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

(Top Pick Dec 29/09, Up 6.53%) Case New Holland FRN 12/15/12

Has been fairly positive on stocks as long as we have the economy continuing to improve and interest rates staying low. Earnings will be good but not as good as last year. Very excited about tech stocks. Generally looks for large cap, but in some funds he focuses on Mid to Small cap companies.

Markets don’t go straight up or straight down. REITS are fairly valued. Changes in rules allow them more wriggle room in what they can and can’t do.

The market got a little toppy. You have profit taking. The fundamentals in the US are getting a little better. We will be in the same choppy market after this correction. Interest rates are stagnating low and should continue. He is going to stick with commodities as well as find some non-commodity stocks.

Any credit event or risk of a credit event will trigger a market pull back. It is most applicable when you are evaluating companies with a lot of debt. He gravitates to companies with very strong balance sheets, often debt free. Reasonably bullish on equities. There are risks, but equities are not particularly expensive and interest rates are low.

US banks: are less expensive than Canadian. But the valuation is probably appropriate. Watch out because they raised so much equity there is a possibility of dividend increases this year and that could be a catalyst for stock price increases. Prefers Canadian Banks and thinks everyone should own one.

India vs. China this year: The dominant theme is the efforts to curb inflation in both countries. Both countries have political risks. He doesn’t own their stocks at this point. Would wait for a pull back in those two markets before buying their stocks. If they ‘blow’ the control over their economies, money will move to the Americas and your investments there will benefit.

It’s just a correction. Nothing does go straight up forever. It is pretty normal to see a bit of a pullback and some profit taking. It’s a bit surprising that it’s the first week of the new year. Gold’s decline is more of a dollar story as it has not declined as much in terms of Euros. QE II will help in the first half of the year and then it could slow down a bit in the second half. If the jobs haven’t come through by mid-year, then you could see a more substantial pullback.

This is the time of year for small caps. In the resource side in the 4th quarter small caps did well. In non-resource, there are a lot of yield plays are switching from income trusts to regular corporations. He thinks there are a lot of under-valued/under-followed companies there. E.g. CGX-T, but there is a weak quarter coming first.

Markets. Expects to see the TSX at $15,000 this year and the S&P 500 close to $1,290-$1,300. Gold is more a speculative metal now rather than an inflation hedge and he doesn’t expect much from it but there are positive stories out there in exploration and development companies.

Basic Technical Analysis Books not geared to professionals? “Technical Analysis Explained” by Martin J. Pring is simple. It builds a foundation of some basic concepts and goes into more complicated aspects in the latter half.

There are a lot of forces. Stimulus spending, consumers who have a lot of debt, and some countries where people for the first time can start to have material wealth. It’s harder than usual for him to predict where markets will move. But markets will move more quickly than ever before and there will be more dangers than ever before. He thinks today was a one day thing. He tries to ignore all the noise. He is quicker to take profits in this market if they hit their target price.

Copper: He looks for stocks and sectors that are out of favour. When something is in a record price range, he hopes he has something already, but doesn’t go near it for new buys. At the time he should have bought it, it was buying other things.

Oil. Thinks it is going to stay up. Expect it will trade in a range of maybe $75 to $100. Asian demand is very strong and US demand has been picking up.

Copper. This is a 2011 story. Looking for a lot of acquisitions so choose mid-cap companies, as they will have takeout premiums. For a blue chip copper play on a global basis, Freeport McMoran (FCX-N) is the one you want.