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

Market. There has been a tremendous rebound rally that started in October but during that time, buyers didn't get much chance to enter. All sold a lot of Shorts were squeezed out of their positions. Some of the riskier sectors like materials, golds and industrials, their longevity has been in question. They've only recovered half to two thirds of what was given up last summer while the leading sectors went on to make new highs. There now is a vacuum in the market. He believes the long-term leader in this market continues to be defensive, yield driven securities.

Gold. Thanks this is in limbo/consolidation right now and may be able to trade to 1600 on the low-end. He prefers buying parts of the market that are seeing new inflows of capital and he doesn't see that in this group right now.

How would an average investor “follow the flow of money”? You make money when investors come in behind you and are willing to pay higher prices so he is always looking for neighbourhoods in the market that are seeing net inflows of capital. A very good place to find data is on the Internet at www.dorseywright.com/. He will only invest in sectors that are seeing expansion and breadth.

Bonds or preferred shares? If you went back over 20-30 years, the very best performing part of the equity market hasn't been the highest dividend payers but are those with a good dividend but one that has grown substantially over time. Preferred shares, for the most part, offer a fixed rate of return so it is like buying fixed income. He prefers common shares that have growing dividend yield.

Market. Pessimists are now coming around to the realization that the US is getting its act together, Europe is slowly getting its act together and even China is having a soft landing. You should be prepared for China's growth to be in the 7% to 8% level versus the 9%-10% that has been in the past. Expect that corrections this year will be shallow.

Sectors. His screens are indicating the oil/gas service sector is screening the best. Financials are not looking too bad. Select commodity stocks are there. The rest are special situations that don't fit a theme.

When would you cycle out of financials and what would you use as an alternative? You cycle of of these in the last 3 innings of the UP economic cycle (2013) and he would go more into the consumers’ area with something like Tim Hortons (THI-T) where you would still be maintaining some dividends.

Presidential Election Cycle. So far, it is going pretty well as expected. Markets move higher until April and then from April to June, the markets go lower. Tends to bottom around the end of June and goes higher through until the beginning of September. Usually, after the president has been elected, markets go higher again.

Base metals. This sector looks very interesting. Not so much on the gold sector.

Energy. There has been a very strong move in energy this year. Technicals are lining up for a significant higher move.

Gold. Historically at around this time of year, gold and gold stocks have a difficult time. It's called the PDAC Curse where usually gold stocks in Canada move up higher from the end of December right through until this time of year, just before the PDAC conference. This year, from the end of December to the beginning of this week, TSX gold index is up 13%.

Market. The Dow Jones industrial average, over the last 10 trading days, it gets to 13,000 and then dips down. There is overhead resistance but there is no downside pressure. Basically we are looking at the likelihood of a flat here for a period of time. Maybe when it gets further into March-April, the market will go slightly higher but beware after it gets to the end of April.

Banks. Canadian banks have just entered into a period of seasonal strength. Usually from right around the end of February until the end of May.

Charting. Do you use the same charting for large, mid or small-cap or do you adjust for size? The key for small cap securities is liquidity of the individual securities. However, the smaller sector has a distinct seasonality.

Markets: When you get exposure to BRIC countries you are getting exposure to growth. Europe has been a strategy and is continuing to unwind. If you have exposure to the BRIC you will get growth. Wants companies with good growth prospects, good balance sheets, likes dividends, but they don’t always have them. He likes ADRs, Hong Kong, foreign listings, to get around the Sino forest problem.