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Welcome to
Jared Rabinowitz,President & CEO, ETF Capital Management
Our Group of Companies is Here to Help!
Today’s Webinar is in Support of
Thanks to our Sponsors
Kevin PrinsManaging Director, Head of ETFs
BMO Exchange Traded Funds
Gold is in the News…
8
• As central banks & governments double their balance sheets & fiscal deficits, some analysists are increasing their targets
• Still, a strong USD backdrop, falling equity market volatility and weak jewelry demand in India & China may remain headwinds
Gold is in the News…
9
• It has not been a straight line up for gold… • Liquidity at times will be a consideration too…
ETF Access to GOLD
10
• There are three ways in which investors can access commodities through ETFs• Which one is best depends on the investor and need at the time
Advantages Disadvantages ExampleEquity-Based 1. No contango or backwardation
issues2. Natural leverage to underlying
commodity3. No storage costs
1. Commodity companies can behave more like stocks than commodities
BMO Junior Gold Index ETF - ZJG, TSXSr Gold – XGD, ZGD
Physical Commodity- Based 1. Almost no tracking error2. No default risk3. Pure exposure to underlying
commodity
1. Storage costs2. Not all commodities are storable
(i.e. perishable commodities)
GLD, IAU
Futures-Based 1. No storage costs2. Exposure to many types of
commodities, including perishables
1. Subject to contango/backwardation Issues
2. Forward contracts could be subject to default risk
DGL (single)
Looking at Gold over 12 Months
11
• Gold equities and bullion ETFs saw a combined inflow of $382 million this month• Investors see gold as a ‘safe haven’ and some investors are using it as an inflation hedge
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
4-30-2019
5-31-2019
6-30-2019
7-31-2019
8-31-2019
9-30-2019
10-31-2019
11-30-2019
12-31-2019
1-31-2020
2-29-2020
3-31-2020
4-30-2020
ZGD ZJG Gold
Source: Bloomberg May 19, 2020 – ZGD – BMO Equal Weight Global Gold Index ETF, BMO Junior Gold Index ETF
Example of Gold Over 12 Months
Weekly Insights
12
Disclaimer
Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus.
This communication is for informational purposes only. While the information contained in this document is believed to be reliable, no guarantee is given that it is accurate or complete. The information contained herein is not, and should not be construed as, investment and/or tax advice to any individual. Particular investments and/or trading strategies should be evaluated relative to each individuals circumstances. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment.
BMO Global Asset Management is a brand name that comprises BMO Asset Management Inc., BMO Investments Inc., BMO Asset Management Corp. and BMO’s specialized investment management firms.
*BMO ETFs are managed and administered by BMO Asset Management Inc., an investment fund manager and portfolio manager and separate legal entity from the Bank of Montreal.
Commissions, management fees and expenses (if applicable) all may be associated with investments in exchange traded funds. Please read the prospectus before investing. The indicated rates of return are the historical annual compound total returns including changes in prices and reinvestment of all distributions and do not take into account commission charges or income taxes payable by any unitholder that would have reduced returns. Exchange traded funds are not guaranteed, their values change frequently and past performance may not be repeated.
All logos and trademarks of other companies are the property of those respective companies.
® “BMO (M-bar roundel symbol)” is a registered trademark of Bank of Montreal, used under license.
13
Today’s Agenda
– The New Buyer of Last Resort –
– Assessing Fear and Greed –
– Looking Through the Eye of the Storm –
– Question & Answer Period –
The SLEEP-AT-NIGHT secret is to make bets when the odds are favourable. Only take risks when the probability of success vs. the probability of failure is attractive. THAT’S IT (PERIOD!)
How Much RiskShould You Take?
Optimism
Excitement
Thrill
Euphoria
AnxietyDenial
Fear
Desperation
Panic
Capitulation
Despondancy
Depression
Hope
Relief
Optimism
Point of MaximumLoss
Point of MaximumOpportunity
Daniel Goodwin, who oversees a team of paralegals for a law firm in Indiana, would typically bet $100 on a handful of sports games every night. A few weeks into the shutdowns, with matches on hold, he fired up a dormant ETrade account with several thousand dollars and began to buy stocks.
“I’m not here for the long run — I just want to throw a thousand bucks at something to see if I can make a few hundred,” said Mr Goodwin, 39, noting that so far he has done well on MGM Resorts and Caesars Entertainment, the casino groups.
“With sports, if I throw $1,000 at something, I lose the whole thing real quick, but here if things go south you can cut your losses.”
Who is BuyingThis Market?
When Risk Factors are High, Take Less Risk7 Factors
§ Market Vol VIX <>50-day average
§ 5-day Put/Call Ratio
§ Market Breadth: McClellan Volume Sum Idx
§ Diff 20-day stock vs. bond return
§ NYSE #new 52-W Highs/Lows
§ Spread JNK vs. LQD
§ SPY % <> 125-Day averagehttps://money.cnn.com/data/fear-and-greed/
Put/Call Ratio: Speculators with Leverage
Stocks vs Bonds: Portfolio Rebalancing
Breadth: Is the Rising Tide Lifting All Boats?
Volatility: Still Elevated, Moderating
Breadth: Leadership is Narrow
Crappy Companies: Only Because Fed’s Buying
Mean Reverse: Still Mean?
Is Now the Time to Take More Risk?
The Eye of the Storm• IT CAN’T LOGICALLY BE A “V”…
• We MUST be in the Eye of the Storm
• Volatility declining
• Headlines OK
• Optimistic worst is in rear-view mirror
The Eye of the Storm: June 2008
The Eye of the Storm: June 2000
The Eye of the Storm: 1973
Bear Market Rallies: 1930s…
The Eye of the Storm: 1938
Era of Populism Begins… #MAGA
OWN WHAT YOU LIKEHEDGE MARKET RISK§ Blank Check Policy = TLT, ZTL, GLD, CGL, GDX, ZGD
§ EM cheaper and younger = EEM, ZEM, XEM, VEE, THD, VNM, EWY, FM, INDA, SCIF, AFK, NGE
§ Debt levels will KILL growth. 1-2% GDP World = ZPAY, PYF
§ Avoid companies in $SPYB that need $$$ = Shorts
§ Technology: CIBR, ARKW, SNSR, ROBO, ICLN, IGV, EMQQ (KWEB), ARKG
§ Post WWII, the economies that thrived were young with strong demographics
§ Coming Inflation STIP, ZRR
§ Infrastructure: XME, ZMT, COPX
§ HEDGE The Pops, Cover the Drops
Question&Answer
“What would your trading strategy be if a vaccine is found today
when the market is still overpriced? Would you still expect
market revisiting the lows and wait for that to happen
to start shopping based on your shopping list? Or would you
start buying if the vaccine is found?”
- Lili -
Question&Answer
“Over the last 20 years of globalization we have seen great currents of money flowing from
the United States to China for goods. In turn China has flowed money to its energy and
raw material suppliers. The energy states have then flowed much of that money back
into American and European stock and bond markets. What is your view of the possible
impact to the financial markets of the reductions in this money flow brought about by
Covid-19 demand drop and recent American policy announcements?”
- Ron -
Question&Answer
“The markets keep going higher, there is no connection to
economic realities. Is the market rise a function of so much
liquidity being pumped in by central bankers that retesting the
market lows (March 2020) is a moot point?”
- Mike -
Question&Answer
“My question is, given the current High Volatility, how does
one implement a Dollar cost averaging strategy (for long
positions)? The temptation is there to try to time the
market...especially when there is a large INTRADAY move.”
- Allan -
Question&Answer
“Wondered what you thoughts are re: holding stock in
senior living facilities? I currently hold Chartwell.
What about Extendicare or Sienna? Despite Corona, there is
still a third of Canadians who are boomers.”
- Brian -
Question&Answer
“Markets have snapped back with some strength since the March lows indicating confidence
in what central banks are doing (e.g. flooding the markets with cash, buying bonds, etc.).
The market is overvalued by many standards but investors are still buying into it.
It seems Central banks have the upper end and like many say, "don't fight the Fed", seems to
be the right attitude to take in this market. What do you think will be the catalyst that will
bring the market back down? A second wave on top of the damage already made by the first?”
- Raffaele -
Question&Answer
“My question is: would you consider Horizon Betapro
Enhanced Gold Producers Income Fund HEP a good way
to have a position in Gold?”
- Guy -
Question&Answer
“Are you in favour of investing in ZQQ? or is there
another Technology ETF that you would recommend?
By the way, I think you’re the greatest!”
- Sandra -
Question&Answer
“With sugar prices near the lows of its long term range, is now
the time to establish a position? If so, what’s the best way to
invest? The TSX has Rogers Sugar - would it benefit from a rising
sugar price like a gold miner would rise with the price of gold,
or would you recommend another security?”
- Andrew -
Question&Answer
“Retired and need stable income, how will ZPR hold up
during downturn? Will yields fall as well as ETF value?
Require stable income not growth, any suggestions.”
- Doug -
Question&Answer
“Is it reasonable to think the INR ( Indian currency ) will weaken for
the next 12 to 24 months or any period? After this period of
INR weakening, how much would Larry feel the INR will strength
against CAD? Is it reasonable to think, emerging currencies will
strengthen against the CAD and USD?”
- Ishwar -
Question&Answer
“I am a young investor and have never been through a financial crisis
before. How is it that the markets can look past everything that is going
on with the economy and keep going higher and higher? Do you think
the market will test the March lows again? What will it take for the
markets to realise the current state of things financially?”
- Justin -
Question&Answer
“Can you explain how and if the recently passed Senate
legislation will affect Chinese listed stocks like Alibaba and JD?
CNBCs Josh Brown stated it wouldn't really affect Chinese stocks
with American accounting firms. I own ZCH as well.”
- Dave -
Question&Answer
“With the possibility of supply chains moving away from China,
what countries would be the beneficiaries? How long do you
foresee this process taking to become established? Thanks.”
- Paul -
Question&Answer
“I know we are six months from Tax Loss Selling season, but is
there any merit on buying good stocks at beat up prices during this
period? What are you thoughts good or bad on buying equities
during Tax Loss Selling season?”
- Patrick -
Question&Answer
“Awhile ago you suggested that if the VIX stayed below 40
for more than a week, only then could one conclude that the
bottom is in. As you know, it has been below 40 for almost
a month. What are your thoughts today?”
- Tim -
Question&Answer
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