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

[Caller asked if Obama care would involve people not being able to afford insurance and health care workers getting laid off.] He doesn’t see that as a huge risk on the horizon and in fact is taking advantage of Obama care coming, for example with CI-N.

Banks. He generally does not hold the Canadian banks in his funds. He holds a little BNS because of their exposure outside of Canada. He is not wildly optimistic about the sector.

Markets. France. Europe is relying on German and stronger economies. France is a tragic basket case. Social benefits are 30% of GDP. French GDP is struggling back after the bounce back in 2009. Significant arrow pointing to the downside. Recession there will get worse before it gets better. Support for the EU is falling. Bond rates are rising. Europe is not going away. It is not getting better. This summer the market is going to force yields up. EWQ is the ETF that tracks France. It has not bounced back. 14 people working for every 10 retired. Retirement in world needs to be in the low 70s. Math doesn’t work in the 60s.

Covered Calls affecting markets. The strategies have kept the overall supply of options less volatile. That is something that we will have for the next 10 or 20 years to enhance returns for shareholders. It is part of the deleveraging of global economies.

Markets. Beijing gave us the shakes and the TSX is off triple digits. The Fed was misunderstood. They want the housing boom going. In the next few years there may not be much in the way of negative equity in US housing. He wants rates to stay low to stimulate this as well as US car sales. Slow growth in China was going to happen anyway because of a trend from capital spending to consumer spending. He would not buy in this sell off because he wants to see some sort of basing. He is constructive and once the correction is over he will re-invest. The US is the place to be.

Educational Segment. Seeking Alpha. Guest was Bobby Ng of FT Portfolios Canada. Beta is basically the market return. The game is to try to beat it. Some very innovative companies have tried to re-weight indexes to try to beat markets and that is ‘Seeking Alpha’. The Alphadex method is a screening method. Start with a broad based market and break up securities between growth vs. value and then rank them based on a variety of factors that differ between growth and value. Get rid of the bottom 25%. The top tier gets a one-third weighting. The ETF portfolio gets rebalanced on a quarterly or semiannual basis. E.g. FDY-T, FUD-T, FDE-T

Markets. This is probably a needed and justified correction. We have all known for some time that at some point we were going to have to ease off from the amount of liquidity. In that transition, we hit a bumpy road, which we are on now. Thinks markets are acting rationally. As we move through the summer, that uncertainty will go away and markets will steady up. He is underweight the market and very underweight resource stocks. He is slowly covering a lot of his Shorts. If people have any resource stocks left in their portfolio, with the exception perhaps of energy, and those stocks are down 15%-20% for the year, he would be selling them now. Expects we will have a bumpy summer and then all of a sudden in September tax loss selling on those companies is going to be significant through to December. If you have any gold stocks, get out of them now. You can buy it back in January for way less than what it is going for now.

Gold. Drivers for gold is inflation, economy as well as fear factors. Hasn’t really seen the 3 factors at work over the last few years since it hit $1900. With the spike in interest rates, the cost of carry has gone up significantly. The fear is that if rates continue to rise and the economy and markets are doing better, what is the better pay off for gold investors and the holders of bullion. She thinks it would be more likely on the downside. She feels gold will be staying at around $1200. There is a seasonality trade but she is cautious on this metal.

Markets. Majority of the TSX is made up of resource stocks and aside from resources, we also have banks and pipelines, which have been very popular and have done very well. A lot of those stocks had reached technical inflection points where they where significantly overbought and valuation was more than fair so when all this is aligned and you have Bernanke indicating optimism on the economy front and yield tightening, it was a good time to take profits for investors. She views the pullback as a mild correction. On the resource side she feels there is still a little more downside to come. Copper is getting to a point where it is attractively valued. If it breaks the $3 point, that will create a very strong buying opportunity.

Markets. China comes out with a data point every week and sometimes it’s good and sometimes it bad. They have so much potential to stimulate the economy. Any bad news you have to ignore a little bit because they can restart the program once again because they have so much reserve. On the Fed situation, he thinks it is just a regular, normal cycle. We have improving housing, improving employment and we have improving profits. Feels that investors have loaded up on utilities and REITs and they’ll have to restructure their portfolios because that game may be over.

Markets. Anticipates volatility to continue. Not such a terrible thing. We are ripe for some kind of correction. The tapering that is earlier than was anticipated was the trigger. Until you see growth rates at 5% you probably won’t see commodity markets go up. Looking to the US, to companies that can grow dividends.

Markets. Has been told that the down market is a temporary phase because there has essentially been a suckage of liquidity out of the market which is why you are seeing all asset classes fall. This is a temporary period that we need to get through and then hopefully we will resume an upward course for energy stocks.

Oil/gas. Has been an awful performer for over 2 years. Investors have not been rewarded for the risks they have taken. A lot of that stems, especially on oil, on concerns about the future price. Feels that this is a wall of worry that we have to surmount. Concerns are much misplaced, especially about US oil production. We have had a 2-year trend that people are extrapolating out to 2020 to say that the US will be oil independent, but when you look at some of the very best experts, they are suggesting that 2012 has been the peak year of growth. The best opportunity in his mind is in 4 categories 1) Canadian 2) light oil 3) Midcap and 4) non-yield.

Markets.. Sees a gradual improvement in the US Economy including in-house sales, industrial production and sales. Also, consumer confidence is getting better. More concerned about the Cdn economy. New bank governor in 2014 may reduce rates if we don’t have stronger economic growth.

Dividends. 80% of the S&P 500 pay dividends and about 77% on the TSE. There are 2 types of companies. 1) Those that can pay a steady dividend and not grow it and 2) those that grow their dividends. He is more interested in those companies that can grow their dividends.