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

Heard that central bankers printed over $12 trillion in the last 5 years. In 2008 and 2009, a lot of people were shown to have behaved very, very poorly and the central banks stepped in the breach to help a lot of people out. We continue to work our way through this crisis. There is no right answer.

Markets. Markets are going to have to endure the financial turmoil of the euro zone, Cyprus, etc. for years to come. If it’s not Cyprus, it will be somebody else next year. You have to be careful with your stock selection and be reasonably defensive in the kind of stocks you have in your portfolio. There is not much else you can do. She is concentrating on dividend growers as this demonstrates the company is doing well. Resources are not the kind of stocks you want to own in this kind of environment because you have the commodity risk, financial risk, geographical risk, etc.

Gold. A lot of people in Europe are questioning that if the Cyprus government can take charge of people’s savings accounts, why can’t it happen to us. This is the weak link of Europe. Russians have said they are not going to loan to Cyprus, which has a lot of consequences. Bottom line, this is a fight between Germany and Russia. Thinks there will be a run on the banks when they open. Feels the risk factor is back on and gold is going to start to go higher.

Natural gas. Thinks the market is going to correct itself as more and more people start to use natural gas. It makes a lot of sense for utilities, trucks, etc. There is a big lobby push between US coal people and natural gas lobby. He is still not ready to invest in this sector.

Uranium. If he were to play the uranium sector, he would go with Uranium Participation (U-T) until he saw some price movement. At some point, uranium is needed as an energy component. If you are patient and want to start adding, this is a good place to be. Too early for him at this point.

Markets. Optimistic. It will be a solid year for equities. US economy is recovering. China is bottoming and coming out. Europe is a train wreck. The two biggest economies in the world are going to show decent growth. We may not be a leading indicator in Canada. He was in Switzerland recently and had to say that that part of Europe seemed to be fine. In Canada, he likes the consumer sector, and energy.

How do year end capital gain distributions on ETF products impact both registered and unregistered accounts? Do mutual funds treat this process the same? Both mutual funds and ETF’s are treated the same way. It is not surprising to see 10 times as much trading activity in the mutual fund as there is in an ETF. This does not affect registered accounts, but in a taxable account, that increased trading activity leads to increased capital gains and capital losses.

Pros and cons of index ETF’s versus those that are fundamentally based such as CUD-T? 6 of one and half a dozen of the other. Fundamental indexing is basically a screen where you have 4 equal weighted screens (25% each) that basically create a value tilt to your indexing and is not weighted like a traditional index is. If you like a value bias, then you should like the fundamental indexes more. If you want to track what you are reading in the paper, then you would want a cap weighted index.

What is the best product for investing in a Registered Disability Savings Accounts (RDSP)? Government puts in double what the payee puts in. If you are disabled, this is a good thing to use because of the matching money you get from the feds. If you are disabled and can afford it, he would strongly encourage you to do it.

Should a person be worried about having their portfolio spread between different ETF families? There is no reason to worry at all. They are companies that are very credible and long-term players. He would recommend you stay with the larger players.

ETFs that are hedged Cdn $’s. What happens to the value of the ETF if the Cdn$ goes down? If it is unhedged, you are doing even better because when the money is converted down to Cdn$’s, you are better off.

Are ETFs priced off market forces or underlying asset value? ETFs are priced off asset value. If stock prices are going up, then your ETFs value is going up.

Markets. He is constructive on the markets but in the near-term, it looks a little overbought. Fundamentals in the global economy have been improving. A lot of the "tail risks" have been removed. Buy on weakness.

Markets. Likes the fundamentals of the US economy, which are okay but not fantastic. Thinks there’s going to be a drag from some of the actions taken by the US federal government. US industrials, automotive and tech look pretty good. Doesn’t like Canadian financials or Canadian energy right now. Also, there are some elements of the energy infrastructure market that he likes a lot. (See Top Picks.)

Gold. With the Cyprus situation, would the Russian laundered money now be looking to switching into gold? They are stuck there now so they are going to have to pay their 10% levy regardless. What will they do with their money if they decide to take it out of Cyprus, no one knows. The Russian government, Chinese, Brazilian are buying gold. He does not own any gold stocks at this time. Believes the major governments globally will continue printing money, which, over the long-term will be very good for asset prices and gold will participate. 3, 4, 5 years from now gold will be worth more money than it is today so at some point you will want some in your portfolio.