is low volume, about 3k shares a day. The top volume stocks in its holdings trade at quite large volumes in comparison. If an ETF provider creates a unit, it is priced according to what it costs them to go out and buy all the stocks within it. This concept is not well understood by the investing public.

Market. The US market is the best alternative for investment until interest rates rise. Investors are concerned about a bear market or a crash. Although we are seeing some of the highest valuations in a long time, where are investors going to put their money? US fundamentals are still very good. She sees 10.5 earnings growth for this year and 11% next year. There may be some consolidation in some stocks through flattening of valuations to make her feel better about entry points. It’s been a pretty strong earnings season. This was expected to be the worst quarter of the year but we are expecting 7% growth. Tech and Internet have had blow-out earnings. But growth stocks have been the worst this earnings season.

Market.There has been a recovery in the global economy. The European economy has been better than expected. China's growth has been relatively strong. Japan came in much better than expected. Some of the emerging economies are doing much better. The US economy is not that much different than it was prior to the US election. The market has continued to anticipate all the good news and have paid for it in advance. People are more bullish than they have been in 30 years. We are clearly late in the cycle, and he doesn't know how much is left. The market is still rocking and rolling to the upside, and it's hard to get in the way of it.

Investing.We are not too far off from the tax loss selling season, and he is looking for bargains. It is crazy what is going on now, making the number of stocks he can buy severely diminished. There are still some he can cherry pick, and hopefully by some good ones before the end of the year. If the US lowers the tax rate from 35% to 20% for the major corporations, as they say, it makes them more competitive. However, the US debt is about $20 trillion. You can go to the US Debt Clock, throw it on your computer, it is absolutely crazy. The average US taxpayer owes $170,000, and estimates are that the deficit is going to go up over another trillion dollars. What they are doing is great for Donald Trump, his family and his colleagues.

Stock Screening? He uses Globe Investor Gold and, as a contrarian, he looks for stocks that are down about 33% in the past year. Also looks to see if they have been listed for 10 years, as he only buys stocks that have been out there for 10 years. He'll then look at financial ratios. With the Globe filter, he throws in a few things on the screen along with a certain amount of revenues, and this gives him a bunch of stocks to look at. MorningStar is also quite handy as they have information going back a number of years.

Uranium. With all the stocks decimated, isn’t this a good contrarian play?He loves buying into sectors that are out of favour, and uranium is way out of favour. Uranium prices are way down. Japan hasn't recovered from the problems they had. This is definitely a sector he is interested in. Cameco (CCO-T) just reported results which were not good, but they seem to be doing just about everything they can to keep it going in a very poor marketplace. A big wildcard is their fight with the tax authorities. They've settled in the US, which cost them virtually nothing, but could cost a fortune in Canada. A company like Denison (DML-T), which he owned years ago, is at the other end of the spectrum.

Market. There are 2 real reasons why markets go higher here. One is fundamental and one is technical. Fundamentally, S&P earnings are calling for an estimated 10% earnings growth for 2017 and 11% earnings growth for 2018, and that is without tax cuts. We are not at peak earnings yet. Technically, in the past we have had 12 such times since the S&P data was formulated, where the S&P was up in the months of August, September and October consecutively. Each of those times except for one, the market went higher for the rest of the year.

Market. The US announced final duties on softwood duties. Stocks are already discounted for this. He wonders if now that we have certainty, is it a positive for further NAFTA negotiations. Maybe he can be optimistic. The increase in lumber prices this year has more than offset the duties. WFT-T is up nicely because of a lot of business south of the boarder and not subject to the duty. It will now be $3 per sq. ft. more or $2000 to $3000 per house more expensive for housing in the US.

Energy industry recommendation. PD-T is struggling. Rig counts are pretty flat so they are not benefiting as normal. Service guys are where you want to play but he does not own any. He would wait until the new year at least.

Global Economy- We are seeing very strong positive numbers from the global economy. For the first time in a long time, we are seeing a kind of global growth, partly as a result of Quantitative Easing. We are effectively going into a quantitative tightening, where they are pulling back on quantitative easing by buying less debt. The caveat is that global growth is not 4%-5%, so rates can’t be increased aggressively. We'll perhaps see slow increases in rates, but now it is more about what the picture looks like. We've had 2% growth, but as well as an increase in deficit. That is unusual. A tax cut is probably going to increase the deficit. From an investment point of view, you'll have low rates and low inflation, which probably means it is pretty good for the stock and bond markets. Globally, we are seeing some good earnings numbers. They’ve been fantastic for the last couple of quarters.

Percentage of US investments if living in the US for 1 month a year? He is two thirds US$ and one third Canadian, and has been that way since January 2012. In Canada, if you take commodities and financials out of the equation, there isn't very much to choose from. You should be aware that when you receive dividends from American companies, they are not subject to the Canadian dividend tax credit, so you should get some tax advice on that. Regarding Canadian banks and the growth potential, he would prefer US banks if you are looking for share price appreciation, but the Canadian banks for the yield. He owns both in his portfolio.

Market. Now is the time people should be adding money to their portfolio, but because the market is at these lofty levels, do half now and bleed the rest in. Valuations are very rich and are reaching new highs. Also, people who are just North American focused have really fallen behind the curve. Canada is up 4%, and the US in Cdn$ terms is only up 10%, whereas the emerging markets and Europe have done much, much better. Having global diversification provides you with less risk and greater return.

Oil & Gas?Saudi Arabia just announced they were building 2 nuclear power plants. This means they can flood the market with oil rather than keeping it domestically. At the same time, Pres. Trump wants to export oil also. There is going to be pressure on changes in demand and supply. Also, electrification is moving forward, and how much of an impact is that going to have on oil? Coal fired plants are being rejigged into gas which is cheaper. Demand is starting to ebb a little. If you own oil stocks, you have to do a very quick discounted cash flow to find out what the true price of a company is going to be, between now and the next 10 years. When it hits that price, you need to either pare back or sell.