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

Today's program was on wines, no stocks.

Rising interest rates. Means Bank of Canada or Federal Reserve is pushing up short-term interest rates and they feel the economy is very strong. Also, anything that gives you a nice dividend will put you in good shape. Canadian banks will do well during that period. Also companies that pay very good dividends.

Coal. Demand for met coal from China is up 50%, year over year. Should be a good space to be long for the next 6–12 months. He likes playing the revenue stream companies on the commodity side, which can diversify away from mining operational risks. Likes Sandstorm Metals & Energy (SND-X).

His clients were promised 8-10% returns and this is where he is this year. We had a trading range on TSX of 11K to 12K and we stuck in that range. He is looking in 2011 for 12k and up. 60% of his stocks increased their dividends. Banks (BNS, TD, RY, and BMO) didn’t, so he expects it next year except BMO (year after). TD’s deal should be accretive to earnings in 2012. BMO’s deal will be accretive further out.

Selling discipline? Establishes 12-month target price when buying, based on fundamental outlook, industry it’s in and earnings profile. Applies an appropriate multiple on 12-month earnings. Can be adjusted if earnings change and will alter the target price. Could result in a Sell. If target price is reached but she sees further upside, she would continue to Hold.

Gold. Up 24% this year. Expert there are speculators and fast money in there. Expecting US economy to surprise on the upside, which could be positive for the US$, and there could be a pull back in gold. Longer term she remains positive. Her main holdings are gold shares, which have lagged the gold price, and she is holding but not buying.

Market. Normal Weekly Stock Cycle chart shows an up trend in 26 weeks followed by a correction in Jan/10 and then a big sell off to July/10. The current rally has been running for 24+ weeks, which is too long. Looking for 9%-10% correction.

Gold. Has a problem with leadership. If you put Barrick (ABX-T), Goldcorp (G-T) and Newmont (NEM-N) together, they are almost 30% of the global gold index. Gold made a new high in Sept and a lot of the stocks did not follow through. When leaders start to fade, it is time to trim back your holdings, especially the doubles as the leverage on this will get you both ways.

TSX and S&P 500. Most important things are trend lines. Using a primary trend line starting at the end of 08 (and excluding the March/09 low) for both cases, it creates a growth channel. Would not be unreasonable to correct back down to the long term trend line, which would give an 8%$-10% correction down to 12,000 for the TSX and 1,130 for S&P 500.

Benchmarks. 1st rule is that it has to comparable to something you could invest in. If you trade a lot, your benchmark could be the S&P/TSX Small Cap (XCS-T), 80% aggressive and 20% in a bond ETF. If you are more conservative, the S&P/TSX 60 (XIU-T).

Caller: On the historical 10-year graph of the S&P and Dow Jones there is a sharp correction in March of odd numbered years. Bill: Trouble is that when everyone looks at these rules, they stop working. They don’t work as well any more.

BMG Bullion fund. One-third silver, one-third gold and one-third platinum. They hold the gold at the Bank of Nova Scotia (BNS-T). The units have performed very well.

Can’t ever remember when we had such a difference in world markets. You have leaders and laggards. The economies now are almost diametrically opposite. We are seeing the beginning of a major change in the economics of the world. China is getting there now. The impact it has on the rest of the world is the proof in the pudding. Likes sector rotation. Likes companies that are feeding the needs of the emerging markets - energy, agriculture, and materials. Still has positions in precious metals. Doesn’t like bonds and prefers high yielding equities. Doesn’t use ETFs very often, but uses ADRs.

Natural Gas: He was bullish on Natural Gas. He thought it was pretty cheap. It had a nice run and didn’t hold. We had a good draw down today and Gas didn’t move. The big months are coming up. There is a lot more to Nat Gas than supply/demand. It depends what the traders do. He is positive in the next 3-4 years. It’s the cleanest, cheap and under utilized. Thinks it will firm up a bit in the next couple of months.

Silver: Been bullish on the precious metal complex. Silver has a lot of uses that gold doesn’t have, industrial, medical, etc. Silver will track with gold. Thinks ratio of gold to silver will tighten and thinks silver will out perform next year.