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

Risk management strategy? The name of the game is “managing the downside”. First of all, focus on high-quality names. Don’t try to hit home runs. Despite how many home runs you hit, when things blow up it wipes out all of the gains. Focus on safe geographies, developed markets, such as Canada, the US and Europe. Emerging-market capital markets lack regulation. Also, don’t bet big on any one name. He limits his exposure to only 5% on any one stock. Also, doesn’t have more than 5 names in any one sector.

DRIP program for a retiree? If you are withdrawing from your portfolio, you need to have liquidity. You generally don’t want to look at equities for liquidity, other than the dividend or the cash flow that is coming in. In other words, you never want to have to be in a situation where you have to sell shares in stocks to generate your monthly requirement. If the yield or dividend coming from your portfolio is sufficient to meet your monthly needs, then you are okay as long as you are willing to withstand the volatility. On a DRIP program there is a good and a bad. The good is that you are saving costs by not having to acquire shares in the open market with commissions attached. However, don’t let that steer you in a manner where you forgo having liquidity because all of your money is in stocks and you don’t have enough for your monthly requirement.

Adding high yield to the fixed income side of a portfolio? He is not a big fan. With interest rates being as low as they are, investors have been pushed to take more and more risks on the fixed income side of their portfolio to get any kind of reasonable rate of return. High-yield bonds carry a correlation, very similar to equities. In a bad market you can’t really rely on the high-yield bond side of your portfolio.

Buy a stock directly or sell a Put first? He doesn’t use options. If you buy the right company, it is more of getting the timing right, and even if it isn’t right you will do fine over time.

Effects of a Bank of England rate cut? Generally, when Central Banks cut interest rates, the currency weakens, meaning that the £ would sell off. The euro would also sell off. You also might see North American equities rally off of that.

In a rising rate scenario, what stocks should we move toward? The short answer is that financials and insurance companies benefit the most from rising interest rates. He would not be betting on rates rising at this time. At the other end, REITs and utilities, will sell off.

Markets. There is a lot of fear mongering by politicians, particularly with BREXIT and what we are seeing in the US. People are upset and politicians are finding it very easy to point fingers at globalization and free trade as being culprits, rather than at the effects of technology. Those jobs are probably never going to come back, but will be supplanted by technology to a great extent. We are undergoing a major shift in the workforce, which is having an effect on the markets. They have been trying to keep things going since 2008 through zero to negative interest rate policies globally. Today we have over $13 trillion of “negative” trading bonds in an attempt to keep the economy limping along. He questions if politics can trump economics in the end, but somehow doubts it. The economic cycle is alive and well, and we are going to go into a period of greater volatility. There is a bifurcation of markets with the bond market telling you things don’t look so good going ahead. At some point postings have got to come together, which will provide a real opportunity for value investors. Expects people will come to realize that expansion of trade and expansion of economics is good for jobs in the long run.

Market Call Tonight was just a repeat of last night's.

Markets. We are at the early stages of a bull run, the likes of which we have not seen in a decade. Things are NOT looking toppy. Brexit yielded one certainty in that government interest rates are going to stay low for longer. The world is awash with money looking for a home. We are in the early stages of a big run in the markets. Pension funds need to figure out how to generate more income. The real estate market has a ways to go. It is not like less and less people are going to come to Canada. Now that there is a green belt around Toronto, we become like Manhattan. You can’t go out so you go up.

Gold in general: It has done very well since Brexit. It has rebounded. As a hedge against uncertainty, you are in an interesting spot where the US dollar AND gold could both continue to do well. This is not usual. Gold stocks should continue to well. Political uncertainty is likely to remain high while interest rates remain low.

Markets. To believe in this market, you have to believe in earnings. Earnings in this market look a little disappointing. Most forecasts are indicating a decline of about 5% this quarter. Thinks it is going to be hard to see this next leg over. There were some very good numbers from J.P. Morgan this morning, that helped a little bit on the US side. For continued growth though, he has to see earnings come on board. Looking at the back drop, globally it is pretty weak. We don’t know what BREXIT is going to be as we have a couple of years ahead of us at least, of negotiations. Expects they will get along and compromise on the way. There are some very unusual signals. The bond market was peaking at the same time stocks were peaking last Friday, which has never occurred before in the history of the markets. Which market do you believe? The bond market typically gets it right, but it is telling you that things are a little worrisome in the world, which is why prices are so high and yields are so low. Investors are thinking central banks will be coming to the rescue again. The market is obsessed with what the Fed is going to do, and to a lesser degree the Bank of Canada, Bank of England, etc. It is a total central bank falling market, and right now we live in a market where central banks have distorted everything. Thinks the current rally is going to be short lived.

Physical gold and silver? If you are looking at holding actual bullion, you would have to have insurance, storage costs, etc. If looking at an ETF, (GLD-N) would make a lot of sense, at least as a hedge. He has never done the physical metal as you are looking at a discount and are probably buying coins or maybe Troy ounces. You have to store them somewhere. Now is probably not the time to buy it.

Markets. Bruce Murray, with David Newman appearing alongside him. The Brang-over, the after affects of Brexit. They do not think it will be all that bad. There is a great relationship between Britain and Germany that they will want to keep going. It is risk on again so growth stocks are coming back into favour.

Buy into the market now? They are 100% invested. We just broke out on the S&P since 2000. Quality Global growth and US large cap growth stocks will lead the markets. He recommends staying fully invested.

Markets. Keith Richards was joined by Craig Aucoin, of the same company. A new high in the S&P is great news. It has done it on a few questionable things, however, such as sell in May and go away and the presidential election. Earnings for the quarter are just starting to ramp up now. That will be a tell-tale sign. Brexit caused a non-fundamental response. It is too early to say if buying opportunities will emerge. Banks face a lot of headwinds. Defensive plays are way overbought. This should not happen when the market is breaking out to new highs.