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

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.

Natural gas. Had been a proponent for a number of years but he was wrong because it kept going down. Has now rebounded very strongly. Has a tremendous future. There are now a lot of companies that are converting. At the same time, the supply has greatly increased.

Numbers out of China are starting to weaken. Seeing weakness in Japan manufacturing for last number of years. Europe is showing contracting numbers. US manufacturing is showing some decay. S&P: It's what you are willing to pay for the earnings.

Nat. Gas: Forward prices are in the 4-4.5% range for next year but he thinks this is on the high side. Trading in the next couple of weeks is positive on. (HNU-T)

US Hedging in ETFs: You can't hedge your own portfolio unless you have millions and millions. ETFs can lock in a currency contract for each month.

Education Segment: QE infinity: 2.8 Trillion in Fed now and if they buy these bonds it will hit 4 Trillion. He is wildly bullish about gold, not as much gold stocks but gold for sure. Different types of inflation: (1) Demand Pull: not enough supply; (2) Cost Push:Wages dramatically stronger than the cost of hiring extra workers; (3) Pricing Power: eg. Apple can charge $899 for phones; (4) Sectoral: When Fed does QE and money gets into system and rise in oil prices leaks into other industries. US dollar will remain the reserve currency for years and years to come because there is no alternative.

Markets: Was in UK this summer and the double dip recession was not as bad as expected with the Olympics and the sentiment uplift. The rest of the Euro is bringing it and us down. Reports from people in Spain and Italy where it was really bad. Euro stocks are on sale. Exports in US were weak but domestics had a pick-up. In US there are signs of a turn-around. S&P is up 25% in the US already vs 6% on the TSX. You should buy US stocks that benefit from a Canadian Economy since it is lagging.