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

Investing. 90% cash but getting very close to a very important point, probably within the next 3 weeks. There are a lot of macro and micro things happening in the next 3 weeks, which are going to cause markets to be really whippy but there’s an opportunity not too far away, before the end of July, for a major move on the upside.

Energy. Normally do very well from around the end of January until the end of June. Historically middle of June is when the CAPP (Canadian Assoc of Cdn Producers) conferences are held, which is usually when the energy sector has reached a peak. This year the seasonal energy trade did not work. Historically this has worked 24 of the last 28 periods.

Airline stocks. They normally do quite well in the spring when people are buying tickets to go on holidays. You probably have another month or so.

Wishes he could tell you when the bottom or the top is. All he can tell us is that things look interesting. He sees good valuation for 3-5 year investments. There are good buys if you are going to be patient. Oil sands are questionable as to whether they are viable. If oil goes to $70-$75 then a bit of small oil companies would be sidelined.

Markets. This was a kind of day which reinforces that you should have these things worked out in advance. You should have a hedging platform, you should know in advance what you are going to do and how you are going to react if markets fall like they started to today. You should use markets like this to try to build and add to positions because some of these stocks have great looking yields.

Hedging strategies? Put option on the SPDRs, the S&P, NASDQ or TSX? PUT options are so expensive and when you really need them, they are even more expensive. You Buy one and it expires worthless in about 2 months or you get eaten away by the volatility. For most investors, the way to hedge is to have good asset allocation built in so the cash keeps coming in. Or if you want to be more dynamic, go to Cash when you see the market falling, but this is a tough thing to do.

Fixed Reset Preferreds. These are preferred shares that mature every 5 years and you can either get your shares back or you can have it float to whatever the 5 year Govt of Canada bond is plus the spread. Gives a lot of inflation protection. Have been remarkably successful and he owns a lot of them.

Markets. Technology sector is certainly undervalued given that it has fabulous growth metrics. Many of the good companies in technology are trading at historically low valuation levels. He would probably avoid the Consumer Staples group.

Markets. Heading into earnings season in 3-4 weeks and at that point you’ll start to see some of the good earnings of the good companies come through and that’s were he aims for. Dividends are reasonably important. He likes to have them but he would Buy a stock even if it doesn’t pay a dividend.

ETF Portfolios. He prefers holding the broad market as a core and builds in around the edges with some explorer (?) products. He looks for trends in the market and then buys that trend around the edges of the court.

Vanguard has moved into Canada. How do you compare them with the existing ETF's? You have to love these funds. To be successful you need liquidity and low fees. These have lower MERs.

Regular ETF and Advisor Class ETF. Same liquidity? Trade at similar prices? An Advisor Class ETF has a trailer fee in it so when your advisor recommends to his client that they buy the Advisor series, the advisor is going to get a chunk of the management fee. They both trade at exactly the same price. Liquidity is not at function of volume when it comes to an ETF. Wouldn't recommend the Advisor Class for the average investor.

Options Strategies. This is an excellent time to be using options strategies. When there is a lot of uncertainty, there is typically a lot of volatility. When there is volatility, option premiums tend to be more expensive, which opens the door for some very interesting option writing strategies.

Stock warrants. When is a good time to buy them? This is the same as a Call option but tends to be longer term. The only difference is, warrants are issued by the company. You use the same logic that you would use on a Call option.

Markets. Spain has now indicated they want to be part of the European union. It's a volatile place to be and he wants to steer clear of this area. His strategy is good companies, strong balance sheets, dividend paying yields and that are trading at low multiples. There is going to be slow growth globally. Dividends will be a much larger part of the return in the next couple of years then perhaps capital gains.