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

Gold. Not a gold bug but if there is ever a time to hold gold, this may well be it. Recently governments have started to aggressively print money. (See Top Picks.)

Shorting Bonds. Good strategy? In Canada you would look at HBP US 30 Year Bond Bear+ ETF (HTD-T). This is effectively creating Short exposures to instruments that pay coupons so you have to cover them. You would hold this for a relatively short period of time.

Market: The pullback we have seen is a buying opportunity. This market will go back to its old pre-2008 highs within the year. We’ve come through the downturn of the economy pretty well. Employment is slowly getting better. Company confidence is slowly getting better. Companies have built up more cash than before the peak. Now you will see expansion and with that comes more employment. It wasn’t even a recession; it was a financial system on the verge of collapse. There is a lot of money on the sidelines. Doesn’t think you will see QE III. The market doesn’t need it. When QE II ends, you will be surprised how little the market reacts. Likes the cyclicals, base metals, resource, coal, iron ore, everything you send to the emerging markets, industrials in the US, technology looks cheap. Light on consumer areas, real estate, retail, financials.

Real Return Bonds: Are yielding about 1% above inflation. Not a trading security. These work inversely with the regular bond market.

Market: Doesn’t like the looks of the equity markets at present. Way too much government debt, rising inflation, rising interest rates. The only one who benefits from market decline is the one who holds cash. He is at 2/3rds. International: Europe is a basket case, he is predicting there is more pain before things right themselves. Gold: It is at an all time high and there is so much hedge fund money chasing gold that it is not the place you want to be. Oil: Tones of speculation, but if Libya gets worse, there would be a further rise in oil prices, but that would hurt the consumer, who would have less cash to spend elsewhere.

Market: This pull back has to go a few more weeks. This correction looks a lot like what we did in November. It didn’t mater what triggered it, Japan, middle east, etc. Natural disasters don’t have a lasting impact. When the pullback completes, metals, mining, a little health care, and technology will do well.

Market: Long and short strategies reduce market volatility. Typically he targets 10-15% compounded returns. He is a value investor.

Natural Gas: Significant supply increase recently. Price spiked because of Japan’s Nuclear issues.

Oil: Bullish on the price of oil long term. Oil fields globally are drying up. You could argue a disaster/war premium built in. He tries to find stronger producers that would make a lot of money even at lower prices, e.g. Painted Pony.

Market: There’s always something going on in the world. He prefers companies that can handle what’s going on in the world. Some might move sideways for a while, but some people forget that the stock market does not follow the economy as much as people think and people get caught up in one bad number. We mo go through some time with more volatility and the market moving sideways. There is an underlying increase in inflation but he does not believe it will increase to 6-7%. The Fed is trying to move expectations of inflation up. His view is that short term, rates will go up but still remain relatively low. We are at historically low rates.

Market: He is not a macro investor. He is a bottom up. He is systematic. He looks for value according to his model price. It is easy to find bargains. Last two years everything went up but now he feels you have to be a trading investor rather than a buy and hold investor. Yield is not valuation. People are paying a lot for dividend yield and ignoring valuation.

Market: He does not try to forecast where the market is going. Research has shown that you cannot forecast the market over time. The market reacts to all available information. He wants cheap, pure, tax effective and broadly diversified investments.

Caller’s situation: 80% in GICs and rest in dividends. At age 50 and even with chronic illness, he says no more than 45% in GICs.

Flow through shares are not going anywhere and have been around for 30 years. He doesn’t think this budget will be passed.

Japan: The market has bounced back fairly well, so there was an opportunity to capitalize on the disaster a week ago. All time high was in 1989, however.