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

Silver? Chart showed a wedge and it broke out in August. There should be some upside direction again.

Videotron 7.125% bond maturing Jan 15/20. It is safer to own this cable company then the holding company of Quebecor. Treated as noninvestment grade but they gush out a lot of free cash flow.

Markets. Mark Carney is in fact going to be the head of the Bank of England. He wants to curb speculation in real estate in Canada. Consumers are too indebted and he is suggesting he might have to hike interest rates. With oil where it is, the Canadian dollar should be about 5% lower and he thinks it will slide over the next while. The 13% increase in Thanksgiving spending tells you shoppers were eagerly looking for deals.

Gold. CGL-T is a gold bullion ETF. GLD-N if you want US$. A number of funds also hold gold. For trading they are more than adequate.

Educational Segment. PRICE of GOLD. If you take the 4 biggest country balance sheets and compare to their GDP, it is about 36%. Historically that has been about 15%. Central banks need a certain amount on their books to control the money supply. They are creating money and taking the bonds from the system to expand their balance sheet. With the commitments they have made, the percentage of GDP will rise to about 50%. They will do this for years and years until we get out of this economic malaise. Recently, we broke out of a triangle pattern in the price of gold. Take the height of the consolidation and add it to the break-out point. He thinks $2050 would be the target for gold by end of 2013 if central banks do what they say. There will be 30% annualized volatility in Gold over the next few years. But Gold will generally keep going higher and higher in general.

Markets. We are going in a saw tooth formation on the S&P. You go through these corrections and create some value and then go back up to the ceiling. This last correction is perfect for deploying more cash. AAPL-O corrected too. Looks for a Santa Claus rally and then a pull back in January/February. It’s not sector-specific. He believes in a year it will be 18% higher by trading but not in stock valuation. Lots of energy stocks are hitting new lows. A lot of people are pulling back from the commodities at this time. There are big crashes happening in these oil and gas names if you look below the index. A lot of deservedly being crushed because their balance sheets are disappearing as they payout too much.

Markets. We are currently in limbo because of the US fiscal cliff and until we see some resolution we may get another 3%-4% up, which would eliminate the recent decline we’ve had. The other thing we have to face realistically is what is going on in 2013 for the Europeans which will be having elections in Germany as well as the need to come up with a seven-year budget, which he doesn’t think they will be able to do. Convinced that the US housing market is on track. Looking out to 2015-2016, you are probably looking at 1,500,000 housing starts. His cash position for clients was 40 to 50% but is now closer to 15% to 20%.

Gold. He is keen on gold as well as silver until he sees the debt situation come under control, because governments continually botch their paper currencies,. This is going to be a long-term situation of possibly 5-10 years.

Gold. It still looks very good to her and is in a long term uptrend. She has a target of $1,900. If central bankers continue to buy gold, it should move up there. Gold stocks that have been rising consistently will rise with the bullion. We have seen Agnico-Eagle (AEM-T) and Argonaut Gold (AR-T) and some of the royalty golds performing well with their operations and rising, but some are not. Investors have to do their homework in picking gold stocks.

Oil. Price is ranging all the way from $75 to $95 because global growth is going to stay fairly flat and we have a lot of production coming on line. There is risk to the downside. She expects oil to stay between low $80’s to the $93-$94 levels. A lot of oil stocks are at a good entry point.

Economy. Doesn’t expect a negative growth environment in the US. With that view and China coming along quite well, overall we are going to see a pretty good 2013. Looking forward, the volatility index will be compressed somewhat which bodes well for the capital market.

Markets. Recent correction we had earlier in the month created a lot of value on both sides of the border. Investors can expect the next 2-3 months will be pretty good sailing. Mid-November to March is a pretty good time in the market. Between now and RRSP season, investors should expect pretty good markets. First of all there is a seasonal pattern of strength and secondly, China seems to be slowly kind of turning the corner. Global economic data almost anywhere, other than Europe, seems to be stable or slightly improved.

Should retail investors buy stocks that are heavily shorted or stay away? How do you find out how heavily a stock is shorted? Sometimes it is an indication that someone knows something that you don’t but on the other hand, once a stock has been heavily shorted, that weight of bad news has been priced into things. Key thing is not whether something has been heavily shorted or not but whether you know the company well enough to know that you have a strong handle on where their earnings are going to be. A case in point would be Home Capital (HCG-T) which is heavily shorted right now with a lot of people talking about its imminent demise and yet they keep raising their dividends and their profits keep going up. Most people predicting the demise have never met with the management and don’t really understand the model as far as being a low loan-to-value lender. This is one that he is very happy being Long on.

Tax Loss Selling. Around 15 Nov, astute fund managers who know the fundamentals on certain companies that have had a bad quarter but are not bad companies, will say “What’s being oversold?”, “What’s being chucked out the door?” for tax loss reasons. Once the tax loss sellers are gone, they can pick these up. A couple of names are Poseidon (PSN-T) and Data Group (DGI-T) which just cut its dividend but still has a yield of 15%. These are not ones where you back the truck up. You buy little bit of them.

Markets. As we get closer to the fiscal cliff, for income investors there is a little push as they protect their returns from the market selloff. No one knows if taxes are going to increase in the US and uncertainty is not liked in the markets. A variety of sectors have dividend growth. REITs are a good place to hide for protection. REITs should not be as impacted as much if US taxes increase. Stick with safe names that you know. There is so much uncertainty that there won’t be a Santa Claus rally.