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

Markets. Last year Europe was not on most investors’ radar screen. Now everyone is hunkered down and ready for it. Also thinks the policymakers are a little bit further along. Any sort of weakness you get from Europe, at some point you are going to want to add to quality positions. There are a lot of supportive factors such as the Fed yesterday, China that has widened their currency band and earnings in the US have been great. Valuations are still relatively attractive.

Sentry Canadian Income Fund? Claim they can take some of the volatility out of investing but still returning their dividend income monthly. MER is over 2%. Thoughts? Mutual funds can be a very good way to go. If you have good active management that can really identify the companies that are more likely to grow their dividends, it is worth it to pay for that active management.

RRIF. Canadian dividend stock versus GIC? Depends on your risk tolerance. You are better off having a dividend stock in a taxable account so you can enjoy the dividend tax credit. He would prefer dividend stocks.

Economy. US Federal Reserve has reconfirmed they are not going to raise rates for quite a while. Even more important, it doesn't look like QE 3 is going to happen. There is enough liquidity in the system. Economy is growing; it just doesn't feel that great. Still has high unemployment and GDP growth of 2%-2.5%.

City of Toronto bonds? Most cities are not allowed to run deficits so the credit quality of cities generally is a great thing to have. Has never owned city bonds as the spread is not great enough for him. He prefers AA or BBB bonds.

Markets. We are currently standing on very thin ice. Key issue will be May 6th when there will be a German state election, a runoff in France and elections in Greece. Following this there will be a Dutch election. The sum total of what will be involved is probably a delay in implementing fiscal austerity measures and budgetary controls. Thinks we go back to square one. Investors should not underestimate the potential seriousness.

Natural gas. Thinks we're going to see the low point in pricing this summer, maybe into the fall. There are some rumours circulating that some major, very large institutions are starting to buy natural gas stocks. Assuming that natural gas bases at $2.50 and in 2 years ends up that $3.50, the best leveraged companies are Advantage (AAV-T) with a potential of 95% increase in cash flow, Progress Energy (PRQ-T) would have a gain of 105% less a yield of about $3.96 and Peyto Energy (PEY-T) with a 38% increase in cash flow and a yield of about $4.60, Arc Resources (ARX-T) and Bonavista (BNP-T).

Gold. If Europe falls apart or looks like it is going to get difficult, he thinks there will be some nasty inflationary implications, fears about a Euro breakup which will result in gold going much higher.

Fixed Income. The quest for yield is ongoing and there is some low hanging fruit in the investment grade space but you have to be a little selective now. Bond market has had a great run for the last several years but there is still some great value out there.

Interest rates. His view is that there will be an interest rate increase over the next 2 years. You're going to see start to see the Bank of Canada make its move maybe later this year, first of next year. He sees 2% in the 18 month horizon.

Ontario bonds? Ontario is probably lagging the other provinces in getting its fiscal situation in order but they have a credible five-year plan to bring the budget back into balance. Relative to Canada bonds, they are looking pretty cheap right now.

Canadian high-yield ETF’s? The majority of the ETF’s in Canada just sort of track the US markets and put on a Canadian dollar hedge. This is a good trade and he does like the market and is relatively cheap right now.

Looks for leadership positions in their industry, track record of value to shareholders, and visible growth opportunities. The US accounts for more than a third of global GDP. Economy is enough to move global GDP growth. IMF upped estimate for global GDP growth last week, mostly because of US. Financial services (banks) are very well capitalized. Automotive sector is coming back. Real Estate is the laggard. Merging markets are slowing down and therefore the TSX is slowing down.

Samsung: Emerging feud amongst third generation of family. He tries to stay out of the fashionable part of the tech space. You have to buy this on the Korean exchange. Are challenging Apple. Launching Galaxy in London in a couple of weeks.

Markets. There has been a liquidity driven strong market since Oct/11 but none of the underlying problems has really gone away, particularly in Europe, but China is also slowing down. Feels there is another 20% downside from here. He is still not totally convinced that the US is out of recession danger and the odds are about 50-50. His Cdn portfolio has about 20% cash.