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

Markets. The time to buy stocks is when people are selling them, not when everybody loves them. He is a value investor which means that he is trying to find stocks in the stock market that are priced below what he thinks they are really worth. Currently, he is deemphasizing resource stocks. Because global growth is slow and there appears to be substantial stockpiles of coal and iron ore, in China for example, resource prices may be a little soggy for the next while. He continues to put emphasis on good dividend payers. Feels there are some US names that have very good value, particularly with the loonie at $1.02.

Agriculture. This is an industry that has been bid up because everybody understands the stories. 2 of the interesting companies to him are Syngenta (SYT-N) and Monsanto (MON-N), both of which are in chemically engineered crop management. But both have been bid up substantially and are difficult to buy at this price. Some people have played the sector through John Deere (DE-N) but this has been bid up as well. If there is a substantial correction in any of these names, it is not a bad time to buy in any of them as he believes the agriculture story is going to be a long story.

Commodities. Commodity sector had predicted a slowdown in the general markets months ago. It is only now that IMF and other economists are coming out and reinforcing the fact that the global economies are slowing down. Now commodity prices are starting to inch higher, which he feels is a precursor of better times to come in the economy for 2013. Feels the opportunities are in the equities because they have underperformed the underlying commodities. Sees opportunities in the Junior gold space as well as Junior gas names.

Market. Earnings revisions are going down a little bit but not that much. Stocks are reacting to bad news. The Fed wants this market to go up, which is the path of least resistance until you get bad news. Doesn’t think earnings are going to be a big thing this quarter. Expect they will move negatively so you are not going to get the earnings growth, maybe year-over-year, but certainly not quarter over quarter. He is expecting a market correction. There are all kinds of signals out of China that it is more than a slow down.

Market. From a big picture point of view, there has been a tremendous amount of overhead resistance if you look at the S&P 500 at around 1500-1550. We are well on our way to getting there, but there is a cycle that comes into play pretty soon that will probably see us peak out at around that level and perhaps a topping pattern that might emerge later in the winter. He can’t say on what impetus how the markets will break through that 1550ish area. We have been in a Bull since 2009 but the party is getting late. He is beginning to move further and further into lower beta type of securities.

Silver. Seasonably speaking, precious metals are a little soft in October which may be a buying opportunity because the winter for precious metals, particularly silver, is good. In the short term, there is a golden cross where the 50 day moving average was up to the 200 day and this can be bullish. Silver looks pretty good but expecting a little bit of a pullback in the short term.

Markets: Trickle down to Canada from US fiscal cliff is that we are locked into a trading range 11,000 to 13,000. Our market is heavily basic materials, financial and energy related. They are counter to each other. We are stuck in this range. He doesn't emphasize trading. He wants to collect those dividends that grow. When you get a dip, that is the chance to buy it. If one gets out of range then switch to that. Typically he runs 2-5% cash. His stocks aren't the volatile ones so you don't need cash as an offset. He prefers the freedom to take a dividend and if appropriate, buy something different with it.

Fully Risked NAV: NAV is a way to estimate the price via cash flows and putting a discount on it. If the discount rate is low, the risk is low. Risk adjusted cash flows is looking at the cash flow throughout an analyst's report. Is it the same all the way through. Fully risked means the price is an entry point.

GIC’s. Caller is 4 years away from retirement and his financial advisor discouraged him on GIC’s. You really should have at least some of your money in income bearing investments. There will be some risks in regards to the possibility of a rate hike.

ETF’s versus leveraged Segregated Funds? He doesn’t like anything that is leveraged if he can help it. If you are in leveraged Seg funds he recommends that you get out of them. Even if you get out of this and into a normal Seg fund you are better. Unless you have a real need for creditor protection or estate preservation, an ETF is generally better.

Can the caller hold individual securities in an RDSP account? Yes.

RRSP or pay down the mortgage? Financial planning 101 says maximize your RRSP and then use your refund to pay down your mortgage.

Markets: Thinks we are looking at strength until the spring of next year. Federal reserve and central banks in most of the world are pumping liquidity into the system. They are creating a floor for stocks. Likes energy but lightening up on resources and commodities. Tech is where he is finding more ideas than anywhere else. Oil is reflecting a slowdown in the global economy and that move in oil is not so much caused by geopolitics.

Market. Technicals and the liquidity arguments favour stock markets going higher. There is a lot of money on the sidelines, interest rates are low and the alternatives are unattractive. Technically, a lot of Canadian stocks are bouncing back through resistance levels. US market is fully valued, perhaps a little bit over, and you had some serious worries in front including Chinese growth and conditions in Europe. Doesn’t think third-quarter earnings are going to be blow outs either. He is staying long but being selective.

Markets. In many ways, they are getting less interesting. A couple of years ago he had about 350 stocks on his Stock Watch list but is now down to about 200 because the markets have done so well. He now holds 23 stocks. Is now into his Buying Season and it is much harder now to pick than it was.