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

Dividends. Will continue to be important. Large cap dividend paying stocks is definitely the place to be 1) because they have the dividends and 2) those tend to be the companies with offshore revenue growth.

Market. Expects it to continue to move up in the first half of the year but believes it will have some challenges in the second half and will pull back. Cash is important to have so over the next few months increase your cash position.

Market. Macro view is that he believes there is a long term secular trend in favour of commodities and expects it to continue for the next 8, 10, 12 years.

Would rising interest rates have a significant effect on ETFs that hold preferred shares and high yield bonds? As rates go up, bonds of all kinds generally go down. Preferred shares really depend on corporate viability and profitability, not interest rates.

Mutual Funds versus ETFs ignoring MER’s? Depends on turnover. A typical mutual fund might have a turnover of 33% to 50% so within 2 to 3 years all the stocks in the fund are bought and sold once. Typical ETF will have a turnover rate of maybe 5% so it is 20 years before the turnover goes the full cycle. On a taxable account you will have more liabilities in a mutual fund.

Any ETFs that invest in options? Not directly but there are some ETFs that use options. Consider Bank of Montreal’s Covered Call Cdn Banks ETF (ZWB-T).

Pay down a mortgage or go into the stock market? Normally he would say pay down the debt, but if you are a high income earner, make your normal mortgage payments, maximize your RRSP and then use your refund to pay down the mortgage. If you do go into the stock market, go for growth.

Market. It’s been a big rally and the party will continue if Ben Bernanke decides to go with Q3. High gas prices will be his excuse. He’ll say we need the consumer to come back and they are getting squeezed on high gas prices. At least with inflation you have the potential of growing out of your problem. With deflation, it’s all gone.

Rare earth. The whole sector has been very hot recently There are some US names like Rare Earth Elements that has done very well. In Canada, Great Western Minerals (GWGX) is his favourite.

Market: Bull markets typically last 55-60 months so we are about a third the way through. The market will have a different flavour from here. We will go sideways until the fall. Now is an excellent time to build some cash for the summer when things bottom out. Focusing on stock picking and sector rotation.

Silver: Problem is that relationship between silver and gold has changed over time. You have to be very careful that you are not the last guy buying silver. He does not own it.

S&P cut the outlook on the US debt but they tend to do something after it becomes completely obvious. This should have been done a number of years ago. US has gotten into a worse and worse shape and they haven’t done anything about it. If they don’t shape up, it could potentially default in the next few years. There are a lot of actions they have to take to prevent this including raising taxes on the rich and corporations and cutting spending on the military.

Markets. Doesn’t like Buying at this time of year as stock markets don’t do much from May to early fall. Generally he does research and hopes he can Sell more stocks and look for Buys that he can do towards the end of the year.

Given the Japanese disaster are uranium stocks the kind of stocks a contrarian would look at now? He likes to see sectors that get hit. Unfortunately uranium hasn’t gotten hit badly enough where he could find any companies that were really interesting.

His stock filter. First step is that the stock has to be down at least 33% in the past year. Then he likes to find stocks that are near the bottom in the 10 year range but have traded at much higher levels for at least 10 years. Looks at financial ratios. Doesn’t like debt. Once he finds a company, He won’t buy into it for at least 6 months, but it could be 3 or 4 years. Normally likes to see at least 100% upside but often it’s 300%-400%.