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

(Looking for stock that is safe with some dividends.) AT&T (T-N) would be fine and the dividend is safe. You may not get a lot of growth out of it. Verizon (VZ-N) is the same. Can't find fault with Proctor & Gamble (PG-N) longer-term but there will be a lot of growth. Microsoft (MSFT-Q) could be interesting. They do have Windows 8 coming out later in the year and also getting into the mobile phone market. Generates a lot of cash flow and increases their dividends.

(Caller would like to know of a smaller prominent US Bank that is reasonably leveraged and positioned for growth in the next 12 months.) There are quite a few regional banks that would do well in this environment. To do well they need the US economy to continue to grow, which he expects it will. You could look at Sun Trust (?), US Bancorp (USB-N) or Hudson Bank (?). He uses an ETF for this.

Oil. This is a pipeline issue that can be fixed so he is still positive on the companies he owns and they are cheap. He is investing more now in oil.

Shorting Gold? There is a fairly limited quantity. Becoming more and more expensive to get out of the ground. Currency and monetary situation globally is going to continue to be very dysfunctional for the foreseeable future. You only need a few people to decide that gold is the place to go and you could have a substantial rally. If you do, he would hedge it by being long one of the senior producers as they have already gone down substantially.

On the weekend the Euro zone put 100 billion into the Spanish bank and did not have to ask for International assistance. Things are getting bad enough that we are going to get some more assistance from governments. But she is forecasting positive profit growth this year. Dividend yield on TSX is over 3%. So there is reason to buy the market. She is not buying except specific situations, but is keeping her powder dry otherwise.

Rules of Investing. 1.) Good Balance Sheet. You want companies that are not encumbered by debt i.e. debt to equity of less than .6%. 2.) Look for companies that consistently raise their dividends. This is the best inside insider information that a company can give. 3.) Buy noncyclical companies. Mimicking the TSX in the past year was a very dangerous game. Look for companies that make products we need and use every day such as food, real estate, retail, telecom and those things we can't live without. 4.) Don't look at the stock price, look at the value. Do your research and figure out what a company is worth. (See Top Picks.) 5.) You have to have a balanced type of portfolio. Diversify and include some fixed income.

Gold. Will do well in 3 types of environments. 1) High inflation. 2) Deflation or 3) the world is going to end. None of these scenarios are happening right now so he has no reason to own gold. As a value investor, it is very hard for him to value gold or what the value of gold is over a long-term period.

Drilling companies. With some companies closing down gas installations, would it not be better to hold off from buying drilling companies? He doesn't buy the natural gas story yet. Way too early and he doesn't see any upside in natural gas prices for at least 3 to 5 years.

Commodities. She agrees with Goldman Sachs statement that a basket of commodities will climb about 29% this year, led by oil and base metals like copper. Commodity prices have come down quite drastically over the last couple of months. By and large are priced in a global slow down. Some kind of a bottom has formed and we may see a little bit more downside to go but this is a great level to step in. Likes integrated companies, especially those with both upstream and downstream.

Gold. Gold stocks have underperformed substantially compared to the bullion itself. Feels that the stocks should perform relatively well against gold bullion this year.

Economies. Spanish banks got a bailout and the markets were excited for about 50 minutes. This is like alcohol, you need a bigger one each time. If they had done this 3-4 months ago, it probably would have had a much bigger effect with a decent rally. Spain itself has a debt to GDP of about 120% and need to raise $70 billion. Has 25% unemployment and 50% youth unemployment and a collapsing property market. Spain is really important as it is the 5th biggest economy in Europe. It is too big to be saved. It puts the whole of the European stabilization fund in jeopardy. We could see a very sharp, painful decline over the next few weeks until such time as "here comes the cavalry".

Markets. Expects the European situation is going to require a lot more pain before everybody comes together and comes up with a solution. This patch up job is useless because you patch up one thing and next week there is something else. Expect it will take years before you have a well functioning Europe. US is becoming a beneficiary of all that European turmoil. Looking for some value and good entry points in US stocks. She is currently in a large cash position waiting for a better opportunity. Seasonality usually works.

Volatility seems to be with us to stay. Down the road you can see all kinds of things that are going to add to it. You can still make money if you pick the right stocks and look for dividend instead of capital gains. The banks seem to be just as volatile as ever. He always has some fixed income content. 10-15% cash or liquid securities. Also a significant gold content, which has been a drag.

When you think of al the stimulus that has been thrown at the market over the last couple of years, the economy is hitting a stumbling block. It’s tough for investors because markets are giving signals one way and the politicians the other. You have to pick your spots. Money is getting deployed in yield-oriented investments. That’s where the money is going. Corporations have cash but are not making acquisitions but they are raising dividends.

Markets. The global macro picture with what is happening in Europe is clearly what the drag on the market is. There recently has been a bounce off the oversold levels. There are also issues with seemingly slowing economic growth in the US as well is in China. Favours the US market over Canada as it is much more defensive than the TSX. The TSX is highly geared towards finances and resources.