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

Markets. She is advising you to be selective. You need a concentrated portfolio. Don’t be correlated with any main index. She looks at the biggest companies across N.A. and asks which ones are going to do well. We had a period of slow growth but she sees it picking up a little. She is not looking for huge growth, however. She is 50% exposed to US stocks.

Pipelines have been big yield payers and got investors’ attention. They have to raise a lot of capital to grow their businesses. The valuations are high because of people chasing the yield. She only has PKI-T.

Markets. People are trying to figure out QE. It is a bad thing for stocks but good for a part of the dividend market and it will help the market. The fed is telling us there will be lower rates for some time. In Canada if you take out the golds we really had a pretty good run. You need earnings to put acceleration under valuation. With dividend portfolios you have the lower yielding more cyclical stocks on one side and the more interest sensitives on the other side. He has been moving back to interest sensitives over the last little while.

US Stocks. Fairly valued. If you take $110 in earnings and put a 15 or 16 times multiple on it, that is kind of where we are. As an equity investor he is trying to figure out not how we got here, but where we are going forward in 6, 12 and beyond months. With the weak economic backdrop, how are equity investors going to gain going forward. That is a tricky question. He has a Neutral trading bias. Trimming names where they need caution. Finding opportunities is extremely difficult. Still thinks the US is the best place to be for equities.

US Markets. We are currently just above the 2008 peak and it is hard to imagine that we are at a new secondary run from here. Feels markets are priced for a little bit of a come off, but nothing spectacular. Jury is out on what the environment is right now. Looking at some of the metrics and some of the sentiment, we are in an overbought scenario. Looking at VIX (volatility index), we are at an exceptional low level. There is a good cause for correction, but as to the level of it, he doesn’t think there is a huge downside from here.

Markets. He doesn’t try to deal with the macro issues. He didn’t pay attention to the issue of QE easing, which ended up not happening. He picks good stocks, regardless of market direction. Opportunities are mid caps. They are under researched on the sell side and under owned by institutions. These are the sweet spot. He is constantly short stocks. He was one of the only funds in 2008 that had a gain.

Markets. We are seeing a bottom process on gold and also a bottom. We are definitely in the bottoming process or well beyond it. It feels like the bottom now. New money is starting to come into the sector. He is not expecting tax loss selling this year in resource and precious metals. If you have no exposure you should build a position over time.

Is the mining atmosphere in Ecuador turning positive? It became obvious the country was not very mining friendly. He is still skeptical that investment dollars will flow into this country. He is still wait and see.

Markets. Thinks markets are going from a “hope” phase to a “growth” phase. Equity markets are leading indicators and transportation, railroads and industrials are up 20%-25% year to date. These portend a greater broad-based economic recovery. We have gone from high volatility and hope, to low-mid-volatility and are now seeing normalized PEs. We are starting to see stocks with breadth of recovery and starting to see dividend paying companies that are really growing dividends and free cash flow. Those are the ones that are going to power through this growth phase for the next 3-5 years of the cycle. He sees a 3 to 5-year bull market in equities.

Pipelines. Highly differentiated by regions, geography and subsector. Pipeline business has been quite reliable in the US. You have to pick the right region, country, as well as the right pipeline operating company. Canadian pipelines have been a good trade for as long as it has lasted but is now taking a bit of a pause and is settling in its space. He would not be allocating away from energy but you have to be in the right region and the right company. Also, look at balance sheets. (See Top Picks.)

Preferred stocks are still trading at a little bit of a premium. Over the next 3-5 years you will get your coupon, but a good correction has already taken place considering the QE tapering that has occurred. Thinks we will stabilize for a number of months. You could get the 4% average yield or go for common stocks. Common shares will fall more than preferreds.

Educational Segment. Model Portfolio Update. Sept/Oct are often the challenging months. No change is needed this time. We are defensive and are getting a pretty good yield. The total return is somewhat soft based on the fixed income holding. Last week we added gold but it pulled back. The High Volatility Put Write Strategy did well. If the market tanks it could really be hit. What could viewers do going forward. We are underweight Europe. If Europe starts to get cheap we might want to rotate into it. No trades this week.

Markets. The new Federal Reserve chairman is significant to the markets. With Summers stepping back the markets are liking it. Larry likes the new favourite. But we are up against the August highs in US markets. We may get news on tapering this Wednesday and the market may not like it, so it could pull back. He is positive on markets, although not on the US economy, as long as the fed keeps up stimulus. With Syrian tensions easing in the last couple of weeks we could see some premium coming out of the crude markets. If we close below $102 then the breakout has failed and we will come back to the old trading range of $88 to $95 in the later part of the year.

Markets. It is the end of Summers’ rally J He is quite bullish on the markets so is on the long side. In Europe manufacturing activity is picking up. Economies are stabilizing quite quickly. Europe could be a very interesting place to invest going forward. Likes N.A companies with exposure to EU as well as Chinese companies. Retail spending within China is really pretty good.

Correction in September? Generally not a great time for the markets so not surprised people are talking correction. He does not sit and wait for it. Macro economics have a lot of positives that makes him think the rally can continue. Is seeing a recovery in Europe. The data is stabilizing. There is still an impetuous to stimulate economies around the world by governments.