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

5% limit on any equity in your portfolio. It takes 30 stocks or more to be diversified enough. An ETF with more than 30 stocks is okay, but you need to be diversified globally as well as between sectors.

Euro vs. the Canadian dollar. A lot of what the Euro will do will have to do with what happens with the EU economy. He thinks it will break up within 10 years. The US dollar will still be the strongest currency in the world. What the Canadian dollar does will have everything to do with oil. Canada vs. the Euro should do a little better than against the US$.

Educational Segment. An agreement among stop producers did not happen. They were talking of freezing production. But if he was running Iran and had been under sanctions for 5 years, he would pump as much as he could to get his share of the revenue. Probably the highs we have seen recently are all we are going to see for now. 5 years ago OECD did not have a clue what fracking would do. Right now they are expecting no material increase in production in North America for over a decade. The XEG-T trend line is up, but we have to watch for it to break down. We have 10-15% correction risk. ZJO-T is energy and juniors would have 15-20% correction risk.

Markets. He has a list of reasons why he is bearish. There is always risk and always reward, depending on the market. The potential upside is 3-4% of the old highs. On the lower side there are the summer lows of last year. We are at the top of the lid on the market. We are in a high PE situation with mediocre earnings. The VIX is very low, showing that people are too complacent. He is hedging. And then there is the saying, ‘sell in May and go away’. He reduces each year and is doing so early. The transport stocks on the S&P are not matching the industrials. Look at CP. It has been in a downtrend.

Selling in May with respect to income stocks. He continues to hold the income stocks. He only goes to max 50% cash for the summer. He moves into lower volatility.

Market. We seem to be in a netherworld. On one hand you have the Fed trying to push rates higher, almost as if it’s a credibility issue, and Central Banks trying to use stimulus. In the next few months, expects we’ll see a rationalization between how much can the Fed lean into the wind all alone, and how much will data come back to them and get them back to talk again about their negative interest rates policy and all the things that have crept up in the last couple of months.

COMMENT. His targets are always in terms of a year. If you don’t get action towards them within the first 3 months, they probably don’t manifest themselves.

Gold? Right now there is a dichotomy of 2 opposing forces. The gold ETF (GLD-T) and the actual spot bullion. He has a much lower target for spot bullion of around $1,175. On the GLD he has a $163 target, which would translate to about $1,600. There has been a base from last November, which is quite positive. If we can get above $1,375-$1,380. There is a lot of air space to about $14. Producers will always lead the commodities, both to the downside and to the upside. Looks pretty good in here. (See Top Picks)

Markets. There were 2 bull markets after the 2^nd world War. Two charts comparing 1949-1959 and 2009-2016 show that markets work themselves higher, but in a zigzag fashion. We are currently in a consolidation period, similar to what we had 1949-1959. The market went higher in the 60s. It started below 80 and went to 1000. In this market move, we started around 8000, so we have a long way to go. In the 1^st wave people are very tentative because they don’t want to go through again where the whole market falls out of bed. Global GDP growth is all positive with an average 2.7% growth. You can’t have a bear market when the global economy is getting stronger.

US$. Feels that the rally for the US$ is dead now. In the currency markets you get long moves, we have had a good move in the US$, and he thinks it has topped at least in the mid-short term. There is going to be a rollover, and that is going to allow all the things that were negative, when the dollar was going up, to get reversed and get positive again. We should now get a relief rally.

Lithium? If Tesla’s Musk can come up with the battery pack, which was promised some time this year, that changes everything, including the automobile business, energy storage, etc. He would be from Missouri for the time being, until there is proof that it works. If it does, this is an area you want to look hard at.

Markets. 17 years on Market Call! We had a nice pullback on the US$. We have seen in it commodity prices. He thinks the US$ will retrace back to its previous highs. This is a long term story. The US really wants to raise rates, but the world and China especially is saying they can’t put up with a strong US dollar. We went from risk off to risk on in Mid-February. In risk off you want the safest assets. The US election is this year. Normally the election year is good and the president’s first year is a tough year.

EBV lines creator. The original work goes way back. He thinks balance sheets are way more important than income statements. He made the model price algorithms his own.

Markets. We are at a resistance point, but there is enough good news out there. We need something positive on the energy side and that would probably carry the TSX through that resistance point. He would hope to see 2%-3% in this next quarter, but we are in a slow growth period. You can’t expect equities to take off when we are talking about 1.5%. Expects we are going to be closer to 2% GDP growth this year. Has been disappointed in the banks this year. The big Shorts out of New York haven’t helped. There have been a lot of Canadian managers that have been red hot on US banks, particularly the regional ones, and he thinks they were wrong. The new rules on lending in the US are really hamstringing a lot of the regional banks. They are going to be dead for a while.

Gold? He used to be a gold holder, but doesn’t own any at the moment. He is a traditionalist in that you really get into gold when you see problems with inflation. He could see people getting concerned because of negative interest rates. It has had a nice run, but will probably have to give some of it back.