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Wealth Management During 2020 COVID Crisis

(Wealth Management During 2020 COVID Crisis – TRANSCRIPT)

Good so we’re on Instagram and we are on
YouTube thanks for joining guys quick
disclaimer before we get started again
I’m Rob Tatro Rob teach well Rob teacher
comm head of the teacher wealth advisory
group we got a couple different formats
happening here so if you see me kind of
glancing every quick disclaimer don’t
take this as personal advice for your
situation I don’t know your situation
now if you’re a client of mine great we
could have a bit of chat and we could
talk about it offline but if you’re not
a client don’t take this as investment
advice I don’t know what you have I
don’t know what you own I don’t know who
you are so anyways thanks a lot for for
joining guys on on Facebook on Instagram
over here both of you guys on my
personal feed I don’t a trophy so let’s
get started right away here I’m gonna
give you guys my overall view and then
I’m just gonna kind of this is supposed
to be a Q&A session so I’m asking you
guys to get me your questions your
thoughts I had a question I’ve been
getting some questions online already
before the event so I’m gonna start
right off the bat first of all how many
people here are working from home give
me a shout out if you’re actually
working from home right now anyone
working from home or you guys just
quarantined alright nobody is okay good
good to see you Mike well good to see
Ken tell her Johnny marks as well didn’t
you get a fall good to you guys thanks
for joining yeah some people working
from home absolutely good good oh
they’re coming in okay perfect so what
we’re set what we’re obviously seeing
here is for sure
unprecedented definitely in terms of
impact on society so what I’d like to
not do today I’d like to not as best as
I can one I’m not going to mention
stocks I’m not gonna mention individual
securities I’m not gonna mention I will
mention sectors I will mention asset
allocation I will mention the strategies
I will mention stock prices movements
generally but I’m not going to be
specifically talking about individual
stocks so this is not market call on vnn
where I can give you guys you know my
top 10 picks for the next month or two
it’s not we want to do here we want to
answer questions about asset allocation
what’s actually happening in the market
price discrepancies that we’re seeing
and I’m also so I’m not going to give
you a specific advice on that
and ideally what I could get is I’m not
gonna talk also about the actual impact
of the virus and what I think is gonna
happen how many people are gonna die how
many people are you know we’re gonna be
impacted I’m not an expert I’m not gonna
pretend I am you guys have read a bunch
of stuff online as well
everyone’s reading everyone’s googling
stuff so the idea is for us to be having
a discussion about the impacts of
investments so I’m gonna open up the
floor there any questions that anyone’s
got right now with respect to
investments if not I’m gonna get started
in the meantime I’ll get started right
now but my overall macro economic
outlook as to what’s happening first of
all Corrections like this by the way
this is open open floor for you guys to
ask any questions at Corrections like
this have happened about ten percent at
ten times ever in our lives so we’re
talking about a thirty three thirty four
percent correction right now as I speak
I do have my BNN up here and I am
watching it on the side here the markets
are down again today I guess the good
news with respect to today is that we’re
not seeing
you know 2,000 points or 3,000 points
like we’ve been seeing kind of lately
but we are still seeing movement in the
stock price so what is causing that you
guys know this you guys likely know what
is causing these movements it’s
uncertainty it’s the human effect so I
don’t need to tell you guys that but I’m
gonna tell you guys regardless we’re now
at thirty three thirty four percent
market correction okay so that’s
happened ten times ever the last ten
times they’ve been kind of you know 1929
was the first time this happened you
know that was an eighty percent
correction it took thirty four months
for it to come back after the war so
during the war we saw a 30 percent
correction that took 37 months to come
back that was World War two if we keep
going 1962 there was Cold War jitters
Cuban Missile Crisis fears 30 percent 29
30 percent and you know that took about
six months to get back if we keep going
you know late into 73 74 there was you
know Arab oil embargos energy prices
went soaring the opposite of what we’re
seeing right now
lengthy recession that was a 48 percent
correction nobody talks about the oil
embargo correction but it’s actually
bigger than most of the other ones that
you’ve heard of you know my dad were
here he remembers the oil embargo he
remembers you know 87 87 is the next one
so 87 was happened basically overnight
happened extremely quick we had a 23
percent correction in one day so to put
that into perspective
last week was a fairly bad week relative
to the markets that was the worst week
since the Great Depression it was 17
percent that was a 17 percent correction
last week this happened in one day my
dad always tells the stories he
remembers how it was that day on you
know on the trading floor and it just
wouldn’t stop it wouldn’t stop it
wouldn’t stop 23% in one day would be
you know when we were at 30,000 points
that being just under a quarter that’d
be like 7,000 points or so on the index
so it’s a lot of movement for sure and
we’re not it’s quicker than we’ve seen
in every single instance except 87 so 87
happened one day and then couple couple
good bounce-back days but this one right
here is quicker than we’ve ever seen and
I’ll just there’s a couple questions
here coming Canadian US federal
intervention have an impact so this is
Simon Clayton thanks for asking the
question Simon two interventions got
announced first of all there’s two kind
of sides to the intervention first of
all let’s talk about the US Fed or the
Bank of Canada they are the monetary
policy so they decide how many dollars
are printed you know what they should be
buying should they be buying assets with
our dollars and you know what they
should be doing we’re by the government
Canadian government US government other
governments they announced stimulus
packages they’ll announce tax cuts
they’ll say small businesses don’t have
to pay taxes they’ll say you know we’re
gonna send everyone to check all of that
is what’s happening two separate field
so first of all let’s talk about the US
Fed and the Canadian the Bank of Canada
the US Fed are announced this morning
unprecedented a blank cheque basically
we will rate whatever amount you want
whatever amount we need to write to buy
bonds fixed income assets balance sheets
to make sure that there is liquidity in
the market now get too liquidy later but
that’s an unprecedented move and in my
mind it’s helping prop the markets today
so to sign and to answer your question
on that front the Fed intervention
now we’re talking about government
direction I firmly believe right now
where we are you know it’s not a
surprise if I tell you that there’s
going to be a lot of unemployment a lot
of unemployment we’re gonna have kind of
two choices we’re either gonna go down
the path of you know we’ll take care of
those we can or something like that
oval goal kind of something more the
Denmark route which is going to be some
sort of level of you know universal
everyone gets something and you know no
one is gonna be hungry no one’s gonna be
without food in Canada I would if I were
I’m not a gambling person but if I was
I’m gonna guess that we’re gonna more
likely to go that way with respect to
just making sure everyone’s taken care
of for however long it takes this here’s
the thing guys I don’t know how long
this is gonna take and I’m not gonna
you and I’m not gonna tell you
that it’s going to last one month in
three months or six months or 12 months
I have no idea and I’m not an infectious
disease specialist although in my spare
time in the canadian CMV foundation i do
a ton of work with pediatric infectious
diseases specifically because CMV is the
number one cause of infant disability
and it is that an infectious disease so
i haven’t met some of these people and
they’re just just not to sound like
trump but they’re wonderful people and
they do just phenomenal work and they’re
working 24/7 right now so i’m not an
expert but i know that it’s going to
last a while and when we had 500,000
unemployment applications last week
think of you guys and your friends and
your family how many of them are out of
work you know just on my hockey team
couple guys told me this week that
they’ve lost it they’re not they’re
being laid off so this is happening to
everyone and i’m it’s going to continue
to happen for sure so to the answer
their question the federal intervention
will it have an impact
I believe it’s propping up the market
right now and I believe that it that the
US government interests in the Canadian
government intervention they won’t have
a choice but to intervene and it’s going
to be something we’ve never ever ever
seen the level of money that
we’re gonna put towards this this
program we’re talking four or five
trillion in the u.s. for support we’re
talking you know maybe ten is percent of
that in Canada half a bill maybe up to
you know maybe up to three quarters of a
trillion canna half a half a trip to
three-quarters of a trill in Canada
those are numbers that are unheard of
and you know you go back to world wars
when we had to fight we I wasn’t alive
sorry not we the collective we we had to
fight against you know maybe losing our
livelihood forever and we spent up to 30
35 percent of the GDP in one year so now
we’re talking about measures that are
gonna be three four five six percent of
the GDP this feels like a ton of money
but there’s a lot more room for that
so Simon I hopefully that answer your
question I’ll try to get to the next
question here I believe that’s yeah Nick
given the nature of this correction how
does one compare this correction to the
other ones you mentioned so on a
percentage level on a percentage level I
have a chart here for that yeah
and by the way all of these charts if
you have any interest put a comment in
there I’m happy to send you some of
these stuff like I I’m a I’m a sucker
for information I love love love info
and I love data
my brother those of you know my brother
Charlie he’s a big big data guy so we’re
you know I’m looking at the worst
corrections in the history and they kind
of start at 80 percent with the Great
Depression but the majority of Amarnath
30 to 40 percent range of the worst
corrections ever now what I really like
to see is the forward returns from the
bottom when you get to the bottom
forward returns your one-year number on
average of these these twelve bear
markets has been 52 percent your
three-year number eighty-eight percent
so we’re talking total returns from the
bottom to the following one year is 52
three years is 86 and the five year
number is a hundred and thirty two
percent so it’s uh I don’t know where
the bottom is again guys and we can talk
a bit more later if someone wants to
know about how and when you do see a
bottom but when I bought
hits you can be sure that there’s going
to be some really positive forward
returns and I’m not gonna sugarcoat it
for everyone today I’m just gonna say
that we could talk a bit about the
bottom because that’s what everyone
wants to know right Rob when are we
hitting the bottom life at Lake of the
Woods thanks for joining MC Bruce thanks
for joining Rick Kaiser thanks for
joining other people here grant he could
see grant D beaugeois thanks for joining
guys I’ll get to the next question here
where should we be investing right now
to offset the losses that we are
experiencing so I’m gonna tell you what
we are doing
generally for our clients do not take
this as investment advice for you
personally I don’t know what you have
and what you do can tell are good to see
but I will say this so our view is that
this is unprecedented generational
opportunity to buy quality assets now
there’s two ways you can play this to
answer your question and Michiko Michiko
you could play this two ways you could
either say I’m going to buy Airlines
casinos Carnival cruise companies cruise
companies and I’m gonna make 510 times
my money when this thing comes back
because they are down some of those are
down 70 80 90 % so maybe that’s how you
want to play it and and that’s what I
would call speculating but that’s
speculating because I don’t know I don’t
know for sure if those are gonna come
back silver B thanks for joining we
don’t know for sure if those Carnival
Cruises those Airlines we don’t know
what they’re gonna come back I think
they are in the gut of my cutting I do
believe that we are gonna fly again and
there’s amazing opportunity there but
for now right for now let’s let’s focus
on quality is what we’re preaching there
are some real real high-quality names
that have fallen 30 35 40 % from some
sectors in real estate financials
infrastructure insurance companies those
are all companies sectors that generally
come out of these things
in really really really good shape so do
I know for sure how the bottom is gonna
look what these companies are gonna do
how they’re gonna bounce back I don’t
but I know one they’re being extremely
solid dividends
I also know – I don’t think that the
government can let those companies go
bankrupt even if we get to a point where
they are by the way I don’t think that’s
gonna happen I do think we’re gonna get
back to normal at some point here and
these companies will be profitable but
regardless when this thing turns around
you’re gonna want to have been paid a
dividend in the meantime you’re gonna
want to have gotten that yield whether
through a dividend stock or real estate
you know and you’re gonna make the
capital appreciation when life gets back
to normal you have a Rob when is that
when does life get back to normal I
don’t know I don’t know but it will have
so to answer your question about where
should we be investing our view on that
is we’re sticking to quality we’re
taking equality we’re sticking to and
we’re also legging it so we’re doing in
two ways one we stick to quality
typically dividend payers if we’re doing
in the u.s. we typically want to focus
on sex sector sector as a whole will do
it ETFs also you have to worry about
currency right now currency currency is
a problem thank you for joining us
Joseph gray duco and Daniela Graham
appreciate that you have to worry about
currency because currency is something
that you know currency has moved so much
right now currency was one of my
questions that I got through over the
night that the US dollar has gotten so
strong and you guys know why the dollar
is so strong right I’m sure someone give
me a quick reason why that I feel like
I’m teaching class here that’s what my
wife is doing today at home with her or
her kids she’s she’s teaching them
school the u.s. dollar is so strong
because it’s a safe haven right people
are selling their stocks people are
selling their bonds people are selling
their real estate people are selling
everything right now and they are going
to either the safe havens the safe
havens typically have been US Treasuries
typically have been just straight USD so
we’re talking cash in a USD account that
has so much in flux and people are
selling the Canadian dollar and as a
result we see in a Canadian dollar
hovering in the mid 68 so to talk about
the strategy to get back to your
question Michiko
we suggest legging in what is legging in
me we suggest whatever money you have in
the sidelines that you are willing to
invest write that number down on a piece
of paper whatever it is I don’t care if
you’re a starting investor or your you
know your retiree or you’re 50 years old
what is that number that hat you have on
the sideline I said half a mil is it ten
mil is it five grand whatever that
number is write it down and do half of
that is what we’re suggesting at or near
these prices all right this is cash that
you want to do half or a portion of that
at or near these prices so you do have a
portion of that and now you’re invested
okay good to see you David so you now
you’re invested you got half of that
invested in the market one of two things
will happen we’re either not at the
bottom and we can get to that in a
second and then you’ll have more ammo to
purchase or we’re somewhere close to the
bottom and then you’ll have participated
somewhat in the rise of the equities
what you do not want to happen folks
what you do not want to happen is for
you to be in a position where you’ve
saved this money you’ve accumulated
wealth you’ve got cash and you were
prudent and you kept it out of the
market and now you finally get this
unprecedented opportunity to invest and
what do you do you wait you wait too
long and then you miss the rally that’s
what we do not want to happen I know how
hard it is in the pit of your stomach
it’s incredibly painful right now deep
down in here I shouldn’t be tapping this
as a microphone you know it hurts down
here or somewhere and your legs are you
know it hurts to even think about
putting money in the market right now
and that’s why we are seeing stock
market moves dramatically down no one’s
buying no one’s buying right so you guys
know how the stock market works right
yeah bids on one side you have ask on
another side if you have people that are
buying more people that are buying and
selling we see a rise and if we see the
opposite we see a fall well when you
have no one no one buying you get what
we saw in the last two weeks which is a
free fall just drop like a stone now at
some point so no one’s buying you guys
by no one’s buying we started prudently
adding to our clients portfolios this
week and we expect to do a little bit
more in the next few weeks what we did
those of you that are clients you guys
know this but we had put some cash aside
in the last year let’s call it the last
year a bunch of different ways just
straight cash or alternatives straight
cash alternatives fixed income we didn’t
know I’ll be lying to you if I said that
I knew this would happen I’d be lying if
I said I knew there’d be a 35 percent
correction I had no clue but we just
felt valuations were a little stretched
so as a result of that you know we had a
bit of casual now that we have that I’m
repeating my advice to you to answer
your question Michiko where should we be
investing not only where how be prudent
be prudent leg in you want to reduce
your market timing risk here now if
you’re a gambler and you just want to
put it on the market today and you’re
like you know what I’m comfortable with
owning you know Royal Bank out of six
yield whoops I specifically said I
wouldn’t talk about stocks disregard the
last mention about a Royal Bank but you
know if you say I’m comfortable owning a
Canadian bank at a 7% yield or
uncomfortable owning an infrastructure
company you know what a eight yield or
I’m comfortable owning a real estate
company at a 14 yield if you’re
comfortable owning that long term then
you know feel free to not worry less
about market timing but for most of you
I think market timing could is a risk
that you could face um I’ll go to the
next question here how’s everyone on
Instagram doing you guys hear me over
here this is my rock April personal
because you’re me yeah okay
Joss Nikola but he’s good all right
thanks for joining over here Dan
Doubtfire you guys
Kenny you guys hear me okay perfect
somebody give me a shout-out or
something or a sign of life on one of
these Instagram channels let’s get to
the next question after Matt job loss
mortgage defaults recession currently
priced into the market this is another
question or more damage so remember that
the market is a 24 hour 24 hour
instrument that is always trading is
always a reflection of people’s views
and values people’s views and values
about what an individual investment is
okay all right Mac I can take it see you
so these stocks are being reflected so
it’s I think I think a stock is worth
more I can go and buy it
therefore the stock will improve so the
entire market is a reflection of the
future value of these securities the
current value and the future value of
these securities right so everything
that we know that you guys know that
you’ve read that you guys have read
online is priced into the market so to
answer your question job loss mortgage
defaults recession that is what you’re
seeing when I point over here and point
into my TV that as the markets currently
currently moving but that is currently
driving the selling so when you see that
hey Christine when you see that it is
extremely extremely difficult for you to
make a statement that the market is not
pricing it you’re basically saying that
you know more than the market right if
you’re saying I know for sure that the
market is gonna fall or I know for sure
that the markets gonna go up you’re
basically saying I know more than the
that’s a tough game to play because
right now right now the stocks are not
trading at any rational valuation they
are not they’re not trading at any
rational valuation they’re trading on no
multiples sorry I was just reading a
comment here they’re not trading on a
multiple they’re not trading on anything
that makes sense historically right so
if you’re saying that you disagree with
the valuation that you’re seeing you’re
basically saying you know I know more
than that because it’s not trading at a
rational level right now guys what’s
your preference right now give me a
quick comment USD or CED would you
rather have US dollars right now or
Canadian dollars right now can I get a
quick can I get a quick comment from you
guys if you had US dollars right now
would you be converting right now or
would you be keeping it dollars are at
68 cents how do we feel about the future
of the economy hey David could see you
David anyone
want to give me a comment as to how
they’d feel about USD you got some USD
comments USD comments USD yeah so got
some highs oh alright I figured it out
I figured out this Facebook thing right
on good to see you guys over here sorry
about the bad angle but it’s it’s
working so now we got we got all the all
the venues happening here here’s what I
think about US dollar and I’m gonna tell
you also what our analyst thinks feel
free to get this comment if you’d like
um you know let’s talk about two things
for US dollar Canadian dollars so
everyone here looks like they’re saying
US dollar US dollar US dollar US dollar
ok Japanese yen one comment it’s my
uncle Alex yeah maybe
Alex who knows let’s talk let’s stick to
USD right now and see ad so historically
the Canadian dollar is typically not
this oversold so oversold meaning on a
relative strength index so relative to
they call it the Big Mac index so
basically what are you able to buy in
Canada versus in the US have you guys
ever heard of the Big Mac index Big Mac
index does that mean something to you so
that means taking a dollar in Canada
crossing the border converting it to US
dollars and buying a big map they called
the Big Mac index it could be really
anything you want you know at some point
if those numbers get too far out of
whack the currency especially Canadian
and US have a measure of self balancing
them out they become you know the lower
the Canadian dollar goes the more buyers
come in in Canada right so it’s got a
bit of a natural checks and balance
system as my dad would call it so the
Big Mac test right now
the K in dollars is oversold but I know
what you guys are all saying I know what
everyone is saying you’re all saying USD
you’re saying USD likely because you
don’t like the prospects long term of
our Canadian economy I’m going to talk
to you about two things with respect to
the Canadian dollar this is Matt Oh Bev
so he is our I don’t mess up his titled
he’s a managing director at Canaccord
and our North American portfolio
strategist so the comment that that he
made short term is typically
there’ll be a bump here there’ll be a
bump here on the Canadian dollar just
because it’s so oversold so if your play
is to trade the Canadian trade the US
dollar which I don’t suggest you guys do
but if your play is that then you know
there could be a bump here short-term
where the Canadian dollar appreciates in
the US dollar US dollar depreciates that
being said long-term our view is that we
have an account deficit both on a trade
deficit and our we’re gonna have a
fiscal deficit we’re gonna have a
tremendous fiscal deficit that’s gonna
be coming up here historically when
that’s happened our dollar has not been
high historically so long-term the
fundamentals for the Canadian economy
[Music] hopefully I’m not surprising anyone when
I say this but I mean they’re not
fantastic given the amount the
percentage percentage of our percentage
of our exposure to the to the Western
Canadian oil and gas place so hopefully
that gives you a bit of guidance with
respect to US dollar Canadian dollar
that being said again I don’t know
what’ll happen long term but you know we
were quite confident when the dollars at
75 that and this kind of started
happening that there was no way that we
wanted to just we want it to sell
because remember the Canadian dollar was
at 80 really not that long ago we were
in a range from 78 to 82 for a good good
period of time I want to say probably 18
months or something like that I don’t
know the exact duration but we were in a
range for a while
Thank You Steven for the compliment that
I’m looking great from all angles I do
feel that there’s got to be an angle
that trims my second neck it’s got to be
a way right anyways maybe I should start
working out in my basement let’s get to
the next question here I had a question
earlier about I just want to get this
right here liquidity and specific asset
classes okay so this is a question that
came in this one came in earlier so
what’s happening to the fixed income
market why are we seeing so first of all
fixed income we’re talking about bonds
bonds or preferred shares so what’s
happening to
the bond market the bond market is that
is somewhat illiquid market in Canada so
the liquid means less it’s less sells
right so if you have an extremely
illiquid stock there are times when
you’ll go what’s called no bid on a
stock no bid I’m like like the guy in
the movie no bid when the stock goes no
you’re basically trading at zero because
nobody wants to buy that stock now that
doesn’t happen with bonds but there’s
less bids so when you have guaranteed
investments this has happened right now
in the Canadian fixed income space some
guaranteed investments some fixed income
instruments are trading at a 10 to 15%
discount now these are guaranteed
instruments short duration you can get
some really nice corporate debt I mean
most of you I should say most of you I
don’t know what your individual
situation is but if you have any
exposure to equity any exposure to
equity whatsoever and you’re thinking of
getting out obviously I would I would
argue against that you know and I’ve
said it before break it I could speak to
it again but one place that that will
likely see an appreciation and I don’t
want to say like I mean it they’re
guaranteed investment so if if the world
falls apart and we let some of these
people go bankrupt some of these
companies go bankrupt yeah there might
be some defaults rates you know I
certainly don’t anticipate ten to
fifteen percent of Canadian companies
going bankrupt I just don’t see that
happening but if you believe like I do
that the Canadian economy and the qiyan
government won’t allow some of these
massive companies like manually massive
insurance companies massive cane banks
massive companies that have
balance sheets it if you believe like I
do that that the government will not let
them go bankrupt then those are
phenomenal plays like those are gonna be
unbelievable purchases so if you own
some of that you know I would advise you
not to sell it on the fixed income
question here from David de Melo would
you consider selling a position at a
steep loss and buying another position
for potential higher return so this
would be kind of the selling your
and going into like a bank stock
question so the answer is not that
simple David but I’ll try to address
your question basically it depends
that’s a terrible answer and I apologize
for getting a terrible answer but it
depends so if those positions no longer
makes sense with your investment picture
you know if someone’s retired and and so
those are these speculative positions
right now in your portfolio those are
extremely speculative I think people are
gonna go back to Vegas and people are
gonna go back to casinos and pecans
I think people are gonna go back to the
strip and go back to flying and I do
believe that I don’t want to sound like
a dooms there here folks because I’m
incredibly optimistic but I’m also
speaking at a time when the markets are
down 35 percent so I believe that those
are gonna come back I do believe that
and if you own them ask yourself why did
you own them in the first place why did
you own those companies and if there’s
now become too risky for your portfolio
it might make a ton of sense to sell
those positions and to replace them with
quality Canadian equities that you know
likely won’t move as much I had a
question here about safety of dividends
so this was a question that came in
online I believe the gentleman’s name
was Gary Gary I dug into your question
but Gary asked me are there companies
that have been paying dividends for a
hundred years are there companies that
have been paying dividends for a hundred
good to see you Josh thanks for tuning
in yes so there are there are there are
many specifically the five that have not
moved their dividends are surprised
surprised the Canadian banks now on the
US side so if I took a look at the
Canadian banks Bank Bank of Montreal has
been paying since 1829 Bank in Nova
Scotia since 1832 t-d since 1857 CIBC
since 1868 and Royal Bank since 1870
that’s a hundred fifty years at least
for all of those companies they’ve never
missed a dividend payment so when we
talk safety of dividends I cannot see a
situation cannot see
we’re Canadian banks cut their dividend
period that’s my point that’s the end of
that’s my point on that so safety of
dividends some people ask you know what
other companies might cut their dividend
well I think you’d be a fool to think
that there won’t be some dividend cuts
in the oil and gas sector like that’s
happening that is happening there will
be some dividend cuts in the oil and gas
sector they’ve already started you know
you got companies like Sun Corps that
need a thirty dollar barrel of oil to
you know to sustain and most of those
companies out there need way more than
$30 barrel of oil but what can they do
first they’re gonna cut their their
expenditures their capex then they’re
gonna cut or maybe they cut their
dividend first cut the dividend cut the
capex close you know what I’ll answer
your question sorry sometimes I sit here
and I just assume that everyone you know
is on you know knows everything I’m
talking about but let’s let’s back it up
a bit what’s a dividend is there’s a
question coming on bond line a dividend
is a distribution that’s issued by a
company that is typically profits paid
out to shareholders historically that’s
what it’s been so maybe you own a
private company maybe you own you know
bills plumbing and bills plumbing had a
really good year and Bill’s plumbing is
paying a dividend to the shareholders
and maybe the shareholders are bill his
wife and his son and you know those
three shareholders are collecting a
dividend but in the public space you
know where stocks actually trade what
you get is declared dividend so every
quarter you know if I’m the CEO of a
bank or a financial institution or a
real estate I say you know here’s the
deven we’re gonna declare we are going
to pay X many cents and historically
public company dividends from these
multi you know these multi-billion
dollar companies they’re extremely
stable and how they want to emit their
dividends and how they want to declare
them so you rarely rarely get a dividend
cut unless it’s an extreme urgency or an
emergency in the sector so typically
you’ll see that in the volatile sectors
oil and gas being one of them
but we typically won’t see that kind of
in the in the financials like I can’t
imagine a situation where they would cut
hopefully that answered your question
Claude can anyone here see a situation
where they would cut the Canadian
dividend do you guys see that
I personally don’t i personally don’t
and again
my job here my job here is not to be
what’s the episode in The Simpsons where
Homer says to Marge you know Marge you
live in a world of make-believe with you
know unicorns and fairies and you know
you’re not living in the real world
I want to make absolute sure that’s a 30
year old sentence reference I think but
I want to make absolute sure that I am
living in the real world so when you
tell me if someone tells me Rob you know
you haven’t thought of this trust me I
have every single morning all I do here
is I talk to analyst economic anima s’
that’s a tough word for a francophone to
say economist economists we talked to
our macro guys we talked to our
technical traders I talked to different
institutional portfolio managers and I
want to be talking to the actual people
that are moving billions and millions
and millions of millions of dollars
because you know sometimes we get jaded
as portfolio managers right you see the
bad news you see the bad news so I’m not
trying to be a living in a world of
make-believe and in unicorns I’m as real
as and as pragmatic as it can get
right Matt crack pragmatist anyway so I
take this incredibly seriously I read a
ton and I talk directly to the people
who are making these decisions I had a
chat this morning with one of the
largest preferred share fund manager in
the country one of the and we talked at
length about the spreads on the and the
corporate yields and on the press and
you know reminded me why that would make
sense for who that would make sense I’m
going to get to a question here this is
a couple questions a couple times I’ve
gotten this question here I’m gonna I’m
gonna take a look at this question from
Wolf here should we be sitting in cash
here as we near the bottom the answer is
unequivocally no unequivocally okay let
me let me extrapolate that a little bit
to here’s why because
this is the emotional cycle okay I
printed this you guys can’t see it but
regardless this is the emotional cycle
all right human beings unfortunately are
the worst worst worst at making
short-term investment decisions it’s a
fact because two things move the markets
fear and greed okay and right now guess
which one’s moving the market it’s not
greed right it’s fear it’s extreme fear
people are freaking out so this cycle
happens I have a video on this I have a
really good video on this and I did it
like two weeks before the crash happened
and or maybe a week before the crash
happened I really like it it’s on my
youtube channel take a look at it it
talks about panic desperation and
finally the last one at the bottom you
get discouraged what do you do right
right right at the end of a market
bottom capitulation capitulation is the
word where everyone who wants to be out
of the market is out all right everyone
who wants to be out is out the only
people that are left are individuals
like you guys who are like well you know
what I got 50% of my portfolio in stocks
you know I got some fixed income I got
some alternatives I’m gonna have to wait
for this to come back right that’s I
feel like there’s a lot of that
anyways among my clients then we were
more defensive than most so capitulation
capitulation will happen at some point I
don’t think we’re there yet
but to answer your question wolf the
reason we want to be invested right now
is not because we know this is the
bottom in fact one thing I know for a
fact is that I don’t know where the
bottom is I know that for a fact like if
somebody ever tells you for sure for
sure for sure they know where the bottom
is call BS on that right away because
you don’t know where the bottom is okay
I guarantee you don’t know where the
bottom is because it’s not moving on
rational basis it’s moving on emotions
and you don’t know what emotions are you
don’t know what everyone else feeling in
the entire planet and plus you get
liquidity issues too right so back to
the point about getting out so what
happens inevitably is that people go
you know what Rob where you know what
advisor I can’t do this all right I just
I know I only have 50% of my portfolio
in stocks but it’s too much for me you
know my husband or my wife is mad at me
I can’t do this just sell me out of here
and I’m okay with just these losses okay
and there’s a bunch of that that happens
there’s a bunch of that that happens and
when the last person we decided they
want to be out is out that’s when once
you have the reverse of what’s happening
now now you have no more sellers okay
and when you have no more sellers like
actually no more people that are selling
the people that want to be out far out
and the people that believe in it long
term like me and like all of you are
still in then you get the opposite that
happens you get people on the sidelines
that are like you know what I’ve been
sitting on a million bucks here I’m
gonna put it in the market you get
buyers you get institutional you get
smart money like Warren Buffett’s you
guys remember in March 2009 when the
market was hitting all-time or I should
say big big big lows the market had
currents at 57% you know one of the key
turning points and moving that market as
crazy as this is is when Warren Buffett
said you know what I’m gonna put my cash
to work I’m gonna start buying companies
right now that was I believe the week
before or the week of and lo and behold
the market started turning right because
now you have no sellers you have no
sellers and you know 100 billion dollars
here 100 billion dollars here so you
know the money’s test couponing and then
you get bids right and no sellers so you
get the reverse happened now don’t get
me wrong it never happens as quickly as
it does on the way down it never does
that the drop that we just saw in the
last month that’s unprecedented and we
will not see that on the way back mark
my work we will not see it on the way
back but what we don’t want to do to
answer your question about sitting in
the sidelines is what we don’t want to
do is miss that okay we don’t want to
miss that
the reason being the largest positive
days ever are always occurring in bear
markets bear markets are what we’re
seeing right now so the largest positive
days always occur on the out swing of a
bear market
and that might be a 10% day it might be
a 12% day it might be a 15% day and if
you missed that one day you know you’ve
missed your entire years worth of
returns so the opportunity cost of you
being out of the market you being out of
the market and not getting that return
is just not worth it right so we don’t
know how close we are to the bottom I
don’t know my gut feel says that we’re
getting there you know I have a lot of
conversations with a lot of people and
you know I do sense that we are getting
there but again I don’t know and I don’t
want to I don’t want to lie to you guys
all right so I truly don’t know but I
know that you know we monitor a lot of a
lot of signals right like some of the
some of the signals we monitor leverage
okay how much leverage how much leverage
is in the markets right now know who and
we’re approaching so we want to have a
net negative leverage situation that’s
it that’s a really good indicator of the
bottom right and then just straight-up
Corrections right how much percentage
how much buying are we seeing we saw the
largest outflow to cash in January 28th
in 2018 we saw a bit of a correction it
was about 20% or so we saw the largest
influx the cash in January so after the
market started recovering people were
getting out and going to cash so where
is the bottom again my answer to you is
we will get to the bottom in my mind
before we get the cure the virus the
flattening of the curve of kovat because
the market is pricing in something that
may happen at some point I know it’s
scary right now trust me guys I know
it’s brutal when my kids can’t go
outside and play with their neighbors
and you know we’re all trying to we’re
all trying to do our part to flatten a
curve and you know you haven’t had a
beer with a buddy and forever and like I
know it’s brutal and that’s part of what
is bringing the market down so to answer
your question feel like my dad know even
like 10-minute answers to questions um
to answer your question we don’t because
we don’t know where the bottom is but
because we know that we’re extremely
close to it the opportunity cost of
being outside the market is just way too
large of a risk to your portfolio if you
have a portfolio that is well
constructed for you and as well
constructed for your risk tolerance and
for your cash needs
you’ll be fine folks and I hate to tell
you this I hate to sound like I hate to
sound like a broken record and I hate to
sound like you know the guy on the TV
but hopefully the logic makes sense to
you why we actually wait well I would
actually wait in these periods of time
because once it turns you don’t want to
miss that party you do not want to miss
that party let’s get to the next
question here how much of a big fall is
caused by Robbo selling really good
how many here have an account with a
robo advisor let’s see you as you stay
instead who else is on there other
people as well so here’s what happened
with Robo advisors I don’t know if you
saw this but there’s a couple of things
that happened with Robo advisors first
of all when you sign up to become a
client of a Robo advisor you get a quiz
the quiz then forms your asset
allocation and the rebalancing happens
at the same intervals so when their
rebalancing they all kind of sell at the
same time they all generally go to cash
or go to fixed income at the same time
so what happens when robo’s and
algorithms are selling across the board
that you can’t have a movement of a
thousand points in twenty seconds in a
market without it being partly
algorithms and partly non human like to
me that’s extremely obvious but you know
we had a day here a week and a half ago
where the one minute chart on our screen
look like you know something I’ve fallen
off the cliff so you got a stock that
fell you know 20 percent or 15 percent
in one minute no that means you have
people you know I guess aggressively
selling that stock during you know a 20
second period of time so I don’t know
the answer I’m not a conspiracy theorist
I’m again I’m a realist I know what’s
happening all over the place and I know
that they’re they’re happening it’s
happening but how much of it is Robo I
don’t know but it’s certainly a part of
it party is certainly a part of it you
guys how are you guys feeling about your
portfolio I know that’s a tough question
today sitting here in my chair when you
know we’re trying to protect capital for
you guys and you guys are the ones that
are actually seeing the statement seeing
the online exporter have any of you guys
capitulated how many of you guys kind of
sold off and said I’m gonna go to cash
that’s enough for me there’s a question
here it’s probably a joke but when
people start jumping out the window
no no no that’s not gonna happen not
gonna happen here that’s for sure
you know capitulation capitulation is
not something I mean at for me when a
client calls we give our best possible
advice we tell them you know the
absolute best what we think they can do
but if someone is is absolutely that the
world’s end with respect to capitulation
you know there’s oftentimes nothing we
can do but we do know that we’re that
much closer to the bottom there’s my
uncle Papa loosing no capitulating for
good to hear papa loop now extremely
optimistic about the opportunities that
are being present yeah we had talked a
bit about opportunities earlier
opportunity that are being prescient
someone had asked me a quick question
about recession versus a depression does
anyone know the difference then I want
to tell me what the difference is
between a recession first of all what’s
a recession we know this right
yeah recession two consecutive quarters
of negative GDP growth so that is going
to happen in Canada for sure I’m gonna
get to your question in a sec you’re
killed first of all I’ll just get to
this recession depression so the depress
or recession two consecutive quarters
negative GDP growth hey guys I don’t
want to be Einstein here in the most
clairvoyant portfolio manager ever but
we’re probably gonna get a recession in
Canada guys in case you guys hadn’t
known that we will get two quarters of
negative growth they can almost bank on
it as my dad says will it get dark
tonight yeah it’s probably gonna get
dark tonight depression there’s no kind
of formal definition but it’s typically
known as three consecutive years of
negative GDP growth with a 10% reduction
in GDP growth like that would be just I
don’t think that I don’t think we’re
going that way personally I do not think
we’re going that way I think there’s
going to be a recession but I do think a
ton of stimulus is going to do some
wonders for our economy once we deal
with kovat there’s a question here from
leveraging so leveraging everyone know
what leveraging is real dig show
leveraging so we use the word leveraging
has anyone here leveraged
I’ve done it personally in my account so
leveraging is when you borrow to invest
it is the word from a basic machine a
lever and live yeah I’ve got set
pizookie said I pushed rack of fun you’d
see Franco funny see ya cook the Franco
fun for sure for sure you’re the effect
of fun but thanks for I’m gonna stick to
English even though my francophone
friends are in big numbers here today so
you’re using your your your borrowing
either from your margin account from a
bank from your line of credit from your
house and you are borrowing money and
then you’re putting that in the market
so the idea with leveraging is that
you’re gonna make phenomenal returns
most of the time most of the time you’re
gonna make a ton of money because you’re
borrowing at extremely cheap extremely
cheap right now right you could buy you
could borrow money for the cheapest
probably that you not probably their
cheapest that you’ve ever been able to
borrow money at I like all the little
the the the waves from all the Franco’s
thank you Joe Matson McCool ooh she’s
standing guy they are a lot of Franco’s
out there but so you’re borrowing you’re
borrowing money you’re putting that to
barring at zero 1% and you’re putting it
to work so as long as your money is
generating more than zero 1% you’re
going to be way ahead that’s why they
call it a lever because you move it a
little bit and it moves a ton on the
other side now it’s a two-way street
there’s no free lunch right so the same
thing that happens on the way up happens
on the way down so when you’re borrowing
you’re investing more than you actually
have while you get hammered on the way
down with leverage as well which is why
we always practice prudent leveraging
and we don’t have many clients at our
leverage but if they do we kind of been
practicing deleveraging at some point
now at this point Stephen to answer your
question if there’s no other cash
anywhere else and this and a margin call
will come does anyone know what a margin
call is has anyone seen the movie I
think there’s a movie of margin call
that a movie feel like that might be a
movie there’s all these movies from the
stock market well that I don’t know I
feel like that’s a movie no one’s no
one’s verifying that for me but
basically what happens with a margin
call is you have assets and then you
have a loan and once your loan once it’s
the value of your assets becomes more
than your loan they call you ring-ring
who’s on the phone well it’s me and I
want you to sell your stocks because
you’re over margins or you’re under
margin they should say so they’ve forced
you to sell your securities and guess
when you’re selling your securities
always when the markets at an all-time
low they call it a squeeze and then
typically you know you have the day or
two days to sell maybe three days to
sell usually it’s not that and then
otherwise they just sell you out of the
positions so now you’re selling at the
absolute bottom and you still have the
loan to pay so if you can’t afford on a
cash flow basis you have to be extremely
careful with margin so it answer your
question right now if you have no other
access to capital of any kind at EFSA or
something that you could put in to add
liquidity or portfolio I’d be extremely
extremely careful I’d want to take a
second look at your portfolio if you’re
max leveraged and you’re getting margin
calls time to make some big big
decisions here
that was a leverage question thanks for
that question
I’m gonna get back to the bubble
question people have been asking me
about bubbles cannabis cryptocurrency
etc how many people here have
cryptocurrency in their portfolio gotta
be some of you that have some
cryptocurrency in your portfolio 5% 10%
how about some cannabis in their
portfolio nobody wants to admit that
because cannabis is is is down
incredibly Wow they’re down like 90% I
hate to tell you this folks but I called
this one you know
you’ve probably seen my BNN clips I’ve
been telling people that the cannabis
bubble would blow at some point it’s
gonna blow much like the tulip bubble in
the 1400s in Holland the cannabis bubble
I think was poised to blow and it did
and now we’re at a 90 percent correction
real quick just got a question about my
favorite market movie my favorite stock
market movie well well well um what’s
the one what’s the movie with the guy ah
the guy who’s like he’s in a he’s doing
cold calls and he’s like a rookie it’s
that guy from I think it’s Matt Damon is
it Matt Damon uh rounders boiler room
is that a movie boiler room that’s a
really really good movie what about I
mean if you just want to Entertainment
wolf of wolf of Wall Street is I mean
there are some funny parts in there
boiler room yes yes Leonardo DiCaprio
that’s wolf of wallstreet what are some
of the other ones there’s uh my dad’s
favorite for sure for sure is uh what is
a Glengarry Glen Ross that’s not really
an investment movie but it’s like show
me the leads I want the leads
that’s how Baldwin who’s in that movie
the big short is one that’s good also
Adam busts thank you for that one the
big short isn’t it Michael Scott in that
movie my
Scott’s in that movie yeah he’s uh he’s
the guy I think he’s one of the guys
steve carell um you know i should
probably watch more movies I don’t watch
much movies are much TV these days but I
digress if you have other favorite
movies please put them in here who else
we got none over here big short Charlie
Sheen yeah Wall Street obviously yeah
Wall Street is a is an automatic Charlie
Sheen he was was that his real life back
then did he get caught in a drug drugs
problem in that movie but I doubt your
ass um it’s good someone remind me what
I was talking about I just went on a
tangent here and I was talking oh yeah
bubbles I have bubbles so if you own
assets in some of those bubbles you now
have to be very cognizant of the fact
that some of those companies are going
to go bankrupt all right some of those
companies are going to go bankrupt some
of those cannabis companies I don’t know
which ones and I’m not gonna talk about
individual companies here today but some
of them will go bankrupt for sure um
we’re talking here about US dollar US
stock market okay so Peter Peter ends
has asked me about investing in the US
market I think he’s asking me without
currency exposure so there’s a fairly
easy way you can do that I mean you
could put a hedge on your portfolio
right start hedging all of your
investments so in other words you know
you buy forwards and futures on the
Canadian and US currency no you don’t
want to do that it’s not gonna be
possible instead what you do you buy an
ETF you X exposed ETF heads to the
Canadian dollar there’s a few of those
that exist execute you I gotta be
careful I’m not giving you advice but if
you’re looking for general specific ETS
they exist X SP x cube cube there’s a
bunch of them that exist that are hedged
for the Canadian dollar so you could buy
it in Canadian dollars and you get the
exposure direct exposure to the sector
so that’s one that’s one way you can do
it I would also take a look at I mean
some of the you have to be careful if
converting a whole bunch of currency so
if you want to just convert a whole
bunch of currency and you’re like oh you
know what I’m just gonna buy US stocks
right now with this currency be prepared
for the currency risk right because if
the US dollar goes the other way you’re
probably gonna be well you’re gonna get
hurt alternatives and then I’ll get into
the gold sector so maybe I’ll start with
gold sector there’s a question here
about Barrack some companies closing so
the gold prices I look at my screen here
today they’re up like they were up like
50 bucks today and again I’m not a huge
believer of owning bullion in fact I’m
not a believer of owning bullion I
recognize that some of you on there are
saying that bullion is a great hedge
it’s a good hedge against inflation it’s
a good hedge against the stock market I
get it I understand that but we’ve also
gone through periods of you know ten
years or whatever with zero return um
I’m okay with owning gold companies that
are profitable that have a solid balance
sheet those are also act as a good hedge
relative to you know relative to just
owning straight equities so you know or
gold stocks fully priced in or I know
are they are you getting all the bang
for your buck that you can with a gold
stock you know that sector some of those
companies are not gonna survive some of
those companies are gonna get beat up
there’s gonna be some damage there too
there’s gonna be some blood there so
just be very very careful which
companies are investing in there they’re
not all they’re not safe and guaranteed
question about alternative investments
so alternative investments depends what
you own in the alternative space the
question is our alternative investments
risky generally my answer here is no
depending on what you owned it can be so
if you own liquid alts if you own a
hedge fund those are risky alternatives
right like some of those alternatives
you don’t know what with the portfolio
manager can do he can buy and sell the
entire portfolio and go long go short
you have to be extremely careful because
you’re effectively trusting someone with
like to gamble with your money so hedge
funds had a heyday in the 70s 80s 90s we
see them less now now you’re seeing more
what’s called liquid alternatives or
pure pure alpha funds or straight you
uncorrelated risk funds stuff like that
where the portfolio manager is trying to
generate a return irregardless of what’s
happening in the market the other
alternatives that I’m a really big fan
of is private real estate if you’re my
client you’ve heard me talk about this
in the past you’ve heard me talk about
it at length on BNN you know on here and
the markets private real estate in my
view is going to have both they’re gonna
dramatically outperform right so with
that in mind I think they have done well
they kept their value right now depends
what you own if you own retail if you
own residential if you own you know
commercial I don’t know what your own
and in the private read space but if you
own like people are gonna need to pay
their rent right so if you own
multifamily private real estate
investment trusts there may be a period
of time where some people aren’t able to
pay their rents absolutely that’s
possible but you still own the real
estate right so you’re likely to be very
very very fun um I’m gonna be wrapping
it up real soon here my my Instagram
live is telling me that I’m hit the
limit I guess there’s a limit of time
here that you can chat on this thing I’m
gonna take maybe one or so more question
and then I’m just gonna give you my last
thoughts about this guy’s so the
question here is direct ownership and
rental properties or funds like century
an apartment or II so I believe in both
depending on who you are maybe it makes
more sense to own it directly through a
limited partnership or directly through
a fund manager or maybe even through a
publicly traded real estate investment
trust I don’t know I don’t know what
your situation is but they can make
sense for every single investor we’ve
been preaching defensive assets for a
while we continue believe that defensive
assets will outperform in this next
market cycle mind you now that we’ve
fallen 35% how do you define the next
market cycle so yeah we you could do it
a whole bunch of different ways so I’m
just gonna recap here some of my
thoughts for today we’re gonna do this
again guys I’m here I’m available I want
to be able to talk to you my clients and
to talk to you guys everyone else so
first of all there will be a turn at
some point there will be a turn at some
when that does happen the market will do
remarkable after that I don’t know when
that bottom is but it will happen
those of you on Instagram I’m gonna say
by now because I’m running out of time
apparently so thank you for tuning in
thank you for tuning in there will be a
time that’s going to turn it’s gonna
turn and when it does turn you’re gonna
be happy you’re invested we don’t know
where the bottom is therefore you’d
rather be invested than not if you have
spare cash if you have spare cash we
recommend a prudent strategy prudent
strategy to deploy that capital using
high quality assets we’re not
speculators we’re not gambling we’re
advising you that’s what you should be
finally Johnny marks is asking a
question what is one Buffett doing at a
time like this he is licking his chops
he is sitting on what is it a hundred
and fifty billion dollars of cash
straight cash homie and he’s going to be
deploying that he’s gonna be buying
companies he can buy entire sectors in
the market and he’s gonna be making I
think a ton of money for himself and for
his shareholders in the future so thanks
so much guys I’m Rob Tatro from Rob thi
calm you know my youtube channel you
know my Instagram channel it’s at Rob
Tatro my facebook is Rob Terrell we’re
gonna do this again I would imagine so
thanks so much for tuning in next week
we’ll take some more questions thanks



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