Theres always a Bull Market somewhere Diversify to

There’s always a Bull Market somewhere. Diversify to find it

Disclaimer • The Ottawa Branch of the National Association of Federal Retirees and the facilitator of this seminar do not in any way offer financial or investing advice. • This seminar and the information in this Power. Point presentation are provided for education purposes only. • Investing involves risk. Any personal investing decisions should be made only after individual due diligence and/or with the assistance of a registered financial adviser or broker. • Ottawa Branch takes no responsibility for any investment decisions that participants may make.

Acknowledgements • NAFR Ottawa, Linda and Ramin, for organizing and sponsoring the webinars • Michael Patenaude, Ottawa Share Club for the excellent graphs • Frank Schilder for acting as Zoom Master

Frequently used acronyms and terms • ETF – Exchange Traded Fund. A mutual fund sold like a stock with (usually) lower fees than mutual funds • MER – Management Expense Ratio. The fees in % that you pay to a mutual fund or ETF to cover the cost of managing the fund and paying the person who sold you the mutual fund • Index – a selected list of stocks or other investments chosen to reflect the average value of a type of stocks, bonds or other assets • S&P 500 – The Standard and Poors index of the 500 largest US stocks • TSX 300 – The 300 largest Canadian stock issuing companies listed on the Toronto Stock Exchange

A great strategist once said: There are knowns. • There are known unknowns. • But there also unknowns - the things we don’t know. • • Loosely translated from Donald Rumsfeld, U. S. Secretary of Defence, 2001 -2005

Facts versus Opinions

The value of Investing Advice & Market Timing • From the Globe and Mail, Report on Business, August 16, 2019: “The argument for gold is getting brighter by the day”, Tim Shufelt, G&M • “The argument against gold stocks …. Don’t do it”, BMO Capital Markets • Since Aug 16, 2019 • Gold bullion is up 36% • Gold miner ETF XGD is up 42% • • As of Aug 31, 2020

Index investing – boom or doom ? • 60% of US Stock Market is controlled by Index (Passive) investing • 25% of all Index money is going into the five largest tech stocks – the FAANGs • Current S&P 500 Price to Earnings ratio = 28: 1. • Average = 16: 1

2 rules for long term investing success • 1. Develop and stick to a low cost, diversified asset allocation strategy • 2. Focus on time in the market rather than timing the market • Probability of loss S&P 500 • 1 year 26% • 3 year 16% • 5 year 11% • 10 year 6%

The most important fact of investing – regression to the mean. Source: AWealthof. Common. Sense. com The most important fact of investing – regression to the mean.

Stock markets – what could possibly go wrong ? Note 2000 – 2013/14 period

Poll question 1 • If you had $100, 000 to invest today, how much would you invest in stocks ?

Jim Cramer, the always enthusiastic host of CNBC’s Mad Money, ends every show with this quote “There’s always a bull market somewhere”.

Select investments that often act differently than stocks • Gold and gold miners • Long Term, High Quality, Government Bonds • Selected Real Estate Investment Trusts (REITs) • Alternative Investments (Infrastructure)

Gold Bullion versus S&P 500 Negative Beta

Gold Miners vs gold bullion Positive Beta

Long Term Government Bonds It’s not the interest rate, it’s the capital gain

Long Term Government Bonds It’s not the interest rate, it’s the capital gain 30 year US Govt bond example Current interest rate 1. 4% If rate drops to 0. 9% Bond value increases by 13%

Real Estate Investment Trusts (REITs) vs TSX

Alternative Investment Examples • Cell phone tower systems • Urban water and gas distribution • Gas pipelines • Toll Roads • Container ports

Brookfield Infrastructure vs TSX & S&P 500

Poll question 2 • The average Canadian actively managed mutual fund charges:

Investment vehicle examples • Gold Bullion ETFs: MNT, CGL. C (MER 0. 4 - 0. 6) • Gold Miners ETF: XGD (MER 0. 65) • LT Government Bond ETF: ZTL (MER 0. 25) • REIT Managed ETF: RIT (MER 0. 98) • All in One ETFs: VBAL, XBAL, ZBAL, HBAL (MER 0. 2 - 0. 25)

“All in One” Asset Allocation ETFs (. 25% MER)

All in One Asset Allocation ETFs (2)

Performance, 1 Year July 31, 2020 • VCIP Conservative Income 8. 0% • VCNS Conservative 7. 9% • VBAL Balanced 7. 6% • VGRO Growth 7. 1% • VEQT All Equity 6. 6% • VCN TSX 1. 5% • VUN S&P 500, C$ 15. 8%

The “Always a Bull Market Somewhere” model portfolio • Balanced ETF 80% • Gold bullion/miners ETF 5% • REIT ETF 5% • Alternative ETF like 5% • Cash 5%

Disclosure • The presenter and/or his family hold the following investments mentioned in the webinar: • VBAL • XGD • RIT • ZTL • BIP. UN

Next Webinars • September 23 Gold as Portfolio Insurance • October 7 Bonds and Preferred shares can still make money • October 21 One Decision Investment Portfolios

Questions ?