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

Suggestions for dividend stocks? Cdn bank shares still look attractive long term. Expecting dividend growth and there will be increases some time this year. Also some of the telecom stocks, such as Manitoba Tel (MBT-T) still look reasonable. Bonavista (BNP-T) is an oil/gas stock that has a very nice distribution.

Strategy has not changed much at all since the 2007 crash. Dividends have always played a roll. They have been tremendous performers since then. We are in the phase of the market where people are afraid of missing the rally. It can be the most exciting, but people focus less and less on risk. Valuations are getting pushed a little bit. Inflation pressures are more of a problem in emerging markets. Now inflation is starting to creep back into North America. He has mostly been trimming around the edges and getting rid of things. It’s time to be careful and cautious.

GOLD: His sense is that there is a huge amount of demand for gold. China allows citizens to purchase it now. India has always been huge purchases of it. The way he looks at it, if you can own a large company that gets it out of the ground at $450, it is a good business.

Oil. Likes the energy complex. We have gotten used to $90 and $100 but the next $100 is going to be a lot more difficult to swallow. Could result in demand destruction.

Is it a good time to be buying high dividend US stocks with the strong Cdn$? Would discourage looking at US stocks based on making a bet on the exchange rate. First you should see if the US market is appropriately valued. What does it do to your portfolio with what you already own and does it double up on anything you already have?

What happens to Options when a company is acquired? Options Clearing Corp is mandated to change the options contract.

Deep in the Money Call Options (e.g. $50 stock with a $30 Strike Price) versus underlying stocks? Not a real fan of these because if you are going into the options market you are effectively gaining the advantage of having limited risks.

Manulife’s Income Plus. Doesn’t like it at all. Ridiculously expensive. Also the trouble Manulife is having with its balance sheet might also be a problem.

When should you consider borrowing money to invest in equities? There are 2 times. When interest rates are low and the market is egregiously cheap such as 2008. (Market is probably fairly priced today.) The other time is when you use something like a Macquarie Equity plus product (?) where you can guarantee that you are not going to lose money but this is expensive.

RRSP or TFSA if you only have enough funds for one? He wouldn’t split but would put it in one or the other. If you are making over $82,000 the RRSP will give you a bigger refund, but under $41,000 the TFSA. Between these two either one or the other.

Likes Equity Linked GICs but doesn’t like Principal Protected Notes. Very similar but PPNs tend to be quite expensive and you have to hold them for a very long time. The GICs are only 3.5 years and you are guaranteed to make money.

Assessing management? Past is a pretty good indicator of future success. Senior management and their team should be significant owners, preferably 10%.

4.25% Canada Real Return Bonds due 12/01/21. Basically government pays a fixed rate of interest and every 6 months will pay you the interest as well as the value of the bond by the amount the CPI has gone up in the last 6 months. You benefit from inflation.