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

Marijuana Industry. He saw a number of companies present at a conference three months ago. The easy money has been made. A lot of companies will fall by the wayside. You can do very, very well if you choose the right companies.

Markets. He thinks we have a little more room on the upside and then that’s it. We are starting to see money flow being flat. This is often a sign where things are looking for an opportunity to sell off. The TSX is continuing to fight with a lid. The S&P looks to have farther to go. He is bullish on oil and energy. He thinks there is a couple of months of strength. The TSX might outperform the S&P short term. He likes metals/materials, but does not like Canadian banks. There is room for a play on US banks, however. In the next couple of months he expects to be taking out his consumer discretionary. Start to take out your high beta stuff and wait for the correction.

Markets. Softness in the commodity prices are responsible for the TSX not performing as well as the S&P. We are seeing a fundamental improvement in corporate profitability in the US. Increasing diesel consumption is a sure sign of an improvement in the economy. You have strength in all kinds of commodity prices. It looks like we will have synchronized global growth which we have not had in a long time. Pulling the healthcare bill last week sent a signal that perhaps Mr. Trump can’t get everything done that he wants. You have to distinguish between a recession and a correction. He sees no sign of a recession. Housing could be an iceberg here in Canada. He does not think there will be a credit or housing event in the next 24 months, however. Housing has propped up the economy.

Markets. Investors are rattled in the wake of the failure of the health bill. Tax reform HAS to happen. It is the most important thing from the market point of view. It is what we need to keep the market momentum going. Repatriation of cash would also be helpful. It is not exactly a cheap market. A 15% tax cut is off the table. The problem is the budget. They need to keep the tax reform as budget neutral as possible. The market won’t be freaked out by this, however.

Gold Billion vs. Mining Stocks. For every dollar of increase in the bullion you expect 3 dollars of increase in the stock price. This has not worked in the last little while. She would prefer bullion right now in case the market corrects.

Markets. We have seen year after year enormous inflows into the ETF space. Fees are often 50-60 basis points. He is feeling pretty good about the global economy. The globe is where you want to be.

Cannabis. HMMJ is a medical Marijuana ETF in prospective filing. It will be a mix of Canada and the US. There is no exclusive Canadian Marijuana ETF.

Corporate Class ETFs. Tax free switches of mutual funds and ETFs are no longer allowed. But there are other advantages to this kind of fund internally that keep costs down.

Weed stock portfolio or an ETF of weed stocks? If you are diversified across 18 companies, they can’t all be winners. Be careful of trading costs as they may have wide bid/ask spreads so you pay a higher price to buy or get a lower price when you sell. If you sell everything and then buy the ETF, it could result in spread costs in both halves of the transaction. Do it over time, or wait for the ETF to build scale so the spreads come in.

Emerging markets are risky. They are so correlated to resources. If you have Canadian securities in your portfolio then only get a small exposure to emerging markets.

Markets. BREXIT does not make much difference to the way he analyses investments. If a company has a fair amount of their business in the UK then that may have an impact. The failed healthcare bill brought into question Trump’s ability to change other things. He combines fundamental and technical analysis. He is max weighted in equities right now. Whether this [US] market has legs remains to be seen. He remains skeptical in further advancements in the TSX just because of the composition of it. He would not be shocked to see oil prices test lows.

Markets. Everyone was euphoric when Trump got a majority republican congress. The market has now spent 24 hours worrying about healthcare. There would probably be a good mandate to see lower corporate tax rates. Now he can allow companies to grow more without needless US regulation. Earnings are string to bubble upward. The market is not that expensive. We need to see lower tax rates and deregulation, but we are now a lot less confident in a clear agenda. World economics are strong enough now to drive stock prices upward. Unemployment is dropping. The Fed is raising rates. We are seeing growth spurts from Japan and growth numbers in Europe. Greece seems not to be an issue. Canada is a proxy for global growth.

Canadian banks. They are expensive based on book value. 10 years from now, they will probably double. Europe has some incredibly cheap banks so it would be a good idea to move some money from Canadian banks to Europe for diversification purposes.

Markets. There is a lot of negative sentiment in oil. The lack of visibility of what OPEC has done and how it has fed into inventories is what is causing nervousness out there. She is confident that OPEC’s actions will work. With production increasing in the US, it is being balanced by cuts that OPEC has made. We won’t get a lot of growth in oil in the US next year if the price does not increase. She looks for companies that have the best growth and the best plays. There is a valuation gap between the US and Canada that makes Canada much more attractive. A border tax into the US will increase the price of oil in the US and thereby encourage production growth there.

Markets. The sentiment on the street regarding the failure to launch the repeal of the health care act is that the tax changes will also be tough. The big interest is in the mid-term election in 2018. If it is not attached to a budget then nothing is going to get done. The most logical thing is for the market to sell off to where it was before the Trump election. This morning there are dip buyers coming in. He thinks through April we will continue to drift lower to where we were before the Trump election. It is the physiology about how markets work. You have to test the confidence. He did not adjust positions on Friday because he expected it to fail. There is major execution risk with Trump policy.