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

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.

Markets. Thinks 2013 will be a good year. Just a continuation of what we have seen since 2008-2009. Still seeing a lot of fear in retail investors not wanting to get into equities and the market. Sees this as a progression from the fear spectrum in the market over to getting to risky and toppy in what she sees as a bend in the market. We are still more on the fear side which gives her a bit of confidence that it will be a good year. Sees the central bankers as doing their job in providing as much stimulus as possible to keep things going.

How does withdrawing money from a TFSA affect the contribution than the going forward? Let’s say you put in $5000 a year or 2 ago and it has gone up by 10% and is worth $5500. You take the $5500 out, you still have $5500 worth of room to put back in. You can always put as much back as you took out. Conversely, if you put in $5500 and it dropped by 10% and is now worth $4500 and you take out the $4500, you can only put in $4500.

Individual stocks as a pension strategy compared to annuities, ETFs and mutual funds? You need to remember that all these things are building blocks and there is no single building block that is unequivocally better all the time. Securities are better in that there are no MER’s and no cost to them but you generally need to have a lot of them, probably a large 7 digit portfolio because you have to diversify by sector and geography. Mutual funds are expensive and annuities are not paying much so probably the best building blocks are the ETFs.

US Stocks? Should these go in a registered plan or non-registered? Is there any problem with the dividends being withheld? Generally it is better to hold US stocks in a non-registered account. You might want to look at, not just US stocks, but international stocks and emerging-market stocks.

With a defined pension plan, should other investments be balanced 50/50 fixed income and stocks or 20/80? This depends on how old you are and how big your defined pension plan is. You probably want to get some jazz into your portfolio. If you have half of your money in a pension and half in a discretionary areas, you could probably safely put 100% of your RRSP money into stocks because your defined pension is like a giant bond portfolio.

Is anything lost by transferring stocks from a TFSA to a RRSP? No. You don’t lose anything other than maybe opportunity costs for putting new money back into your TFSA

If money is withdrawn from a TFSA and replaced with in the same year, is it considered an over contribution? Yes. If you take money out, you have to wait until the following calendar year before putting the money back.

Costs when moving funds from a full service broker to a discount broker, or vice versa? There will be a transfer cost of typically $125 plus tax. This is not exorbitant. You need to remember that you always have the option of transferring either in cash or in-kind. If you are happy with the securities that you have, you don’t have to sell it to move from one to the other, you can do it in-kind.

Can you transfer part of an RRSP to a RRIF before turning 71, as well as keeping the RRSP for future contributions (up to age 71)? Yes. Some people like to do that because they can get a tax credit for a tax income for pension income. For example, if you transfer 25% or so to your RRIF. If you have a $400,000 RRSP, you transfer $100,000 to a RRIF and you start taking out your RRIF payments, it gets added to your pension income leaving you with still $300,000 of an RRSP and you can still contribute to the RRSP.

Vanguard Consumer Staples ETF (VDC-N) or Vanguard MSCI Emerging Market ETF (VEE-T) to get capital appreciation? You can almost always get more capital appreciation if you forgo dividends because dividends are paid by large-cap stocks which are mature. Smaller companies will grow more quickly than large mature companies that are paying dividends. They will be more volatile as Risk and Return are related. For capital appreciation, VEE-T would have greater appreciation.