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

Interest Rates. 1.6% is where the 10 year bond landed and the fact that we are now at about 2.2% is actually a good thing. It means that we are finally out of this bunker. There is going to be an adjustment. A lot of stocks may have to have valuations altered somewhat. We are still probably in the low interest-rate environment for a long time, as long as we don’t have global synchronized growth or inflation. Use every bit of weakness to exploit it. There are going to be dividend stocks that get oversold that you are going to want to buy but there are going to be dividend stocks that can really benefit from higher interest rates.

US Markets. Cdn markets have been disappointing but he feels the real correction should be in the US. Even though things are improving there, a lot of the buying activity that we have seen over the last few months was due to the Japanese yen. The yen carry trade is going to be in doubt for a little while as Japan is pausing on their initiatives. US market is probably going to struggle until we start seeing earnings in about a month.

Markets. This has been a challenging time and frustrating when you see the US market up 15% for the year and we are basically flat. Emerging markets have generally been down so far. There had been a feeling that stocks have been overvalued and we’re getting a correction although the recovery is still somewhat uncertain. Recent setbacks are really preventing more opportunities for investors, particularly if you are looking longer-term, 3-5 years, over the next business cycle when he expects many of these commodities will come back.

In the event of a significant market correction, which categories of Cdn large cap stocks will be best able to continue their dividend payments in $ terms? If we had a big correction, the banks would be the place to be. Right now they are trading at around 11X earnings and 10X forward earnings. Payouts are roughly around 50%. They will be able to maintain their dollar dividends fairly substantially. Look for companies that have very strong balance sheets and payout ratios of 50% or less.

Markets. There are a couple of specific things that are needed to get the Cdn market moving again. On the energy side we need a catalyst such as the Keystone XL to get the Americans interested in our stocks again. You also need people to realize that we are not the same as US banks and are probably not going to have a mortgage crash. China is the biggest external thing beyond the US.

Markets. Market was arguably overbought so the pullback was probably needed. There could be a bit more. It is obviously being driven by the uncertainty of the fed pulling back on their asset buying program. Her view is that there will be a gradual withdrawal. Feels that longer-term, we are in a slow global recovery environment and would use this opportunity to add exposure to companies that will benefit from the ongoing recovery. She still likes Canadian banks and pipeline stocks.

Markets. We will be well supplied in energy markets for years to come. The theme has been oil trapped in the province. Not convinced rail car loading is viable. Pipelines are safer. The US believe the liquidity measures are helping in the US. When the Fed can pull back the support then he will be roaring bullish on the economy. He feared a downgrade in the US but now it does not look like that will happen into next year. September will culminate the debt ceiling negotiations.

Silver. Economic numbers are questionable. S&P saying things are looking better takes the shine off gold. If we get to last month`s lows that would be the next trigger to get into silver. September-October are the seasonal strength entry point.

Doesn’t think any government will confiscate anyone’s gold. For trading purposes, liquidity of ETFs is fine.

Education Segment. He is looking at the spread between WTI and Western Canadian Oil. On his blog is a link for tracking this. CLO-T is an ETF, the oil sands ETF. Showed a chart of this against spread and it is inverse. The sector is not responding yet. A bottom is starting to come in. 3-5 years the sector is fairly cheap right here but there will be volatility here right now.

Markets. Firm believer gold will go a lot higher than where it is today. We may be setting up for a bottom. We tested the current level a couple of times. We could be higher by the end of the year. 66% of silver is industrial demand. Supply / demand is very tight.

Markets. US market has risen to a point where, historically, there has been a lot of resistance to going any higher. The leading sub index, transportation, has hit a valuation level that it hasn’t reached in 40 years and, when it got there, it just seemed to start to come back. Doesn’t know if it can go any further at this juncture or not. 60% of the stocks that he is following have earnings forecasts downtrends. At the same time, there are some questions about what is happening in China which worries people in the global trade implications. In Canada, we have the issue that if China slows down and the US is just dabbling along, what happens to our resources. In the last month or so, he has been taking money off the table.

Markets. Seeing good signs on the economy in the US. Europe is showing signs of bottoming. Things are definitely improving in Japan. China doesn’t have as fast growth as they’ve had in the past but still growing, 6% to 8% instead of 8% to 10%. This is definitely a great time to be investing globally, outside of Canada, which is going to be faced with a slowdown because of what is happening in China. Resources are going to grow slower. Also, housing growth in Canada is moderating whereas in the US there is acceleration in housing.

Markets. Markets. Right now we are seeing a shift of money out of the Canadian market and into the US market. This will change in time. Feels the US market is being very influenced by the QE3. Until that ends, maybe they’ll continue to outperform. The fundamentals in Canada are fine.

As a very conservative “buy and hold” investor, is it time to start adding to my REITs? Thinks REITs are at the end of a long cycle. They did get overpriced in this particular cycle. You can still hold onto them on a long-term basis but don’t expect the kind of capital appreciation we have had. He also does not expect to see any additional payouts.