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

Markets. Cyprus has sent a bit of a chill through the markets. Some of the proposals are frightening. Fortunately that was defeated but who is to say it won’t come back. It points to more unsettled conditions in Europe. It adds to the uncertainty, which markets generally don’t like. Thinks they will be very vulnerable to negative news coming out. Despite private economy in US forging ahead, issues out there will frighten markets. It may just represent a buying opportunity. More demand may come from China as inventories are worked down. He has not been that well positioned in the US and missed some of it. He had concerns about the valuation of the currency. Thinks we will see some more recovery in the US dollar. Hopefully, by the middle to the end of the year, we will have enough confidence in the recovery that we see futures pick up. To invest today you have to be looking to invest into the next cycle.

Markets. The news from the EU about Cyprus made him nauseous. If you are going to tax wealth, ok, but if you go into bank accounts and just take money from people’s accounts, that is just a major failure of a government. Perhaps a lot of the money is related to the Russian Mafia. He is not worried about it being a contagion. This is a reason for the markets to pause. Be cautious over the next couple of weeks. If the S&P pulls back to 1475, that is a healthy thing. A pullback makes sense.

Global Dividends. Dividends are generally higher globally than domestically but you don’t get the dividend tax credit. You have to put it in a registered account.

Educational Segment. Behavioral Finance. People make investment decisions emotionally rather than rationally and that can be problematic. How you think about pulling the trigger on buy and sell decisions has a lot to do with your outcome. Let’s say you buy a great stock you saw talked about on TV for $53 and a couple of weeks later a scathing report comes out by a bear guy and the stock is now trading at $40. Then a guy comes out on TV and says it's going to $15 but another says it will return to the 52 week highs. Do you double up? Do you put a stop loss in? Do you wait a week and call in to this show? Only the stop loss is a rational choice. You have to have a plan.

Markets. On March 6^th he talked about a head and shoulders pattern and predicted S&P would hit 1560 then last week it hit 1563. We are in an upward channel and the trend is upwardly positive, even with this Cyprus disruption. The trend finds support at 1520 and we could go there and still maintain the upward trend. He is bullish. The TSX broke out of a long term range from 11500 to 12500 and we are holding above that range. It is probably not your go-to play at this point as there are better opportunities out there. Everything cyclical is seasonal at this point – Avoid defensive. The risk on trading in the markets started last week.

Markets. He is pretty well fully invested. Short-term driver is basically window dressing. Coming up to March 31 and some people missed the November/December markets. Didn’t jump on in January and they have to report to their trustees on March 31, or shortly thereafter, that they are properly invested. Longer-term factor is an improving economy in the US and the long-term shift from bonds back to equities. 2 critical events that have just taken place, which have stunned him. 1) US president’s statement that his priority was not to balance the budget and 2) the deposit grab by the ECB, ECU and the IMF of depositors assets in Cyprus. We should think long and hard about the implications of this long-term. They are not positive.

Oil. The rate of growth in fracing in the US is slowing down, which is giving some people some pause as to what is the long-term reserve life. It is a blessing to have this incremental oil supply. On a global basis, the huge demand will come from developing nations which will take up increasing exports from the US and Canada. He feels $85-$90 is where the price of oil should be.

Why are we spending so much money to ship oil down through the US when we could just build our own refineries in Canada? That is a great, great question. The initial reason is “not in my backyard” where people view refineries as dirty and smelly. He feels this attitude is changing. A boost will come from the transfer of Western oil to Eastern Canada, where it will be refined mainly by Suncor (SU-T).

Bonds. Government yields are at rock-bottom levels and the spread between them and corporate bonds is slowly shrinking down to where they were prior to the 2008 crisis. High yields have had phenomenal returns in the last 12 months and have come out of the gate this year still very good. Last year there might have been a deal with an 8%-9% coupon but those are now 5%-6%. Have really dropped quite a bit. Getting late in the economic cycle for interest rates and you need to be selective and cautious.

Is there any way of knowing the “face value” of target bond ETF’s Maturity? These are products offered by Bank of Montréal (BMO-T). There is usually a set date that they are going to mature. The short answer to the question is that “No, there is no face value”. You are getting a basket of bonds so it is a total return type of product with a mix of bond interest and the fluctuation of the daily market value.

What are odds on a sell-off in bonds? What’s the trade and where would the money go? We are getting a little bit later in the cycle. When we get to that point of interest rates going higher, bond managers are always watching economic indicators as to when that might happen and they start moving from corporate to more government.

Markets. He is still positive on the market based on his belief that 1) the economies’ of US and Japan in particular are going to do better than most people expect and China is going to do okay. Europe is the problem but later in the year he sees things starting to bottom and hopefully improve. 2) Thinks that bond interest rates are going up and once people realize the types of hits they are going to take on their bond holdings, money will be flowing out of there and into equities.

Lifecos? His preference is Sun Life (SLF-T), which he owns. Great West (GWO-T) is also a fabulous company and he owns this through Power Financial (PWF-T). Sold Manulife (MFC-T).

Markets. Dow on a 10-day winning streak. There is sensitivity so something could trigger a pull back because we have had a strong rally since November. Markets are more focused on Bernanke’s comments that interest rates will remain low. The US is slowly getting better and China is slowly turning around. Europe’s weakness is already built in. There are always names that will pullback in this market and many times she sees it as a short term event and that is the company to buy. If there is a pullback it will not be that deep.

Markets. US markets are somewhat overbought and have had a tremendous run year to date. A little bit of caution is warranted at this point but over the course of 2013, he feels the economy is going from one fuelled by liquidity to one fuelled by growth so stock markets can do quite well going forward. Has been overweighting US stocks for 16-17 months. September-October 2011 is when the divergence between the S&P and the TSX began. Had been a little bit concerned about the commodity space on Canadian side and felt it had come to a bit of a stall. Feels mega-caps and big caps are the place you want to be at this point. To ready himself in the event of a correction, he will rotate out of overbought areas and look for names that he still likes that have sold off a little.