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

Risk premiums on equities currently in the market are so high that equities are incredible value. Expect there will be a transition to equities because of strong corporate earnings and the fact that stocks are cheap. Professional investors are very timid so markets have been range bound.

Uranium in a power plant is a very acceptable way to create power. There are so many project on the books for just the emerging nations alone that it will more than take care of demand. Doesn’t think Germany is actually going to follow through with not continuing using nuclear power. Good time to take advantage of the market knee jerk reaction.

Market: We are seeing so many divergent variables now that it is very hard to predict where things are going. The market has moved up so much over the past couple of years that the upside is more muted than it was before and the risk has increased. This time of year is not usually very good for stock markets so he likes to do research but not a lot of buying. Sold off about 25% of his portfolio. Likes SU real estate, financials and banks.

Effect of rising inflation and increased interest rates on REITs and how do you protect yourself? Hard to give an answer. Moderate inflation and good positive credit spreads, real estate could do alright but if it gets too high and interest rates come up, obviously it will get hurt.

TSX. We are in a major bull market. Market had a major low in 2009 followed by an up leg into the summer of 2010 when there was a pause. There has been another up leg ever since. The Toronto market is now at the point where it had the rally, had the pause and now ready to make a new up leg. Give the correction another week or so and it should start something new. His target is 15,500.

Commodities. They’ve gone too far ahead and are now pausing. They’ll be starting up again soon.

Dow Industrial - Weekly chart shows a head and shoulder pattern, which was a major bottom that occurred in 2009. Dow has marched steadily upward from there. Primary trend line has not been violated, not even close.

TSX Metals – Both gold and metal stocks have gone through ABC corrections. Metal stocks chart shows higher lows, so they look pretty good. Gold stocks have pretty well equal lows even though the bullion took off giving a big divergence between bullion and stocks. If you are looking for a terrific rebound opportunity, go for gold stocks.

Market - Thinks the market hit its bottom about a week or so ago and expects we will work our way up. Considers 14,000 a bit of a resistance level, we’ll get through that and then run into even more resistance. Probably caught in a range of 13,200 to 14,400. We have to get rid of the debt ceiling problem in the US along with some calmer news from Europe.

Natural Gas. He has gone from negative to more neutral. Gas storage conditions are much more normal now. We haven’t had that much warm weather which is what it takes to get this going. However last storage entry was above what was anticipated. If you have a longer term basis of say 5 years, you can be investing in gas now.

(A Top Pick Dec 21/10. Down 42.98%.) Pairs trade and was Long Sea Dragon (SDX-X) and Short Bankers Petroleum (BNK-T). Sea Dragon was hit with the uprising in Egypt. Sold some of his Sea Dragon but still has his short on Bankers.

Constructive on the market. Believes the TSX is in a trading range of between 12,500 and 14,500 and doesn’t see it breaking below based on what the economy is doing. Expecting high single dividend returns, including dividends, over the next year or so.

Utilities. Should these start to be sold off in expectations of higher interest rates? If you are rotating into the market, it makes sense, but not sure what you will rotate into. Materials have done substantially better but don’t pay dividends.

A classic traders market right now, more so in the US than in Canada. We are currently 3 years into the bull market. Years 1 and 2 was just getting all the boats top rise and now it’s about earnings and momentum. Excellent earnings momentum right now, particularly in the US. Thinks US housing will be dead for a long time, unemployment will be high for a long time and the US debt will be a mess. However, companies that are exhibiting great earnings are not in those sectors.