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

Markets. It is reasonably likely to happen that the year will end positively. Short-term things that are still in front of us are China stimulus and the US fiscal cliff, the 2 big ones. Also, we don’t want Europe disintegrating. If these things were favourable, the market could be up another 5% in 6 months. He is now into the single digits in the cash he is holding.

Fiscal Cliff. In simple terms, if nothing different happened there would be tax increases in the US come Jan 1st along with spending cuts. If that were to happen, the average US consumer could have $1000 less in their pocket to spend. That would affect consumer spending and GDP would be softer. There would be a dip come January and that would be a fiscal cliff. Doesn’t think that is going to happen but is something we need to watch carefully for the next few months.

Markets. Better than expected readings on US consumer confidence and we are back to pre-recession highs but stocks are under pressure. Partly because the markets have had a very good run over the last few months. All the central banks have put in their stimulus packages and that has put away the doomsday scenario but it takes time for this to take effect. Now we have to go back to fundamentals and this is that profit growth is slowing. Companies are not very optimistic and are showing reduced guidance. With the US election, there is still uncertainty. Investors should wait as there is no sense in going in when volatility seems to be increasing.

Markets. It is the same as 2010. He was waiting for the market to break out above the 12,000 level and we could close the year above 13,000. Canadian markets tend to be strong this time of year (Nov/Dec) in energy and metal stocks, which have a lot of influence on the index. He was a big buyer at the beginning of September. He has been trimming interest rate-sensitive stocks like REITs.

Short Interest. A long time ago it had a lot more meaning. If you have derivatives trading against it, or pairs trading, you might have someone shorting but offsetting with options. Now a days short interest does not mean people are bearish on the stock.

Nat. Gas. Beautiful downtrend. When it bottoms it will be obvious. Clear bottom back in April. The last two lows have been higher than the previous. Buy HNU-T with a $15 stop and a 30-day moving average as your exit point (trailing stop).

Markets: Wrestling match between mushy economic conditions on one side and hopeful rallies on the other as banks pushed out stimulus. Savers are looking for something that gives them a little more yield. The core themes has been predictability. You need securities where you know they have the ability to pay and that ability is growing. Each rally that comes on behalf of one of the policy initiatives has been shorter and shorter.

Markets. This pullback is not unexpected. We had quite a good run into the end of Q3 with a couple of really positive developments including stimulus in China, some easing in Europe and the US Feds move. There is a bit of a pause now. Expect that we will end up higher by the end of the year and higher than we were at the end of Q3. Buying $40 billion a month of housing bonds will continue the improvement in the US housing market. Thinks China will get back more on a growth path. Big uncertainty is the US election but regardless of who wins, there will be a focus on what the agenda looks like in 2013, which will be helpful in removing some uncertainty.

Markets. Coming into Q3 earnings seasons which starts heavily in the US next week and estimates have come way down so it will be interesting to see how companies report. China uses 40% of all commodities so this has a large impact on Canada. Has a little bit of cash but he can see himself getting more defensive because of the global slowdown.

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.