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Market Volatility, Trump, and Exempt Market Investments


Market Volatility,  Trump, and Exempt Market Investments

Why Donald “Trumps” Clinton Is Good for Western Canada

Craig BurrowsNov. 15, 2016 I must write my November article with at least a passing observation of the election of President – Elect Donald Trump, and what it means to the world economy and politics. It’s interesting, that whether you’re American or Canadian, people were bullied or embarrassed to admit support for Trump.

His victory is not all surprising after all the weak policies of Obama. The setting was right for Trump as it was for Reagan taking over after Carter. The macho part of America was embarrassed, felt neutered, were mad as hell and were not going to take it anymore!

I happened to be in Phoenix on election night and was in the hotel lounge when the presidency was announced. We asked a couple of the waitresses (late 40’s / early 50’s) what they thought of the election results. They shared how although they were surprised, they were not disappointed. They went on to say how they felt that all politicians are liars, but Clinton was a crook.

I asked directly why they wouldn’t support a woman for President, as CNN and liberals demanded. They simply said, “I don’t want the first American female elected President to be an embarrassment to all women”. Unlike in Canada with the help of social lefties and the CBC, we got rid of a strong manager of the economy for someone with great hair. From a Canadian perspective, I’d rather have Harper than Trudeau negotiating with Trump over the next four years.

I woke up the next day in Scottsdale to play a round of golf, and a complete surprise to me – there were no zombies or tanks in the streets! At the same time, no one was admitting that they voted for Trump either, however I did hear wails from the Clinton supporters. This election was about people tired of political correctness and tired of the status quo, and looking for an alternative to dirty politics.

So how will this affect public markets in the future? A Trump Administration will be good for the stock market initially however, it will just take one stupid thing said or done, to lead to short term panic and the volatility will re-emerge once again. I see one great opportunity and it’s the energy sector in Western Canada. The Keystone will go through and it will force the federal Liberals to support pipelines east and west. The US consumes 20 million barrels a day and can produce half of it (good for Canada). Trump says he wants Energy independence and embargo OPEC oil (May 26, 2016 speech in Bismarck, N.D.). This is brilliant and was done once before under President Eisenhower at the height of the Cold War. If the US was to do this, Trump says it would result in $700 billion increase in the economy with $30 billion in wages over the next 7 years, with $6 trillion in tax revenue over the next four decades. Imagine, less money needed to fight Middle East wars, less revenues for terrorism and foes, less cost to military and better jobs for North America? How is this bad; the environment? The issue is not oil and gas but coal as the main culprit of North American greenhouse gases.

Since September 2014, we told our clients to reduce their position in energy. Consequently, we have had a 2% exposure to the energy sector since 2015 before the crash. We are now telling investors that it is time to invest in the energy sector. For Trump’s plan to work, he needs Western Canada’s oil and gas which means pipelines and massive infrastructure to increase oil sands capacity. They’ll also need a big investment in Mexico which will need North American technology to help PEMEX increase output.

As part of our 8 Ways to 8% strategy, we have two private offerings in the oil sector that will produce 8% yields, and with some equity participation at exit. In fact, one company has been buying distressed assets and their oil reserve is 50% more valuable than their current valuation. This is a great time to get back into oil if you’re not in that sector or looking for a yield producing investment.

As far as Canada, I’m a little worried if Trump decides to renegotiate NAFTA with PM Trudeau and Min. Dion as our negotiators. The cartoon below says it all.

exempt market investing donald tump

Craig S Burrows ICD.D President & CEO, CCO TriView Capital Ltd.

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8 Ways to 8% Articles

Sept 10, 2016 Investing Strategies for Eight Percent or Better

Oct 15, 2016 Plan for Tomorrow but Live for Today – Exempt Markets and Financial Planning

Nov 15, 2016 Why Donald “Trumps” Clinton Is Good for Western Canada

Dec 10, 2016 Clean Up This Holiday Season to Increase Yield

Jan 15, 2017 Private Equity: The best kept yield secret

Feb 15, 2017 Sweetheart Opportunities do exist in February

Mar 15, 2017 The Ides of March and be wary of the Fourth Estate

Five of our 8 Ways to 8%

Petrocapita Income Trust
9 percent returns Canada investment opportunitiesIssuer: Petrocapita Income Trust
Description: Investment in preferred trust units of the Trust (PTUs) targeting 9% yield p.a., paid quarterly, together with “discounted” common shares (Common Shares) of a subsidiary of the Trust which are exchangeable after 18 months (or in certain events) for publicly traded trust units of the Trust (PCE.UN)
Category: Oil & Gas Investment Fund – Acquiring heavy oil production and mid-stream assets in Alberta and Saskatchewan.
Target return: 9% annual return on the PTUs, plus potential additional return attributable to the Common Shares.
Targeted terms: 4 Year duration
PetroCapita 2017 Term Sheet
Clear Sky Income Portfolio Fund – Series II
canada exempt market offersIssuer: Clear Sky Income Portfolio Fund – Series II
Description: The Fund believes that opportunities exist to acquire Car Wash locations at attractive prices with existing operations, and the potential for consistent growth. The Fund will generally focus on acquiring, or otherwise investing in, Express Car Wash locations which were constructed or refurbished in 2000 or later. These Car Washes are located in markets with strong employment growth, established operations and the potential to provide increasing cash flow
Category: Yield
Target return: 10% Annual Investor ROI before other stakeholder participation
Targeted terms: Investors also receive 10% of any distributions of net available cash above the Investor Target Return.
Rev Royalty
8percentIssuer: Rev Royalty Income and Growth Trust
Description: An income and growth fund strategically allocating capital between credit sectors to improve risk and reward prospects
Category: Multi-sector diversified income
Target return: 8%
Targeted terms: Open-ended fund with annual redemption ability

AP Capital Mortgage Investment Corporation
8percentIssuer: AP Capital Mortgage Investment Corporation (AP Capital MIC)
Description: AP Capital MIC started in 2007 and is a mortgage lender in Western Canada. The firm advances short term (1 year) mortgages to owners of primarily single detached homes in urban areas of BC and Alberta. Borrowers are home owners who require short term funds (bridge financing) and often may not fit with conventional bank underwriting (e.g. business-for-self individuals). Equity in the borrowers home is what protects the fund’s capital as the target loan to value is 70%; leaving 30% equity to protect AP’s funds. Over 700 mortgages have been advanced since 2007 worth nearly $200M in mortgage principal. 450 of those mortgages have been fully repaid leaving the current portfolio with 250 mortgages valued at approximately $57M in principal. Mortgages are sourced through mortgage brokers at interest rates of 5-15 percent.

Category: Yield. Cash Flow.
Target return: 7% monthly distribution (Cash or DRIP) plus annual top up (post audit). Annual returns have historically been greater than 8% per annum.
Targeted terms: 4 year redemption fee of 5% in year one. 4% in year two, 3% in year three, 2% in year four. 0% redemption fee after 4 years. Redemption fee is on initial investment only. Up to 5% of initial investment can be redeemed annually without fee.

Equicapita Income Trust
8percentIssuer: AP Equicapita Income Trust
Description: Investment in preferred trust units of the Trust (PTUs) yielding 8% p.a., paid quarterly, together with “free” common equity of the LP (a subsidiary of the Trust)

Category: Private Equity SME Buyout Fund in Western Canada. Targeting business between $5-$30million in enterprise value.
Target return: 8% annual return on the PTUs, plus potential additional return attributable to the common equity of the LP
Targeted terms: 5 year duration

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