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

Markets. Since 1924, the S&P 500 has gone down 8% or more in the 3rd quarter on 15 occasions. On average, the 4th quarter gain was 4.9%. We just had a very important inflection low earlier this week. We are lined up for a classic move in the 4th quarter. Next week we get the start of ¾ reports and they're going to be terrible. Markets will already have anticipated this and stocks will start to move on the upside on really bad news.

Historically it has shown a classic support level at its 200 day moving average. Since 2003, the 200 day moving average has been just below the price of gold. Last week, it came all the way down to the 200 day moving average and then popped again. Looks like we have a very important intermediate low as of last week.

Moving averages? The traditional one you want to use is the 200 day moving average. The other one is the 50 day moving average. Currently most markets are below this. If you see the markets moving above the 50 day in the next week or two, that is very positive.

Is the Dow theory still relevant in today's market? The theory is, if the Dow industrial and transports are trending in the same direction, that is considered to be bullish. Not a big believer in this theory. It works sporadically. Hasn't worked too well in the phase that started in 2000.

Technical analysis. With the wild market swings, is it still relevant? From May until now is the time of the year when volatility is the greatest and the time when you should hold a lot of cash. Watch the Volatility Index (VIX-I). Historically, when it gets above the 40% level and peaks, that is a really good sign.

Interest rates being at an all time low are making dividend yielding and equity more attractive. The reason the interest rates are low are concerns about the slowing global economy.

Markets. Thinks the markets were very oversold as there was very negative sentiment in the marketplace. Expect this is being cleared up right now but that was not necessarily the low. A lot of the issues that were causing this are still here, so this is going to continue. We need some real action from Europe. He is actually buying companies with good dividends in this marketplace. Companies are in great shape, its governments that are in bad shape.

Silver. Feels the outlook for the next six months is up. Silver is okay at this price.

Oil. Feels it is at the bottom as it is at the price of production now.

Markets. The current situation represents a serious buying opportunity. Wouldn't be surprised if the figures shown yesterday afternoon were the bottom. For those people who have some courage, now is the time to show it, especially true if you are under 60.

TFSA vs RRSP? Most Canadians are going to be in a higher tax bracket when they are working than they are when they retire. E.g. If you put $10,000 into an RRSP and you are in a 40% tax bracket, this will give you a $4000 tax refund. When you retire and you take that $10,000 out, you are in a lower tax bracket of 30%, it means you pay $3000 in tax. For 80%-85% of Canadians, he would maximize the RRSP.

In a TFSA account, should we be buying dividend paying stocks are higher risk types? His general bias is towards growthy stocks, but a few are 60 or more, you might have biased towards more conservative dividend paying stocks

Preferred shares? Usually good dividend yields and lower volatility but he prefers things that are more growthy on the equity side. If a company did not pay out dividends, the stock would go up by an appropriate amount. People who are 60 or older may prefer the greater stability.

RESPs for grandchildren? Depends on the age of your grandchildren. For the first 9 years for his daughter he put the money into equities but when she reached 10, he started putting it into income but just recently switched it to a balanced position of 60/40.

Allocation percentages of ETF's or low-cost mutual funds in a portfolio? For a couple in their mid-50s, something like 60% in stocks and bonds in stocks and 40% in bonds makes sense. The 60%, he would divide into 5 equal buckets of Cdn equity, US equity, international equity, emerging market equity and tangibles.