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

Markets. The worst case is that we go back to last summer’s lows but he doesn’t believe that will happen. Fears include slow down in US and worries about China but does not include Europe this year. We don’t have revenue growth so how do we have market growth. You had weather problems last year. 72% of analysts are bullish and that is worrisome. You could see some weakness but not to last summer’s lows. Copper has gone down about as far as it is going to. He prefers US vs. Canada for growth but for dividends, stay in Canada.

Sell in May and go away? He is going to watch it very carefully. Maybe it is April. But we are seeing the housing market in the US recover.

Market. What we saw in the last few weeks was the early part of the selloff. What we have had was very strong growth in the capital markets, particularly in the US. Canada has had very disappointing returns showing the disparity between the 2 countries and he thinks this disparity is going to persist for the rest of the year. His strategy is 1) to have a little cash to take care of some buying opportunities that come up in the next few months and 2) weight the more defensive names in a portfolio, which would include your utilities, pipelines, consumer staples and healthcare names. Expects the market to continue to slow giving a 3%-4% slide from here on both sides of the border.

Natural gas. This would benefit hugely from LNG. Expected to be range bound, possibly getting to about $4.23-$4.50 in the summer but doesn’t expect it to get much above that. Fundamentals are pretty weak at this point.

Markets. Much more neutral on the market now. His call in 2010 was predicated upon the economy getting much better. Looking at the leading economic data at that time, which is what he likes to focus on, housing looked like it had bottomed and was turning a corner, incremental data points were getting better and, typically, the market will start to interpret that with a longer lead time. There was a compounding effect of zero interest rates, the Fed pushing a lot of liquidity into the system but very low expectations for equities. Currently, the North American housing index has rolled over; the ISM manufacturing data has rolled over. This means we are in for slower economic growth. Expects some sort of correction now because we have gone too far.

Markets. Getting a little more rational and a little less panicky. Gold seems to have stabilized and oil was up a bit. He will continue to try and get dividend income stocks into his clients’ portfolios. You have to be concerned that the dividends you get are relatively safe.

Markets. Lots of earnings coming out: big names in technology. Looking for top line growth this quarter. In general the computer services market has had challenges to grow this. She focuses on those names that she thinks will do better in this very competitive market. She does a lot of bottom up research and thinks this will be the key to success. She took some cash off the table because some companies have different earnings schedules. Valuations are fair market but if you don’t have good earnings you get punished. She sees a buying opportunity. She would still be buying into this market and sees a rotation into a little more tolerance of risk.

Markets. Current situation could be a seasonal thing. Think we saw the same type of rough patch last year, where everybody got concerned. There is no question that the data is not going to be hugely robust but it is a recovery so it will be in fits and starts but it is heading in the right direction. Pretty much every new stock he has added to his portfolio has been US. Has gone from 0% weighting in late 2011 to 25% allocation. Likes companies that are paying dividends and/or buying back shares and with extremely low valuations. Very excited about buying US companies that he can’t find in Canada. Feels the drop in the price of gold is good news. It tells us that inflation is not a concern. He is still positive on productive commodity assets such as copper (for the long-term), oil, natural gas, lumber, etc.

Healthcare. Overall, this is a space you have to be in. He has trimmed back his healthcare allocation because valuations have gone too high and he is waiting for a pullback.

Markets. Has been having trouble finding things in Canada to buy. US has a lot more stocks to potentially buy and this was the area where his bids ended up landing. He rarely buys stocks at this time of the year. Most of the time he does his buying in November and December when tax loss season is on. At this time of year, he was always looking for more to sell, either the big gainers or if he has something that would make a good tax loss.

Energy. There is only one data point he can put his finger on to explain the weakness in oil and that was the Chinese GDP number that came out and missed. It was supposed to grow by 8% but only growing by 7.7%. Beyond that, for oil to fall 5.5% this week and 11% this month, he can’t find a fundamental reason. This has been a frustrating thing for almost 2 years now. Many of the companies, both in Canada and the US, have been very strong but, because of the leaning towards income investments, fund managers have been in a net redemption mode for about 1 to 1.5 years. Right now, the oil/gas sector is massively, massively out of favour. Market will probably be volatile for the next 3-4 months.

Energy. Looking for late blooming cyclicals in the energy sector. Going back to the beginning of 2012, he noticed things that were happening in other parts of the Canadian market that led him to believe that energy is probably going to have its day. Some of the segments in Canada that have done well, financials and consumer discretionary, are typical indicators of economic recovery. Thinks the next phase for this attraction to energy will not necessarily be in the yield names. Instead, names that offer good growth at a reasonable multiple of cash flow without over levered balance sheets will be where the market goes. Although he is not abandoning yield names as this is a necessary component of getting the right exposure to energy companies looking forward.

Markets. In the last week or so, Canadian market has been a little bit rocky but generally over the midterm he is positive on equities. More biased towards US than Canadian equities. A lot of good things going on in the US with an improving situation, particularly with the housing market which is driving a lot of change. Has been moving capital out of Canada and into the US, particularly into things like automotive and housing. Near-term there have been big moves in the US market and a little bit of concern about the short-term divergences with emerging markets and commodities not performing well and yet US markets still near their highs. Even in the US we could be in for a short-term underperformance over the next few months. A 5%-10% pullback would be healthy for the market. He has 30% in cash in the funds that he manages.

Gold. After a historic drop like gold has had, the biggest in 33 years, he would just stand back and wait to see what is going to happen. Has a very small position in gold in his funds. When you see that dramatic a drop, it is hard to understand what all the unintended consequences might be, whether it is margin calls, liquidation in gold funds, redemptions of managers who owned too many gold stocks, etc.

Markets. Chinese growth still 7.7%. China slowing down is not a new story. It is probably going to grow in the 5-7% range. We are entering a bit of a panic phase in gold. We are right at the bottom of the low end of the recent channel. We are looking at a new range of low 1300s to 1500s. We hit the low end of the channel today. We don’t know what the low will be. It could be today, but we don’t know. Below $1300 for gold he thinks 30% of global production just stops. Suspects there is another up cycle to gold at some point.