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

Markets. Not quite out of the woods but improving economic data coming out of the US, especially from housing and employment numbers. China seems to be coming back into the fold with some traction on manufacturing, etc. Pretty good solid foundation for equities to continue to grind higher this year. Sovereign debt fears have kind of dissipated to certain extents, by evidence of the lower yields in Italy and Spain. Looking at the technicals, in the very near-term, we are little bit overbought. There are some risks that are coming such as the looming US debt ceiling. As well there are upcoming presidential elections in Italy in February. Continues to prefer US equities over Canadian equities. You want to position yourself more in cyclical sectors rather than defensive sectors. Expects emerging markets to gain some traction this year as well.

Energy. We are about to enter the sweet spot, which runs from Jan 18 through until the middle of June on the Canadian sector but this year it is coming in earlier than expected. Technicals are already starting to turn positive. Fundamentals are also starting to look very good. Average gain of S&P/TSX Capped Energy Index from Jan 18-June 15 is 10%.

Technicals. As soon as the CES show is over in Las Vegas, technicals start to drop. It has already started this year. There is one stock that has had a big impact on that and that is Apple (AAPL-Q) but the whole sector has been under pressure since that show was over.

Markets. Really hinges on the US consumer. Now that the housing market has stabilized and is starting to come back, the big surprise will be how strong the US consumer really is. As US housing improves it continues to strengthen their banks and is a huge employment generator. Has started to put money into both Europe and emerging markets on the expectation that there will be pretty good global growth in 2013. He would describe the overall mood of investors as timid. Fundamentals are actually quite good but PE multiples are very low so risk premiums are high so there is an overreactnion to things like fiscal cliffs. There are political things that can affect day to day so it will be volatile.

Do ETFs have a DRIP program? Just about all of them have Dividend Re-Investment Programs. He uses this for a lot of his portfolios. For an RRSP, this is a great thing because you don’t have to worry about cash building up in your portfolio. (You do have to request them.)

Nuclear energy ETFs with 3 to 5 years of term? On things like nuclear and uranium, he would rather go with a stock.

What ultimately drives share prices of an ETF? Is it actual trading or only a reflection of the trading of the underlying securities? Or both? It tends to be a bit of both. In Canada it is the NAV that will determine the starting price but during the day, supply and demand can move the price off the NAV a little bit. In the US it trades much tighter.

Platinum. Main catalyst for platinum and palladium is the catalytic converter market which is driven by the auto sector. A lot of demand for automobiles is coming out of places like China and India. There had been some issues with mine shutdowns in South Africa. It is a very small market and the impact is going to be quite significant from the shutdowns.

Gold. Has been very frustrating. A lot of things are happening that he had been expecting such as QE. QE announced printing of about $85 billion a year. US is going to print about $1 trillion. Their monetary base is up 2.6 trillion at the end of last year, which effectively means that their monetary base can be up 40% next year. In that kind of environment, gold prices and stocks should just be taking off. Germany is calling for their gold to be repatriated indicating that countries don’t trust each other’s currencies and central bank actions. Expects gold will go well beyond the $2000 that he was predicting last year.

Precious metals mining stocks. Underperformed last year so he is seeing a lot of opportunities. Valuations are spectacular again. Has been waiting for this tipping point which he would have thought would have come last year. So far we are off to a reasonable start and he remains very optimistic.

Resource stocks. It will be global growth that drives resource stocks this year as well as increasing and better performing ISM numbers as well as purchasing managers’ numbers. When you see industrial economy starting to pick up, that will be the catalyst for resource stocks. Expect it will be a modest year for resources except for a few exceptions such as energy as well as some materials but he is not so optimistic on precious metals.

Markets. There is a lot of scrutiny on the placing of audits these days. Would not be surprised at more law suits regarding companies missing at audits. The roll of the audit is increasingly important from the point of the view of the market. Every time Obama speaks, markets react badly. He doesn’t expect much today as he will speak on the 29^th in a state-of-the-union address. [Obama’s address is essentially expected to pre-empt all or part of today’s Berman’s Call] The debt limit has to go up and has to keep going up and up until they balance the budget. Don’t expect anything different.

Markets. Overall he is looking for 6% to 8% and if you can get half of that in dividends, you are kind of halfway there so you don’t have to take a lot of risks to get the other 4%-5%. We are still in a choppy environment in a trading range of 11,500 to 13,500 on the TSX.

How do bond markets negatively impact dividend stocks? If interest-rates rise,, typically interest-rate sensitive stocks go down initially. He feels this is a short-term of 1 to 2 years phenomena and after that the stocks can do pretty well. Keep in mind that currently interest rates are so low that, it doesn’t matter what company, they have reduced their charges substantially. Doesn’t think this is a lasting thing.

Markets. Seeing really great opportunities in stocks and nothing in fixed income. Markets are relatively inexpensive and he sees pretty good earnings growth this year and a much calmer global environment this year. Investors are getting the message that they have to their money to work.