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

Markets. There will be a little bit of cycling out of the more liquid REITs since we had such a run up this year. There is more value if you go down in the size of REIT, as long as it is good quality. We are not at risk of a major decline. Foreign investors are coming in and buying REITs as well as properties. Canada shines as a place for stable returns.

Markets. Thinks stocks will continue to do well, despite ‘Sell in May and Go Away’, although it will be more volatile. He would look for a pullback and then the market goes back up. Thinks rates will go up a lot slower than people think. The US is in a faster recovery than Canada. People went through a massive recession unlike anyone had seen and they want everything to quickly bounce back like normal. We have slow growth,, but companies are in better shape and you will see top line growth in the next couple of quarters. It will be a bumpy ride over the next little while, but the outlook over the long term is very good. Dividend stocks are important so he favours them and likes consistency in companies also. Some of the dividend stocks are trading at the high end of the range so won’t move up as fast as they have over the last 3 to 4 years.

Markets. CPP – taxes need to go up and benefits have to go down. Around the world, most government retirement plans are grossly underfunded. The vast majority of people are not saving enough for retirement.

Educational Segment. Financial Literacy. BMO partnered with an educational organization to talk to grade 7 students about money. It’s about knowing what costs you are incurring (fees and interest) as much as about attitudes toward money. Http://TalkWithOurKidsAboutMoney.com

Markets. Stocks are still the best option for the year. Economic growth globally is picking up. Thinks we are getting closer to a pullback. He has scaled back on some of the areas where he would tend to want to buy back into on a pullback, e.g. bio techs, internet stocks, high tech, energy. We are seeing a flood of foreign money come into the energy sector. Nickel has probably been the commodity of the year. Global manufacturing looks good. There is plenty of risk: Valuations are high, the interest rate backdrop, political risks and the seasonal – ‘sell in May and go away’.

Markets. US economy is slowly improving as he thought it would. The only breakdown in markets is that the NASDAQ went through its 50 day and approaching its 200 day moving average. It will probably hold, but you never know. If it broke he would be more cautious. Russia and Ukraine are the biggest wildcards. Europe and Japan seem to have faded in the mean time. He looks at water, industrials and agriculture as being the most promising.

Russia / Ukraine sanctions and their effect. Ag stocks could be impacted if the crisis is long. He feels they will do as much as they can until the US mid-term elections. This is his one major caution on markets.

How to take advantage of new US legislation regarding rail car safety. WAB builds locomotives and rail car safety equipment. ARII-O, KLS-X and TRN-N are in that business also. He believes keystone is dead.

Gold. Feels it will go higher. Russia meddling in Ukraine will help this. $1400-$1500 is doable this year.

Markets. He is bullish on the markets, but the whole "Sell in May and go away" thing may come to fruition. The market wants safety and yield. It is setting up for some sort of correction. He is at about 20% cash.

Markets. We saw an inflexion point recently where fund managers are beginning to come back into this space. There is a lot of US money coming in here. He had been waiting a long time for this in this space. He thinks there are upside scenarios for oil prices. The inventory picture changed through the year as it was the coldest year in a longtime. In Canada it has almost reached crisis proportions. The producers have a big job to do to refill those inventory levels by the beginning of the next heating season. This is a better natural gas picture than we have seen for a long time. He decided not to go headlong into the gas trade, but to increase exposure to balance producers that have exposure to gas as well.

Markets. Thinks the recovery in the US is in fact occurring, but the market got a little ahead of itself. Unemployment and consumer spending are both moving in the right direction. Europe seems to have bottomed, but the market was a little ahead of itself there. Emerging markets are where there are opportunities. Developed Asia is probably the best place. Hong Kong, Korea, parts of China, and Singapore. Euro zone growth will be tepid. Ireland has emerged from special measures and Spain is doing well. Japan has to maintain the printing presses, but to move beyond the current levels of debt, they need international holders. Longer term, he thinks this is a dangerous place.

Weak Canadian Dollar. If the US continues to strengthen you will see a normalization in the currency. If you have holdings outside of Canada they will have their growth and dividends magnified by any weakness in the Canadian dollar.

Markets. Stock markets have had a great run in the last couple of years. This is not just due to corporate earnings, but is also due to price/earnings inflation. Valuations are simply more expensive. With the prospect of interest rates rising at some point and if the Fed tapering continues, that will put pressure on some equity prices. Also, corporate earnings have been somewhat disappointing for some of the large mega international multinational companies. His equity fund is about 30% cash because he is having trouble finding good things to buy. He still finds value in Japan, but a lot of the companies have moved up quite substantially. Also, seeing value in European financials.

Interest Rates. The 10 year bond yield rose after Ben Bernanke’s famous comment last June. Since then, the reserve board has done everything it can to ensure and talk investors into believing rates will remain low. 10 year bond yields have actually declined in the US to about 2.5% so investors have become quite comfortable for the next 2-3 years. They believe interest rates will stay low so ETFs like SPDR Barclays High-Yield (JNK-N) and iShares Hi Yield Corp Bond (HYG-N) ETFs have come back up again as people begin to feel they are not going to suffer any capital losses. This is the same with preferred shares.