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

Hedged or unhedged? He uses unhedged primarily because hedged cost more. Currency diversification is a valid form of diversification. He thinks the loonie will stay pretty much where it is.

How much do you need to retire? If you have 50-80% of the income from when you were working. For those with only CPP and RIFF, look at a 4% depletion rate. Don’t take out more than 4% per year. If you work till 70 then 4.5% to 5% is fine.

Real return bonds pay a rate above inflation. But you can have an increase in interest rates but not in inflation and then these bonds don't do as well.

Markets. Likes leading cyclical sectors that generally participate later in the cycle of recoveries, particularly in the US and North America. Generally speaking, this would be energy, industrials, as well as financial stocks which perform quite well in that time period. There are lots of challenges globally in terms of economic growth, but, in the US, we have seen signs of recovery and he has been playing this for the last year or so. North America is probably in the 6^th or 7^th inning of the growth pattern in the recovery on the US side. Starting to see Europe recover and perform better and some of the economic signals are improving. In some peripheral countries, debt levels and cost of borrowing is improving as well. Looking for exposure in North American companies that are exposed to a recovery in Europe.

Gold. Does not like gold. Gold companies will continue to struggle as the volatility of the commodity continues to swing around. For years and years, these companies were not forced to operate well. They were paid to grow their companies at the expense of trading economic value for shareholders. It is going to take years and years to fix the problems to get the capital structure in the right places and have their operations in a place where only good mines will produce and bad mines will get shut down. Developing mines that are not economic will not get developed. This is a cycle that will be going on for a couple of years.

US Stocks. There is still upside, which is going to come from multiple expansion as it has from the last couple of hundred points. Still the best market to be in compared to other developed markets. Low hanging fruit is definitely gone from the US market but this is more of a stock pickers market than a sector call at this time. You want to look for stocks that have upside from an earnings perspective. Drivers over the last year have been that economic momentum has gotten better in the US. Going forward, the drivers will be that earnings pull through better than expected and economic momentum that is somewhat positive and continues to reaccelerate.

Markets. Resource stocks, although not showing the best resilience, are probably the best traders and this is the most stable sector that we have. They are preparing themselves for the eventual great rally. You have to be patient. Banks are looking very good, partly because international banks have moved into another down phase. With Spain leading the way out of the depths, he is thinking Europe is looking pretty positive.

Markets. Still finding value in spite of these tremendous runs. Even with the Canadian market up so strongly in October, almost 5%, you have to remember that the first 6 months of the year were very disappointing and the last 2 years before that were pretty disappointing. Banks are still at about 11X earnings in spite of this tremendous run up and still have very high dividend yields and are not overvalued.

Markets. US shows the most promising opportunity in growth, particularly in the more cyclical side of the business. There are opportunities in companies that are tied to logistics as well as infrastructure and the consumer side. There is the overhang of gridlock in the US in the horizon but part of that is mitigated in the way you invest. He invests in larger cap lower beta names that can offset a little of that risk. Canada is a little bit more handcuffed based on what the US does. Our interest rates are going to have to remain low for companies to remain competitive. There are some pockets of opportunities, particularly in the infrastructure space. There are parts of the Canadian economy within the consumer space, as well as in the financials that are very promising and tend to lead the charts.

Do you see Canadian banks splitting soon? They are definitely approaching the levels where they normally do a split. Historically those splits have happened at around $100. It is possible but thinks they will probably still wait for that slow and steady, continuous growth.

Twitter IPO? On companies like LinkedIn, Facebook and Twitter, the consumer behaviour has changed and this social media is an important part of peoples’ daily lives. It is going to have some level of resilience whether you participate in an IPO or some months down the road after its had a little bit of a cool off. The issue is, how do you monetize. There is such wide disparity in assessing what earnings look like, which creates an opportunity for an investor. Most of time when you see an IPO, you see a lot of excitement but it doesn’t necessarily mean that the company is going to have a great showing every single day. You might be better waiting a year before participating.

Markets. Everybody is aware that China and Europe are stabilizing and seasonally the 4^th quarter is good, so everyone thinks the place to be is in stocks. He is the same, at least for the next couple of months. The market can be overvalued for a long period of time. The US seems to be scurrying from one self induced crisis to another. Now there is going to be a little break in the action before they start rumbling again in the early part of January. Load up the truck! The S&P 500 has hit 33 record highs this year. The last time there was that many was in 1995, with 77. The S&P 500 went on for another 4 years. You have to look at the upcoming trend in the market where interest rates may start to rise a little bit. Look at what sectors will do well in that environment.

Markets. The markets are melting up. Oct 9^th was the low. Shrugged off any bad news. Earnings are positive but companies are not beating to the upside. Cash on the sidelines that was waiting for a pullback is now coming into the market. Equities are outperforming fixed income. The whole rise in markets has been driven by multiples expansion rather than in earnings. Profit growth in companies is important and is the long term driver.

Markets. We need late cyclical plays. Rather than trying to time the market, the best thing to do is to enjoy the current bull and play the rotations. The order of rotation is with the front end being financials, maybe telecoms next and maybe utilities at the end will. Middle of the market is consumers, maybe some industrials. The back end would be materials and energy. Financials are still leading, and they lead every bull market. With the financials making 52-week highs, we want to enjoy them, but not necessarily chase them. Until the financials roll over, he is really not worried about the market. If there is a correction, you just live through it. There is actually no real solid definition of what a bull or bear market is. He feels that to be a bull market you need to see a new high at least every 6 months and to be a bear market, you need to see a new low every 6 months.

Markets. Earnings. Things are improving in Europe, but domestically consumers are soft. What concerns him most is top line growth. If they can cut costs and still deliver on the earnings front he is happy, but for the others he is concerned. Next year the S&P will trade up to 1830. As long as Fed does not back off too much on tapering, they can do well. Repurchasing is seen as positive and is picking up. If companies have nothing better to do with their cash then you have to wonder if the economy is not on the slower side.