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

Market. Thinks we are only in a temporary corrective phase in the TSX. Market participants are worried about the end of QE2 and there has been some tightening in China. Historically from May onwards, spring, summer tends to be a soft pattern. It's very possible the TSX heads down to the 200 day moving average. Pretty decent corporate earnings out of the US.

Market. Market is concerned about inflation and higher interest rates and the result on the outlook on commodities. Sees it as a blip. China just declared a 5.2% inflation rate and the market is worried they will have to raise interest rates. Biggest driver for that is oil prices. Most commodities are rolling over after reaching the resistance level. He uses $100 oil in his estimates and if you fast forward a year with $100, inflation shouldn't be as a big an issue as the market sees right now.

Gold. Looks on this as a trading vehicle and sees it at between $1,500 and $1,600 an ounce. He is a little bit underweight as it is hovering around the upper end of the band. The nice thing is that gold stocks do not reflect anywhere near the gold price.

Commodities. A lot of speculation initiated last week by the decline in the silver price. Prices were spiking significantly and margin requirements were raised several times and this initiated a turn around. Inflation numbers out of China and US inventory numbers spooked the market..

Market: Market is one-way beta. Commodities were up today and stocks were down. This happened about a year ago. All that has to happen is that oil has to go sideways for a couple of weeks, then stocks will start to discount it. It is because of the speculation in the commodities. Probably doesn’t make sense that Silver goes back to $50. Sees loose monetary policy in the US for rest of year, call it QE 2-1/2. You won't see interest rates rise in the US this year.

Oil. Expects oil to be $110-$120 a year from now. Looks like the war in Libya will continue for another 6 months . Also, there has been a lot of noise about demand/destruction in the US and China. Sees demand growing in China and India.

Natural gas. Could see a short term rally as quite often there is a spring rally as the short positions are at record amounts. Doesn't see the price much above $5 this year. Every month the US is still showing a record amount and they are still drilling.

Big sell off last Thursday shows the speculation in the commodities market. A lot of it was driven by the amount of liquid money we have because of low interest rates. People are flocking to anything where they can make money. Not only did you have oil move through $100 because of unrest in North Africa, but speculators want to re-test its old highs. Feels the fundamental price for oil is in the $85 range. He puts the $85 oil price through his models so if oil is at $85, his oil picks will be fairly valued. Also, owns companies that pay dividends so in times of volatility, which helps insulate your total return.

Natural Gas. Feels it will be higher in 12 to 18 months. Starting to see demand increase. Expects to see massive decline rates soon.

Covered Call Writing. You are basically buying the stock and Selling an option 6 months out. On a $60 stock you are picking up roughly $2.50-$3 as well as collecting any dividends. During that period, you are picking up roughly 5%-6%.

Fixed Income ETF's. Realistically you have to decide on where rates are going to be. An important component is not just should you be in ETFs but which ones. Currently you want to be in those of short duration, such as 2.5 to 3 years..

Leaps. These are basically long term options. The problem with options is the Buyer is paying for time and on Leaps, you are paying for an awful lot of time.

What would you suggest for a TFSA? There are lots of choices but he would look at S&P/TSX 60 ETF (XIU-T), S&P 500 (CAD-Hedged) ETF (XSP-T), Cdn Div & Income ETF (CDZ-T). There are a lot out there. Just buy yourself a large Cap ETF.

Market. Canada has had 10 months without any significant correction. Market doesn’t go up forever. He is telling his clients that there will be a period when the TSX goes down 700-800 points (5%) in a couple of weeks. Not unexpected. This could be that period. There is certainly a big liquidation in the commodity space. Long term secular trend is that China is going to continue suck up everything it can. Feels the current market turn, with liquidation of precious metals and oil, is a short term correction of speculative excess.

Silver. Finished its seasonality at the end of April. Has been in a bubble lately and had a parabolic move, which he doesn’t like as you don’t know when it’s going to collapse. Will be coming back down to the $30 range. If it keeps going down, it could reach $20. There will be a lot of volatility.