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

Markets. Complacency had seemed to be gripping investors to the point where they had taken any fear factor off the table. The decline in fertilizer stocks last week shook them up as well as the Italian election. Market had been overbought. He has taken advantage and bought a lot of stocks that he liked. There is a school of thought that says markets are not overvalued based on historic P/E ratios. Still has cash and is not chasing anything. If a position gets to 10% in his portfolios, he pares it back.

Pipelines. A lot of the fear about the XL pipeline, or even northern Gateway, not going through is already in the price of the shares. Feels there are some long-term alternatives. As far as going to Asia, you have the trans-mountain system and the pipeline is in operation. Also, it is a great idea if there was a reversal of the TransCanada pipe so you are shipping Western oil to Eastern Canada.

What is the difference between “averaging down” and buying on a pull back? Averaging down is when you own a stock and it starts to go down and you buy, hoping to catch it on the downside but you could run out of money and the stock keeps going down. Buying on a “pull back” is when you have things you would like to buy and you want them to pull back to the price you are interested in.

Markets. Has been pretty low volatility on the way up since mid-November, so any time you have that for a month and a half, you are right for a correction. US Fed coming out with their minutes got people a little bit worried that they were going to tighten sooner than people had thought. Little things like that can set it back. The whole dividend space is more richly valued than it was a year or so ago but in this type of environment it makes sense. We have a slow uneven economic growth and low interest rates so people are attracted to companies that are paying dividends.

Diversification. Asset allocation is what deals with your volatility. Everybody’s portfolio should match their risk spectrum and how much volatility they want to have. With the period we are going through now, people finally get to test their asset allocation exposure and how comfortable they are with the risk parameters. People tend to make emotional decisions rather than the right ones but having asset allocation in different sectors really helps.

Gold. There are a lot of negative comments, but they are not really looking at the big picture. The big picture keeps getting stronger and stronger and we should come back and review what is going on right now. When there is a spread between reality and perception is when you really make money. He has never seen this spread bigger than what is going on right now. Physical demand is outstripping production by a huge amount. Most of that deficit is coming out of the central banks. Central banks have gotten rid of the gold. The Germans have started to ask for their gold, so the music is stopping.

Markets. The pull back is more of an opportunity to put some of the cash you have to work. Markets go through cycles. Retail investors are cautious about getting back into equities. There is still some runway in this bull market. She is bottom up but selective in picking her spots.

Resource Stocks. Thinks the pressure they are under has to continue. Junior market is pretty much dead. A lot of them are desperate for financing, which they are not going to get. Shareholder destruction is breathtaking. The one good thing is that they are going to be more careful in expanding. Some of these projects are going to get shelved, or mothballed at the very least. Production growth will be reined in, which will hopefully moderate supply, which will bring prices more into balance and that will allow them to start over.

Markets. Generally constructive on the markets overall. In the low interest-rate environment, where are you going to go? You can’t hold your money in bonds. He read that there are tens of billions of dollars sitting in GICs and the ones in 5 year holdings are going to mature soon. If people are looking at solid, blue chips that pay good dividends, they don’t have to grow much.

US financials. Thinks these are going to lead the way. Have slowly fixed their balance sheets. Housing market is coming back so mortgages will be coming back on side. (See Top Picks.)

Gold. doesn’t perceive gold to be cheap by any means. Wouldn’t surprise him if the price came down further. Very, very difficult for him to find gold companies now that fit on his Watch List.

Gasoline. One of the strongest seasonal trades from the end of January through to the end of April. 14 of the past 15 periods had an average gain of 21.9%. This is a time when refiners are going from winter gasoline to summer gasoline and they shut down their refineries and do their maintenance, so inventories of gasoline start moving lower. (See Top Picks)

Markets. Historically, in the year after a US president is elected, markets go up right through until the 1^st week in February. Then the market tends to take a bit of a shallow dive until the end of March. After that, the markets then move higher and by May they are at new highs and the market historically peaks right at the end of the year. Any weakness you see in the next 3-4 weeks is a buying opportunity, particularly in sectors that have strong seasonality at this time of year.

Gold. The best time to own gold is around the middle of July until the end of September.

Markets. He now has his own research firm. He does not invest so he offers conflict-free opinions. The great rotation out of bonds into stocks is actually starting to happen. 1.5% interest rates are not going to cut it. Studied bull markets. They are always criticized when they start. 2008 is still in people’s memory. Valuations are not reflecting the reality of corporate performance.