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

Markets. This is all short term stuff and he is a long-term value investor. He buys stocks when no one wants them and sells them when everyone wants them. He chooses companies he likes as well as prices that he likes.

Could we slip into a recession and if so, what would be the effect on the stock market? Canada is dependent on 2 things, commodities and the US. Commodity prices will come down and that will hurt. Best stock market globally has been the US because the economy there is nowhere like it was in 2008. Europe will probably go into recession and China will slow down. The US might go into recession and pull Canada down but there is a better chance it will just have some slow growth.

Market: A festival of tax loss selling. You will be right in the zone now. This is what starts feeling more like a bottom like a couple of years ago. People don’t want to deal with each other – this is the contagion. The European situation can only be solved by politicians so it is a speculative situation. The banks in the EU need to get better balance sheets and then things will start to roll.

Markets. After the tax loss selling, there will be stars that rise in January. He finds you can usually make more money from discarded stocks from January on. The mining sector has been our leader all the way through the last year and earlier but started to falter this last spring and has never recovered.

Markets. Focusing on the economic data coming out of the US, which is fairly strong. Jobless claims are best it has been since February, railcar loadings are improving and consumer confidence is very strong. This may be an indication that the US is decoupling from what is going on in Europe. Looking forward to a fairly good Q4 as well. Cdn$ looks undervalued.

Market: We are grinding through things in Europe right now. Won’t have a long-term solution in place for some time but should have a policy in place within 90n days. Either a good one involves the ECB or a more muddled one from Germany are the two options. We will be in a better position next year. Stocks are cheap and dividends look good. Lots of diamonds and rubies out there. A lot of pessimism is priced into the marketplace. This is the second most attractive environment for valuations in his lifetime.

A year ago, TSX was $1600 above the DOW and today it is below. Why? Repatriation of funds from Europe has had a big impact on this. There are lots of good quality, multinational companies in the US. Canada is somewhat on the resource side and mines have taken a hit and gold companies have gone sideways. At some point or other, will be back to a point spread of $1000 or better.

Market: He normally appraises a company and tries to buy below that appraised value. He wants to get something more than the market gives you, which is 8%. In certain times he will make a mistake and in other cases he will make up for it. With small caps he looks for a higher rate of return in exchange for the increased volatility. He believes in holding for 2-4 years, not 2-4 weeks. Tech hardware looks interesting, resource companies, interest him. The biggest companies of the world are interesting.

Markets. To protect yourself and get some growth, stick to good quality, dividend paying companies that are well run. Also pay attention to how much cash you have in your portfolio and that you are not selling on down days and make sure your asset allocation is correctly situated.

European sovereign bonds. This is too much of a wild card right now. The situation seems to be very fluid, going back and forth. If you're looking for safety and income there are a lot of other wiser choices in Canada and the US. This is a definite slowdown, which will put a cap on growth but in one sense is good for fixed income in that you know that rates are not going to go up immediately.

Do bond yields have to rise from here? If so, where does a bond investor “hide”? Can't see bond yields rising, at least for another year or more. 2 places that bond managers make money is either in their term or duration so in a rising rate environment, you get as short as possible. The other place is a mix between government and corporate. In a rising environment corporates are going to take it a little bit harder so reduce corporates and go into governments.

Money market funds? They pay a very, very low rate. The big risk is if we stay in an almost zero rate environment.

Ford Credit Canada 4.25% Bonds due 2014. BB but is there a possibility it gets upgraded to BBB? BB is just below investment grade and Ford has been very public in saying they want to make it back to investment grade. That is good news and their sales are up. If you buy them, make sure they are in the shorter terms.

Uranium stocks. This is not on a lot of peoples radar screen at the moment. After the Japanese earthquake, a lot of people focused on other directions. There is probably also a lot of tax loss selling. Uranium will have legs longer term but in the short term, there doesn't seem to be any momentum. If you have the time horizon of a couple of years, it would be a good time to get in.

Market: Bought 3 stocks starting in August and he is scouring for bargains. This is a time when a lot of people are doing tax loss selling and he buys stocks when they are out of favour. There could be the Santa Clause Rally follow by the January affect in the first few days of January.